A Quote by Muhammad Yunus
Poor people always pay back their loans. [...] It is us, the designers of institutions and rules, who keep creating trouble for them.
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We create institutions and policies on the basis of the way we make assumptions about us and others. We accept the fact that we will always have poor people around us. So we have had poor people around us. If we had believed that poverty is unacceptable to us, and that it should not belong to a civilized society, we would have created appropriate institutions and policies to create a poverty-free world.
If you have loans, the first thing you want to do is say, "Okay, look I have a credit card, if I really need to borrow, I have this emergency money that I can get, but for now there is no reason for me to keep cash at zero percent interest rate and at the same time, pay all of this money out. So, I think people need to figure out quickly how to pay loans and how much cash they should really keep.
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.
We basically built a pricing model that surgically identified what people wanted to pay us for and what they didn't want to pay us for. One of the things we figured out early on was that we could create value for people by creating a product that allowed them to design something that they couldn't design without us.
It's the nature of government, to build enduring institutions, structures that stay long after their purpose is over. If you pay people to help the poor, you have people who won't be paid if there aren't any poor, so they'll be sure to find some.
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.
But credit card debt is unsecured debt, which means if you get in trouble and cannot pay off your credit card, you can discharge it in bankruptcy. What are they going do to you? If you're in a financial position to just methodically pay off both credit card and student loans, pay them all.
We can remove poverty from the surface of the earth only if we can redesign our institutions - like the banking institutions, and other institutions; if we redesign our policies, if we look back on our concepts, so that we have a different idea of poor people.
The Fed needs to adopt new tools, on its own and perhaps in cooperation with the other parts of the US government, to improve the economy from the bottom up. This includes increasing facilities for debt forgiveness for under-water mortgages and excessive student loans; increased credit facilities for small businesses and cooperatives; helping to underwrite mechanisms for creating affordable housing in cities; and more restrictive enforcement of financial regulatory rules to help rein in excessive banker risk and pay.
The federal government requires that its loans be paid back within 10 years of graduation, and Harvard has pegged its loans to the same 10-year timetable. Yet despite Harvard's low default rate, the idea of years of loan debt is daunting for some students even before it's time to pay back.
The purpose of faith isn't always to keep us from having trouble. It is often to carry us through trouble. If we never had any trouble, we wouldn't need any faith.
Basic US economics tells us that back-of-the-house workers are very unlikely to get more pay overall. The fact that workers are in those jobs means employers are already paying them what they need to pay them to get them in the current environment. If employers do share some tips with them, it will likely be offset by a reduction in their base pay.
If there were not derivatives, there would be no bank loans at all today, because people want to get fixed-rate 30-year loans, but banks don't want to keep 30-year loans on their books.
We must fundamentally restructure our student loan program. It makes no sense that students and their parents are forced to pay interest rates for higher education loans that are much higher than they pay for car loans or housing mortgages.
Always, it is the poor people who pay. And always, it is the poor people's women who pay the most.
In order that the revolution should be something more than a word, in order that the reaction should not lead us back tomorrow to the situation of yesterday, the conquest of today must be worth the trouble of defending; the poor of yesterday must be worth the trouble of defending; the poor of yesterday must not be poor tomorrow.
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