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Suicides in India show the dark side of micro-finance

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Re: Suicides in India show the dark side of micro-finance

#61

Post by flatulent1 »

forensic wrote: post #32
namdnay wrote: post #29

Earlier quoted context omitted.

While I agree with your general gist, "Capitalism and free enterprise produced everything good" is a bit of an exaggeration. Capitalism didn't "produce" labour rights, it didn't "produce" national parks, the sexual revolution or the abolition of slavery. I don't think we can simplistically say that captialism is the cause of all that is great in this world, even though it's a pretty major component.

I said "capitalism and free enterprise". Not just capitalism alone. Pretty much everything good came from free enterprise. The parts of society that engaged in free enterprise came up with the good stuff that would slowly spread free enterprise to the other parts of society. Specifically: Are labour rights really a thing? Were they created? "Labour rights" are a communication of certain realities, e.g., treat everyon…

>Capitalism and free enterprise produced everything good.

>National parks were not created either.

National Parks consist of isolated bits of something good that was there long before man. They're definitely not something good produced by free enterprise, rather something good still there because it was protected FROM free enterprise.

Re: Suicides in India show the dark side of micro-finance

#62

Post by _delirium »

roel_v wrote: post #38
r90 wrote: post #23

Earlier quoted context omitted.

Check your facts: http://www.lectlaw.com/files/ban02.htm E.g. Alabama: ALABAMA, the legal rate of interest is 6%; the general usury limit is 8%. The judgment rate is 12%. Like I said, it's not perfect, there are many exceptions. The US has devolved quite a bit from the humane society that built it up. But generous bankruptcy laws still make it possible for Americans to escape high debt. In India, suicide seems to be…

Did you even read your own link? Here's the second (!) paragraph from it: "But my car loan is higher than that"; "But I'm paying way more than that on my credit cards." That's right! Banks have separate rules. In fact, due to high inflation, in 1980, the federal government passed a special law which allowed national banks (the ones that have the word "national" or the term "N.A." in their name, and savings banks that…

That seems to support the claim that this is a recent departure from the "general and historical" caps on interest rates, though: most states have long had usury laws with interest-rate caps, and national banks were only exempted from them in 1980.

Re: Suicides in India show the dark side of micro-finance

#63

Post by _delirium »

roel_v wrote: post #36
r90 wrote: post #13

Earlier quoted context omitted.

If SKS microfinance is charging 24% they are a loanshark, period.Rates as high as that are usury and should not be lawful. I'm of half-Indian and half-European descent and I am always ashamed of my Indian heritage. The Indian people as a collective simply do not know what it means to be humane and have never heard the word solidarity. I don't mean that Western countries are perfect, just that they are lightyears ahea…

Interest rate limits for people (not corporations) are generally and histroically limited to about 8-12%. [citation needed] The evolution of the relationship between social and legal norms re: what are acceptable interest rates is a very interesting topic, with much cultural diversity and a broad range of case studies from canonical usury regulations in medieval Europe to the prohibition of pay day loans in much of t…

In the U.S. at least, there was a period of 150ish years where that was the case. Most states passed usury laws pretty soon after the U.S. was formed, and by the mid 1800s almost all had pretty strict interest-rate caps. They were loosened a bit towards the end of the 19th century, though some were strengthened again in the early 20th.

In 1978, the Supreme Court ruled that states couldn't enforce their usury laws against nationally chartered out-of-state banks--- the usury laws of the bank's state, not the customer's state, were the only ones that applied. That effectively killed usury laws, because it meant that banks just all incorporated in the states with the weakest usury laws. Then Congress completely preempted state usury laws for nationally-chartered banks in 1980.

But from sometime in the early/mid 1800s to 1978, most states had interest-rate caps in the 8-14% range, and most are still on the books, just ineffectual.

Re: Suicides in India show the dark side of micro-finance

#64

Post by motters »

anamax wrote: post #51
motters wrote: post #31

Surely once for-profit companies get involved there is a conflict of interest between poverty alleviation efforts and the interests of share holders/investors.

> Surely once for-profit companies get involved there is a conflict of interest between poverty alleviation efforts and the interests of share holders/investors. Hint - "not for profit companies" also have interests that may have nothing to do with their supposed clients. "not for profit" merely means that the investors don't get explicit ownership or dividends. (Many US "not for profits" do special things for their…

> Not-for-profits are often run to benefit the folks working for them.

You may be right. I can think of a few not-for-profits which seem to be benefiting not much more than their few founders.

Re: Suicides in India show the dark side of micro-finance

#65

Post by geekinthecorner »

Qz wrote: post #3

India’s booming microlending industry is part of a global phenomenon that began as a charitable movement but now attracts private capital seeking growth and high returns. Good old capitalism, always there to turn nice things into shit.

Life is impermanent, in the end we all become fertilizer.

Re: Suicides in India show the dark side of micro-finance

#66

Post by edge17 »

shrikant wrote: post #59
edge17 wrote: post #54

Earlier quoted context omitted.

Thanks for the post shrikant. Most people don't seem to realize this, and it's in part because of all the attention MFI's are getting rightnow. There's very little data and numbers available, but are some - http://microfinance.cgap.org/2010/11/11/who’s-the-culprit-ac... This table, taken from the above blog post, was of particular interest. It describes what percentage of the loans are used for what. In looking at th…

[...] the people that receive these loans probably don't know what microfinance loans are; that's to say they probably just call them loans. And this is the crux of the issue. The table only denotes what the borrower took the loan for, and not for what actual use the money was put to. Basically it boils down to this: once the money is in their hands, unless the borrowers have had some information dissemination of a s…

The table only denotes what the borrower took the loan for, and not for what actual use the money was put to. Basically it boils down to this: once the money is in their hands, unless the borrowers have had some information dissemination of a substantial sort, it can be used for any purpose.

I don't think (and I could be totally wrong, I don't know the process of actually getting one of these loans) that the left column denotes what the borrower took the loan for. I think it's what the loan was actually used for. The data collectors, I believe, sampled some subgroup of people and asked what the loan was spent on.

Re: Suicides in India show the dark side of micro-finance

#67

Post by edge17 »

DaniFong wrote: post #60
edge17 wrote: post #58

Earlier quoted context omitted.

Capital - assets available for use in the production of further assets http://www.google.com/search?hl=en&source=hp&biw=120... Baseline level of trust = 100% risk 100% risk = 0% return 0% return = Charity That's not to say charity doesn't have a place in the world. But the conversation about microfinance is about empowering individuals, and you don't empower individuals by writing them a blank check. You empower them…

Why would a baseline level of trust equate to 100% risk?

How else would you be all-inclusive? If interest rate is a measure of risk, i.e. the riskier the individual the higher the interest rate, then the most untrustworthy person can only get a loan, or access to capital, at the highest possible interest rate and at the greatest possible risk. The greatest possible risk is the situation in which the loaning party never gets their money back. If the baseline is to include everyone, it means you have to include the situation of greatest possible risk, i.e. hand out cash to someone you know won't pay it back. Intent to pay back is well and good, but risk profiling exists for a reason and microfinancing is a banking practice aimed at empowerment.

Aid, on the other hand, engenders the notion of giving and not asking for anything back. Microfinance loans are not intended to be aid.

Re: Suicides in India show the dark side of micro-finance

#68

Post by DaniFong »

edge17 wrote: post #67
DaniFong wrote: post #60

Earlier quoted context omitted.

Why would a baseline level of trust equate to 100% risk?

How else would you be all-inclusive? If interest rate is a measure of risk, i.e. the riskier the individual the higher the interest rate, then the most untrustworthy person can only get a loan, or access to capital, at the highest possible interest rate and at the greatest possible risk. The greatest possible risk is the situation in which the loaning party never gets their money back. If the baseline is to include e…

To me, baseline trust means that if they squander their first access to capital they do not gain access again. Such a lending strategy would not raise this issue.

Re: Suicides in India show the dark side of micro-finance

#69

Post by klbarry »

roel_v wrote: post #39
r90 wrote: post #22

Earlier quoted context omitted.

That's all well and good provided that the loan is unsecured and generous (i.e. humane) bankruptcy laws are available. In India, bankruptcy means a rural farmer will lose everything, including his land and his seed corn. You can't have it both ways. Either the loan is secured and farmers pay low interest rates. Or a high rate is allowed because the loans is an unsecured loan with high credit risk. But then the debter…

You're posting many claims of this nature in this thread, but like my gran used to say 'when you're in a hole, stop digging'. Much of the West does not have what you call 'humane bankruptcy laws', most debts in most of Western Europe is non-dischargeable. The US is quite the outlier in this respect. Furthermore, bankruptcy is not a counterbalance for high interest rates! It's a purely pragmatic tool, not a designed p…

I adore your use of a homey saying, it reminds me of Lord of the Rings.
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