Leverage Rich Vs. Poor

Muhammad Yunus of Grameen Bank was asked on CNBC what is so different with micro credit from the current credit crisis that makes it a success. To them Micro credit can also lead to something similar to the current credit crisis. Micro credit gives credit to non-traditional (high default risk) credit seeking people in a more tradition way (the other way for Grameen's customers is to go to Loan Sharks) through Grameen Bank. The current credit crisis is also caused by excess debt taken on by people who do not have a decent income to pay the debt and have bad credit scores.

The host of fast money (true to the Show's name everyone on the show, including the host Dillan Ratigan, speak really fast cutting into each other ever so often), asked the same question to Mr.Yunus (Nobel Prize recipient for his work on Micro Credit). He answered that the Grameen's goal is not to make money out of the loan from the people but to help the people develop self employment. After the interview with Mr.Yunus, the gang on the show was shouting on top of each other that the goal of capitalism is making money and that there is nothing wrong in that thinking. Here is the video of that episode of Fast Money on CNBC.

On a brief thought the Fast Money experts (not so truly experts) appear to be correct. How can the people with no income and no credit history at all be given loans without the expectation of any returns? Would one loan a beggar 10 dollars and expect him to repay the loan? Conventional wisdom says 'NO'. Now replace the beggar with any other human with abnormally low income producing job or one that is struggling to lead a day to day life. To me, day to day life means feeding oneself and his/her family a decent enough meal three times a day. Again, conventional wisdom tells us 'NO'. If we look at the current crisis, people were given loans that at least had some kind of income though they were reported to be earning more than their real income. With this loan they bought homes in anticipation that the home prices will continue going higher for ever and that they (The lender and debt holder) could live happily ever after. But we have seen the credit crisis unfold before us in the last 2 years. So how can we trust someone with one credible source of income, when the smartest loan lenders in US and across the globe failed?

To that traditional thinking if we add the fact that the repayment rate of the micro credit loans is as high as 99.5%. Yes that is a staggeringly high number, a number so high not even the best banks lending to the richest in the world could match. So where is the difference between these two worlds? Mr.Yunus recreated this success over the last three decade or so with his Grameen bank in Bangladesh and around the world.

So we see that both traditional and non-traditional systems lent money to high risk credit seeking people. But one lost a limb and an arm and is still struggling to get up, while the other is walking tall with a aura of improving the human lives and conditions in the remotest and poorest parts of the world.

The Grameen bank was started and still operates with the motto of helping the poor. There is no expectation of a repayment leave alone the expectation of a profit. But to everyone's surprise including the founders, the loans kept being repaid at a high percentage. This micro credit is their only door to a brighter future and they could not risk losing that security blanket by defaulting the loan.To these poor people taking loans, Grameen Bank was their last straw at changing their lives; changing lives where they can have food for themselves and their children, send their kids to school, have a safe roof over their top, clean water to drink.

All these are basic amenities where the lenders and debt takers of the modern rich world are totally unaware of. They were loading themselves with debt beyond their abilities not because they were lacking the basic amenities, but out of greed. They wanted to make a quick buck; they did not want to be left behind in the race. This greed is what caused the leveraging and this greed is what's causing the collapse.

Here is a video of Mr.Yunus on CNBC during the recent economic summit in Davos. Here you can see in the early part of the video that the Brooklyn branch of Grameen has given out loans exceeding million dollars to about five hundred seekers with a repayment rate of 99.5%. The experiment paid off in West as it did in the East. Geography was not a factor in its success.

One question that truly surprised me in that video was 'Who does not have enough food in the world and how do we feed them?' - that is the world some of these people live in, but for millions in the world 'hunger' is a reality and helping these folks gain income producing employment should be the priority. May be it is time to rethink the traditional teachings of modern education and do something on my part towards this cause.

AR Rahman best

In lieu of the 3 Oscar nominations to AR Rahman, I compiled for my colleague at work a list of some of my favourite AR Rahman songs from over a period of time. Here is the list. Click on the song name to open the video in You Tube. The Oscars are live on ABC at February 22nd, 2009 at 8 PM EST.

Rang De Basanti - Roo Ba Roo
Jiya Jale - Dil Se
Taal - Taal se taal mila
Rangeela - Mangta hai kya
Dil Se - Chaiyya Chaiyya
Meenaxi - Chinnamma Chilakamma
Prema Desam - Mustafa Mustafa
Premikuldu - Mukkala Mukkabula
Kadhalan - Urvasi Urvasi
Gentleman - Chiku Buku Raile
Roja - Roja Jaaneman

Ofcourse the latest has to be in the list. So here it is.
Slumdog Milliannaire - Jai Ho

More on my problems with Airports

This is a concluding part of my previous post - Why I hate Airports.

Also one has to deal with one or all of the following people - 1. Indifferent, 2. Meddlesome and 3. Moody. To fully understand my case, I have to explain my recent experience where I had to deal with all three kinds (Indifferent, Meddlesome and Moody) of people and the other baggage (pun intended) that comes with it.

We reached the airport at around 3:00 PM. The sign board at the ramp signaled that the Air India departures were at Terminal B. That was all good. But on reaching the Terminal B, there was hardly any space to stop. Nor was there a sign for Air India on the gates. I saw Jet Airways gate and that is where I decided my stop would be. I somehow found a nook to stop and put my hazard lights on. I unloaded the bags from my car trunk and took them into the terminal to find the Air India gate. I had asked a couple of airport personnel where the Air India ticket counter was. Both of them were indifferent. Finally a third guy responded that the Air India was level 2 and pointed to the right. I thought from his pointing that Level 2 was the far right end of the same floor. As I dragged along, my eyes fell on the elevator and I saw a small yellow sign reading Air India.

Apparently they shifted the Air India to the basement of the airport, I mean Level 2, while all the other airlines were at the main level. I handed over the responsibility of the bags to my wife and headed back to my car to park it. All this while, I was scared of my car being towed away. It had been parked for a long time without anyone in the car.

I drove to the parking lot, took the parking ticket and headed to the Air India check-in counter where my wife and mother-in-law were waiting. The line was huge as always. But in all this chaos I saw a digital weighing machine at the end of the line. There was a row of seats to the left of the weighing machine with two old men sitting. They appeared to be in their mid 60s. A few feet in front of the weighing machine were a few other passengers and their families. I took the bags and placed one bag on the weighing machine. This action of mine somehow generated an extreme interest in one of the old gentlemen. He jumped out of his chair and began to look at what I was doing. He saw the same thing I saw and he quickly blurted out said 52 lbs. He said that to me and his friend who was still sitting. He turned to me and said 'Its OK'. I took the bag off the machine and took it back a few feet where my wife and mother-in-law were standing. I came back with the second suitcase and laid it on the machine floor. This time I saw it as 25. I couldn't believe it. The old man who was still there jumped again and said in some broken Hindi 'I changed it to Kgs. It is now easy for you. 25 may be tough'. I knew that Kgs is short for Kilos or Kilograms.

I am already bothered now by the actions of the old guy. I brought the cabin bag and weighed. The old man said 'It is 8.8 Kgs you should be fine'. My wife took out the heavy hard cover books from both the suitcases. I weighed them again. The meddlesome old man now gave me a pass signal with for 23 and 23.5 Kgs each. I did not know if I was to feel happy for the help or feel aggravated at his meddlesomeness. But I couldn't be distracted by this; I had miles to go before I sleep. Yes, literally I have 125 miles more to go before I really sleep and that was hours away.

We waited in line at the check-in counter. When it was our turn, the guy behind the counter greeted us and told to place one bag on the pedestal to weigh it. I put on of the check-in suticase and for some reason it was already showing 2.0 Kgs and did not change. He rudely says to me in a low voice, 'Can you take it off the machine'. I had him repeat twice to understand what he was saying. I took the bag off and he reset the machine which showed 0.0. I replaced the bag and it read 23.2 Kgs. I was relieved when he took the bag in and said it was ok. The calculator inside was telling me it was overweight by a pound. I placed the second bag and it read 23.8 Kgs. This time also he took the bag in and said it was ok. I was really happy now as I had passed 3 pounds of excess baggage. It was kind of a sweet revenge from my previous experience where I had to pay the fine for excess bag weight.

He seemed to be in a pleasant mood. He silently came close to me said I could put any stuff in the 2 bags that were checked-in if I wanted to. I was surprised at his generosity and asked my wife to hand me the books she was holding, to put them in the bags. Before I could put them, he asked if I had carry-on bag. I said yes and placed that on the scale. It read 8.8 Kgs. He said 'You can put whatever you want in this bag and I will check it in also. You can pick them up at the Mumbai Airport'. I explained this to my Mother-in-law to see if she was comfortable doing that. She said no and wanted to keep it with on the flight. This must have pissed off the guy. He said 'I put the tags to the carry-on bag. Do not ADD ANYTHING to this after you go up. They will check the weight again and fine you'.

I should have noticed the change in his tone and mood. If I had enough Emotional Intelligence Quotient (EQ), I would have known not to bother him anymore and move away from there. But the Indian in me wanted to bargain. I asked if I could put the books for kids (I was using the sympathy bait too) in the already checked-in bags. He said ‘NO, that would make the bags overweight’ and that I had to pay for the excess baggage. Sanity prevailed in me and I took the tickets. We quickly moved away from there to the ticket issuing counter at the left end corner of the room.

From here on, my wife took over. I guess women have a better EQ or others tend to be nice to them. It may be a combination of both. The lady behind the counter was very courteous to us now. My wife even requested an aisle seat for her mom and got it. I am sure if it was me, I would have gotten 'NO AISLE TICKETS FOR YOU'.

So we went upstairs after collecting the tickets and stood in a long line for coffee and some food. For some reason, people go crazy over food in crowded places. It took thirty minutes to get a cup of coffee and Vegetarian flied lice (I mean fried rice) at a Chinese fast food vendor. I had to go vegetarian as it was an auspicious day. We said our goodbyes to my mother-in-law at around 6:30 PM, paid the insanely expensive parking fee ($3 for every 1/2 hour) and headed to the Bridgewater temple, and then reached home at 10:05 PM.

I thought that the ordeal was over. But life of late seems like a day in the movie 'Groundhog Day' where the lead weatherman lives the same day over and over again. I have to make a trip to the airport again this month. Only this time I will be picking a different person, my brother, at a different airport.

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As a side note, there is also a certification in Emotional Quotient. One of my friends recommended Daniel Goleman's 'Emotional Intelligence' which is on my list to read in the future.