A Quote by James Surowiecki
Making loans and fighting poverty are normally two of the least glamorous pursuits around, but put the two together and you have an economic innovation that has become not just popular but downright chic. The innovation - microfinance - involves making small loans to poor entrepreneurs, usually in developing countries.
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The inability of middle-class people to receive loans in developing countries has had a stifling effect on economic growth and prosperity around the globe.
What people do is they pay the small loans first. Why? Because they enjoy making the number of loans smaller. But of course it is a very ineffective way to pay debt down.
If I'm a bank, and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money: in other words, to make highly leveraged loans.
Making loans accessible to millions of the previously unbankable customers is a noble goal. Getting them hooked to such loans isn't.
Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.
Even President Bush has cited the need to outlaw the practice of corporations making loans to their officers. Strangely enough, when the President was a corporate officer, he took out several loans from the company.
Microfinance does not require previous experience or loans to the same extent as a small-business loan, so it's easier for women to enter the micro sector.
Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.
Two words guided the making of 'Babel' for me: 'dignity' and 'compassion.' These things are normally forgotten in the making of a lot of films. Normally there is not dignity because the poor and dispossessed in a place like Morocco are portrayed as mere victims, or the Japanese are portrayed as cartoon figures with no humanity.
Because its purpose is to create a customer, the business enterprise has two - and only these two — basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are 'costs'.
Kaizen and innovation are the two major strategies people use to create change. Where innovation demands shocking and radical reform, all kaizen asks is that you take small, comfortable steps toward improvement.
Innovation basically involves making obsolete that which you did before.
Imagine you have six loans, small to huge. People want to close loans and because of that, they try to pay off the small loans, but that's not the right strategy. The right strategy, of course, is to pay the loan with the highest interest rate. People make this mistake and it costs them lots and lots of money, it's a very expensive mistake because interest rates accumulate and become very, very expensive very quickly.
A world where wages no longer rise still needs consumers. Middle-class purchasing power has been maintained through loans, loans and more loans. The Calvinistic reflex that you have to work for your money has turned into a license for inequality.
Our focus is more on secured retail business like housing and car loans. While we will do some unsecured loans - credit cards and personal loans - we will do it primarily with existing customers.
Payday loans are but one of many financial techniques - from overdraft fees to student loans subsidizing for-profit colleges - specifically designed to pull money from the pockets of the poor. This problem generally goes unrecognized by policy makers.
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