Be a banker to the poor

wolfbear wrote:

Ok, agree with you again somewhat. But you're comparing government loans to private loans, not a far comparison. Private loans are free market where government ones are not. I will put my money on people not government any day.

ugh.
This is not free market.
This is freedom to do what you want to do.
But it isn't free market.
Its people handing out free loans through a non-profit,
decidedly not free-market.

When Habitat For Humanity builds someone a house and just gives it to them, is it "Free Market"? It's not the government, so, going by your singular critera of "it's not the government" it must be.

I'm telling you, we do LOTS of things in the US and in "capitalist" societies around the world that aren't 100% "free market", and this is 100% NOT in the spirit of such an idea.

But i agree with you SOMEWHAT.
I'll take the people over the government ANYDAY.

hippiemom wrote:

According to the FAQ on the Kiva site, there is no return on the investment. Your loans are also not guaranteed, although approximately 97% are repaid in full.

EDIT: I rushed through that section and misread it. 97% of microfinance loans worldwide are repaid in full. Currently, 100% of Kiva's loans have been repaid.

I'm definitely going to do this. Instead of a charitable contribution that I would otherwise make, I can put the same amount of money here and keep using it over and over again.

Wow - I wonder if I can apply for the no interest loan!

(it does sound like an intriguing idea, though)

hippiemom wrote:

I posted this back in March, and have made several loans since then. The first two were repaid in full yesterday, so I thought this would be a good time to bump the post for those who may have missed it the first time around.

I've already lent out the repaid funds to new borrowers, so it just keeps on giving

wow, I'm just seeing this now and I absolutely love the idea

i'm poor!!!! send me money!

thanks

Heineken Helen wrote:

and indeed in those cases where they ARE going through a field partner, they DO actually pay interest to them Average interest rate that somebody else gets on our money (not the receiver of the loan) is 20%

http://www.kiva.org/app.php?page=about&action=aboutPartner&id=30

'The self reported average, annualized, flat interest rate in real terms charged by the Field Partner to the enterpreneur. Note that Kiva.org does not currently take a cut of the interest rate charged by Field Partners and instead relies on an optional lender fees/donations to help pay for running our website (small core staff, rent, servers, etc).

If the Field Partner interest rate seems high, consider the following:

Field Partner interest rates are a highly affordable alternative to the local money lender


Local money lenders - often the only option for poor entrepreneurs to get a loan - charge interest rates ranging from 60% to 800% annualized.
A poor entrepreneur can generate greater benefits from additional units of capital than can a highly capitalized business, because she or he begins with so little.
According to the World Bank, studies covering India, Kenya, and the Philippines found that the average annual return on investments by microbusinesses ranged from 117 to 847 percent.
The costs of making a micro-loan in the developing world are higher versus larger loans in the West.


Cost of screening - Field Partners must screen entrepreneurs who commonly have no credit history, no collateral, are frequently illiterate, and often live in remote areas. To responsibly assess the credit worthiness of each entrepreneur, the cost is higher than the West where most everyone has a credit score and screening / loan application can be done electronically.
Cost of in person collections - Field Partner staff typically travel to each entrepreneur on a monthly basis to make collections. Compared to the West, where mail and internet repayments are standard, the costs are higher.
Cost as a size of the loan - If the Field Partner's actual cost per loan is $25, the percentage cost is 0.25 percent for a $10,000 loan, but 25 percent for a $100 loan.
Field Partners must charge an interest rate that allows them to pursue their social impact agenda sustainably.


In order for Field Partners to reach more of the poor with relatively low interest loans (vs. local money lender), they need to cover their costs.
Given the higher costs of microloans discussed above, Field Partners must charge a sufficient interest rate.
Kiva aspires to provide transparency around the social impact and relative Field Partner interest rates in order to ensure to reward Field Partner that successfully create social value while lowering their costs to do so. '

Sorry.
That just nailed it in the coffin for me.
THIS IS CRAP.

Someone is RAPING these people at 20 FUCKING PERCENT !?!

The person actually providing the funds gets JACK SHIT ... in fact, if you keep it on your card you are probably PAYING 9-28% depending on how shitty your credit card rate is.

SO ...

to recap ...
most of these loans, through a field partner ...
COST YOU 10-20% ON YOUR CREDIT CARD
EARN SOME BANKER FUCK 20% ON YOUR LOAN.

NET SUM FOR THE BANKER PIGS:
30-40% !

Think of it that way!

:( :( :(

If someone REALLY wanted to pull this idea off the "honest" way, you would say "fuck it with the "credit checks and field partners" ... do an Ebay type rating system where these people some how get commented on by other user-lenders ... "i lent him $25 and he has been paying steady, highly recommended" ... get other local indigents on the take for dollars a month (probably a huge salary for them) and have them scout out other worthy loan recipients. Hell set up a store and staff it in all these regions with locals, call it "Loans R Us" and let em walk in and apply ... it shouldn't cost 20 goddamn Percent.

or just suck it up, and acknowledge that lending small amounts to indigent folks is small potatoes, and who gives a fuck if you get your $25 back ... but the USER\LENDER would make 7-15% and NO ONE ELSE GETS RICH ... the site gets its money through advertising, good will, donations ... what ever ... but THE INDUSTRY IS FUCKING YOU ON THIS!

I'm sorry.
I can't support this idea, knowing that some "Field Partner" is pulling in 20 goddamn Percent on this! AND you are forced to use a credit card at an interest LOSS with NO upside AND its done all under the implicity grounds that the loan is ZERO PERCENT, even though the fine print states FAR TO THE CONTRARY!

It's absurd!

DriftingByTheStorm wrote:

get other local indigents on the take for dollars a month (probably a huge salary for them) and have them scout out other worthy loan recipients. Hell set up a store and staff it in all these regions with locals, call it "Loans R Us" and let em walk in and apply ... it shouldn't cost 20 goddamn Percent.

that's quite a good idea... he/she could also be someone you could donate to... like the way kiva runs on donations directly to them rather than a cut of individual donations.

DriftingByTheStorm wrote:

I'm gonna ammend this post to keep it short and keep the flames down.

1. I think it sucks that they only accept "loans" in the form of CREDIT CARDS.
It fucks the lender, by forcing them to MAKE INTEREST PAYMENTS on a loan, of which they receive NO INTEREST.

2. I think it is funny that YOU can not make any money, but the guy who is running this gets a salary. Infact, everyone on staff is getting paid, i imagine.

3. I think they would get a LOT more lenders if they would just charge even some token interest to these people. Say 3%

4. I think this system errodes the free market on some level.
If you think about it, for every person out there on this site getting a 100% subsidised NO INTEREST loan, there is another guy out there somewhere who didn't get on this site, who is trying his damnedest to get a loan like every other honest joe in this world, and HE IS NOW AT A SEVERE DISADVANTAGE because YOU gave the OTHER guy a FREE LOAN!

Just think about it.

Is THAT fair?

I dunno.

:(

1. why would you pay any interest? either you use a Debit Card (or whatever they're called where you are) or you pay off your CC in full each month.
if you're in CC debt, you probably shouldn't lend out money to someone else anyway..
you say somewhere else: Even if you are paying off your card in full, you are still losing the "Time Value" of your money.
I use CC to actually GAIN time-value...it's in effect a very short-term (few weeks) loan if you repay in full every month.

2. do YOU work for free?

3. that would help, but it's complicated tax-wise, especially as it's cross border.
I see the system more as a charitable fund to which one does not have to add all the time..

4. :rolleyes: free market is a myth! if it existed there's be no trade barrier or import duty and no financial regulation whatsoever...that'd be called Anarchy actually!

Pegasus wrote:

I can't believe you can be so stupid!

first you complain how lending without interest is wrong for the 'economy', then when told that in fact there's an interest, you rave it's unfair?!?

and drop the Credit Card..if you're dumb enough to pay that kind of rates to your bank, you shouldn't be lending money to anyone.

lastly, how, do you think regular bank lend money? they use the one you have in your accounts ..therefore making interest out of YOUR money without giving it to you..
:rolleyes:

1. Drop the personal attacks. I'm not stupid, and you don't need to go flinging insults to get your point across.

2.

a) Yes, i complained that not charging intrest would not be fair. it wouldn't, see above for that explanation.

b) Yes, i am NOW complaining that 20% is TOO much.
Here is the problem, if they came out and said straight up, "you lend money, WE charge 20% on YOUR money" i wouldn't have a problem. but the average joe is being CONNED, yes CONNED, in to believing that they are lending out their money for free. Instead you are lending YOUR money to a banker for free and he is turning around and lending it out to some poor fuck for TWENTY PERCENT? All, again, under the guise to YOU the real lender, that your loan was "free" ... That is what is stupid.

3. Yeah. Bankers take your money "on deposit" and lend it out. It's called fractional reserve banking and it has been to blame for just about every major economic problem in the modern era. The inherent problems (short term liquidity) with fractional reserve banking are the very reason 7 super-rich assholes got togeather to form the Federal Reserve System in America in the first place. I completely disagree with it. Before the Reserve was set up, banks were losing money ... why? Because tight lending policies were causing businessmen to SAVE and use CAPITAL to expand ... i'd rather see the world tighten it's belt and run on real wealth rather than spend money that doesn't exist and cause potentialy catastrophic events to occur at the expense of the people all while the banks are raping the world. Don't think it costs the people any money? Of the over $9,000,000,000,000 in Federal Debt, about $1,400,000,000,000 is a result of the Savings and Loan "scandal" alone ... i say "scandal" because it was NOT, it was a government BAIL OUT for no reason other than they promised to BAIL OUT! Just like the FDIC and the FRS. Think about it, at LEAST 1\8th of the federal debt is directly related to bad banking practice. The truth is about another 40% is DIRECTLY the responsibility of the FRS in the first place. But that's another story.

Whatever. It sounds like YOU are the one who could use some brushing up on "modern economic theory" and the truth behind those "theories" ... the truth that the only person winning at the end of the day is the ultra-rich banker fuck ... even little banks can't compete any more. Why? Because the Federal Reserve System makes it patently unfair to the little guy.

So whatever.
Yeah, i think it's crap that this site comes off as you giving money for free to someone, but the reality is the banking industry is making between 15 and 40% at the end of the day.

And my credit score is 800+ and my card rate is 7.99%
I'm not stupid, go insult someone else!

Pegasus wrote:

the WHOLE lending principle, in any shape or form, relies on the system I described. apart from 1-1 borrowing, there's no other way it can work.

I like how you state the alternative, and then gloss over it.
The whole lending system in CURRENT shape and form relies on the pyramid scheme you implied. See bolded section for an alternative.

Pegasus wrote:

Banking crisis comes from bad lending[...]that's the only way a bank can lose money.

Bullshit. This is outright rubbish.
In fact, you only have to look to the ten years preceding the meeting at Jekyll Island (1900-1910) to tell you otherwise.

In those ten years banks were going insolvent at some alarming rates, and it had NOTHING to do with bad debt. The economy was actually doing amazingly well. The only problem the banks were having is that they were LENDING TOO MUCH, and they HAD NOTHING HELD IN RESERVE. Ok, relatively nothing ... i mean, when your outstanding liabilities outpace your assets to cover by a margin of 300-33,000% ... yeah 33,000% ... you are doomed for disaster ... that's what happens when you take ONE dollar in deposits, loan out 10 on that 1 and then take that 1 and reinvest 98 cents of it ... you are left with 2 cents to cover 10 dollars ... THAT IS WHAT THE BANKS DO!

THAT is why they used to go broke ... NOT BAD DEBT ... it was simple insolvency due to liquidity that arose directly from over extending their credit lines!

THAT is why the Federal Reserve was created in America.
That is EXACTLY why we have the current system... so BIG banks can be as wreckless as they want, and their stupidity will be covered with the backing of someone ELSES liquidity ... and then if everyone is playing stupid ... Uncle Sam will step in and fuck the tax payer with inflation (ie printing more worthless trash)! You need to read up on the history of this shit. It's scary.

Pegasus wrote:

principle is sound,

Uh.
Negative, ghostrider.
Go back and read from the top.
Yikes!
You think having a dollar that is worth 8 CENTS on it's original basis is SOUND !??!

Pegasus wrote:

it's the greed of the banks (and their shareholders) that screws it up.

Well, i guess you got that part right.
This is like calculus ... you got the right answer, but the wrong math to back it.

The greed of the banks is INHERENT in the current system. The Federal Reserve System ENCOURAGES banks to be wreckless ... in FACT, if you AREN'T being wreckless with your lending, you are LESS likely to stay in business.

Why?

Because some other giant bank (JP Morgan Chase, or Citibank, perhaps !?!) that knows the rules (probably because their founding fathers INVENTED the rules on Jekyll Island in 1910) will use them, just as they were intended to be used.

Namely: LEND LEND LEND.
LEND TO THE BIGGEST HIGHEST INTEREST (read: RISKIEST) BORROWER YOU CAN FIND -- the Federal Government is always a SURE bet --

then, when the borrower is nearly broke, right off the loan as a loss?
Oh wait, no ... LEND THEM SOME MORE ... that's right ... ROLL IT OVER ... Federal Government Debt anyone?

Hell, LEND THEM TWICE AS MUCH!
Give 'em half to pay you interest, and half to spend more on themselves.

Then 10 years later when they are flat broke again (Federal Government?) LEND THEM DOUBLE OR TRIPLE and EXTEND THE TERMS OF THE LOAN

(hey, how would you like this as a private citizen: Oh Mr. Smith, having trouble paying your 500K home mortgage at 6% for 30 years? Oh, alright, we will refinance at 600K and put 100K in your pocket and finance the whole thing at 10% for SIXTY years!)

THAT is why banks get in "trouble".
Except, that TODAY ... THEY DON'T GET IN TROUBLE.
[unless you are a small bank lending to the common man. then uncle sam tells you to fuck off. you aren't "essential" to the system, and are expendable. only when you are one of the big boys do you get the bailout!]

They take their borrower up to Capitol Hill -- Chrysler, Penn Central [yay, we got AMTRACK out of that bullshit!], Lockheed Martin, etc -- and the banks AND their borrower PLEAD TO CONGRESS -- Oh Please Uncle Sam ... If you let us both go bankrupt, the American people will suffer ... 20,000 jobs will be lost and the Country will NEVER be the same ... YOU HAVE TO BAIL US OUT! PRINT MORE MONEY, AND GUARANTEE ME THESE LOANS ... HELL, MAYBE YOU COULD TRADE ME SOME OF MY SHITY LOANS FOR STOCK IN MY SHITY COMPANY !?!?

Grrr.

Ron Paul Learns Yuns Some