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Could microlending develop the world? · Stuff You Should Know

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  Speaker 1: Brought to you by the reinvented two thousand twelve Camray.
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  Speaker 1: It's ready. Are you welcome to Stuff you Should Know
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  Speaker 1: from House Stuff Works dot Com? Hey, and welcome to
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  Speaker 1: the Josh and Chuck Electric freak Out featuring the Matt
• 0:20
  Speaker 1: guest producer Mad and standing in. You may also know
• 0:24
  Speaker 1: it as Stuff you Should Know Matt of Lions and
• 0:26
  Speaker 1: Scissors and Playing Soon. They have a MySpace page Red Chuck. Yeah,
• 0:32
  Speaker 1: we plugged it before. Yeah, so we're not doing again,
• 0:34
  Speaker 1: which I think we just did that, buddy. That's all right, Chuck. Um.
• 0:38
  Speaker 1: I don't know if you're paying attention or not, but
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  Speaker 1: the United States pretty much dominated the twentieth century and
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  Speaker 1: every way you can see what USA USA exactly that
• 0:47
  Speaker 1: that was chanted quite a bit. Remember Rocky Oh yeah,
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  Speaker 1: beat the Russian guy? Yeah? Um that was just one
• 0:54
  Speaker 1: accomplishment of minute four five Rocky four right. Um? So yeah,
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  Speaker 1: we we uh successfully fought just about every war we
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  Speaker 1: engaged in. Our economy just thrived. Did you know that
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  Speaker 1: the per capita GDP and nineteen hundred for the United
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  Speaker 1: States was four thousand, ninety six dollars? Not bad by
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  Speaker 1: nine It was nine thousand six hundred seventy one dollars
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  Speaker 1: doesn't seem like that much of an increase. I think
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  Speaker 1: about the population increase. So actual g d p UH
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  Speaker 1: in nineteen hundred was twenty eight point six billion dollars.
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  Speaker 1: In nine it was nine point to six eight trillion dollars. Yeah,
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  Speaker 1: So basically we rocked the hissy during the twentieth century.
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  Speaker 1: Right now it's two thousand nine. We're engaged in land
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  Speaker 1: wars with insurgent groups in Iraq and Afghanistan, and I
• 1:48
  Speaker 1: guess you could replace engaged with mired maybe. Um, the
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  Speaker 1: the dollar is being abandoned or considered being abandoned as
• 1:57
  Speaker 1: the universal currency in favor of a back skit of currencies,
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  Speaker 1: which spells trouble at cornucopia. Yeah, that's another way to
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  Speaker 1: put it, buddy, uh. And our housing market caused a
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  Speaker 1: worldwide financial collapse, so America is not quite as bright
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  Speaker 1: as we used to before. We get tons of emails
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  Speaker 1: saying it wasn't just that it was um with it.
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  Speaker 1: So this is this has caused a lot of people
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  Speaker 1: to wonder whether the turn of the twenty one century
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  Speaker 1: was actually the end of the American century, you know,
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  Speaker 1: especially with the rise of Brick, Brazil, Russia, Indian, China,
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  Speaker 1: and specifically India and China. Their enormous development has made
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  Speaker 1: people think, well, China is the next United States. Right, Well,
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  Speaker 1: I know everyone always thinks that it's hard to not
• 2:45
  Speaker 1: be in the moment and realized that the greatest civilizations
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  Speaker 1: always fall at some point. Sure, it's gonna happen. I mean,
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  Speaker 1: it may not be anytime soon, but fast forward a
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  Speaker 1: thousand years and America might be a barren waste land
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  Speaker 1: like the Matrix or something was there? Was it a
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  Speaker 1: barren waste lane. I don't remember when he showed him
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  Speaker 1: on TV and it was this, you know, destroyed Madison
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  Speaker 1: with the general consent. This is the real world, that's right, Yeah, yeah, yeah, yeah. Anyway, Um,
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  Speaker 1: but we'll well, we'll have our day. I say, I'm
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  Speaker 1: with you. I say that the United States century, the
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  Speaker 1: American century, is not over yet. I agree. And the
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  Speaker 1: reason why is I think that during the twentieth century,
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  Speaker 1: the American dream this this idea that everyone has an
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  Speaker 1: equal shot at um pursuing his or her own goal
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  Speaker 1: under the free market capitalist system, which is not true,
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  Speaker 1: but it's a nice thought, I think. But I think
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  Speaker 1: that thought the American dream, whether it's possible to realize
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  Speaker 1: it or not, was so successfully packaged that it was
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  Speaker 1: able to be exported to the rest of the world.
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  Speaker 1: That kind of caught up. Have you ever heard of
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  Speaker 1: Thomas Friedman's Golden Arches theory of conflict prevention didn't have
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  Speaker 1: to do with McDonald's. Yeah, then I have heard of it.
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  Speaker 1: So yeah, the the the back four I think the
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  Speaker 1: Balkan War, uh no, two countries that both had a
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  Speaker 1: McDonald's engaged in armed conflict against one another after the
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  Speaker 1: point that both of them had the McDonald's until until
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  Speaker 1: the Balkans because they were pretty stoked about their fries
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  Speaker 1: and their big Max. You could say that. You could
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  Speaker 1: also say that cause correlation does not prove causation. But
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  Speaker 1: still it's pretty interesting and it makes a good point
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  Speaker 1: that it's a symbol actually more than anything. It is
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  Speaker 1: just like a coke machine. Like you can find coke
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  Speaker 1: machines in the most remote countries areas of the world,
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  Speaker 1: and you can say that that's basically your exporting democracy
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  Speaker 1: through successful capitalism, right, happy juice. That's also going on
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  Speaker 1: right now, that that continued export um with this thing
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  Speaker 1: called micro lending that's the longest s up we've ever done. Yeah,
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  Speaker 1: but dude, it was good. Yeah, micro lending is pretty cool.
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  Speaker 1: It's a good article, dude, Thank you, well done. Thanks
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  Speaker 1: a lot, buddy. So Josh, as you know because you
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  Speaker 1: wrote it. Micro lending doesn't necessarily refer to the size
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  Speaker 1: of a loan. It's not necessarily itty bitty loans the
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  Speaker 1: size of the loan. It's how you use it, right,
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  Speaker 1: It's a that's actually very true. Thanks. Um. It's uh.
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  Speaker 1: It refers to the the qualifications of the borrower, right,
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  Speaker 1: although it usually is a small loan. Right. One of
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  Speaker 1: the big flaws in that American dream, that capitalist free
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  Speaker 1: market system where supposedly everybody has an equal opportunity at
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  Speaker 1: obtaining success that their own hard work, is that you
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  Speaker 1: usually need startup capital. Right, even if you're selling hot
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  Speaker 1: dogs on the street, you gotta buy the car. You
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  Speaker 1: gotta buy the dogs. Like my bloody Mary stand last
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  Speaker 1: year at the golf tournament. I was not there for that.
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  Speaker 1: I invited. I had to to my front yard. I
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  Speaker 1: had to invest in the Oh yeah, that's the one
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  Speaker 1: where the cops came and busted it up. I lost
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  Speaker 1: all that money that I invested in the bloody Mary.
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  Speaker 1: That's what happens when the fuzz turns up. But startup cost, sure, yeah,
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  Speaker 1: the thing is is where do you go for startup costs?
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  Speaker 1: Generally go to a bank, and well, banks are run
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  Speaker 1: by capitalists themselves. They're looking to turn a buck, of course,
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  Speaker 1: so they have certain criteria that people have to meet
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  Speaker 1: to to to be accepted for a loan application, right, right,
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  Speaker 1: So the problem is is that there's huge masses of people,
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  Speaker 1: generally the working poor, who are usually excluded from this.
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  Speaker 1: They don't have collateral course not um, they might not
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  Speaker 1: have an education to back up this entrepreneur, probably credit
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  Speaker 1: history or loan history. So they're not meeting the criteria,
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  Speaker 1: they can't get the loan, and therefore they can't obtain
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  Speaker 1: self sufficiency through their own hard work or achieve the
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  Speaker 1: American dream. It's a it's a flaw, it's a caveat
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  Speaker 1: to that that system. Right. So what micro lending does
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  Speaker 1: is it kind of fills that gap between these excluded
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  Speaker 1: groups and self sufficiency by loaning to people who I
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  Speaker 1: put it in the article that traditional lenders would consider
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  Speaker 1: are are mindlessly risky. You know, these loans are mindlessly risky.
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  Speaker 1: That's why a dude like Muhammad units Is deserve the
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  Speaker 1: Nobel Peace Prize. Yeah. Time you News is a Bangladeshi
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  Speaker 1: economist who founded this micro lending institution called the Gramin Bank.
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  Speaker 1: Can I read his quote? Yeah? I love it, man,
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  Speaker 1: it's inspiring. Uh. He said, if banks lent to the rich,
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  Speaker 1: I lent to the poor. If banks lent to men,
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  Speaker 1: I went to women. If banks required collateral, my loans
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  Speaker 1: were collateral free. Here's your Nobel Prize. He also lent
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  Speaker 1: to the illiterate by by not having too much paperwork
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  Speaker 1: and poverty rural areas, rural areas where there were no banks.
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  Speaker 1: I mean, like, think about how little access you have
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  Speaker 1: to start up capital if there's no bank anywhere near you.
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  Speaker 1: So he sent people out to these villages to sign
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  Speaker 1: people up for loans. Um. And he did it pretty aggressively,
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  Speaker 1: but aggressively in the favor of these other people, rather
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  Speaker 1: than aggressively to make money himself. Um. So he found
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  Speaker 1: Gramin Bank, I think in the nineties, and it's actually successful. Yeah.
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  Speaker 1: I love the business model. It's so cool. Yeah, just
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  Speaker 1: the whole thing you point it out about the what
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  Speaker 1: he counts on to get the loan repaid is um
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  Speaker 1: almost like honor. It is in traditional societies. There's a
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  Speaker 1: lot of there's a lot at stake with a good name,
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  Speaker 1: and when you borrow money, you're putting your good name
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  Speaker 1: on the line, which is how you got the money
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  Speaker 1: in the first place, usually your family name. So if
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  Speaker 1: you don't repay it, you're basically knowing your your whole
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  Speaker 1: family's image. Right, so that no, it's people'll be like, hey,
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  Speaker 1: thanks for the money, so long chump. Yeah. Um, So
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  Speaker 1: they use social pressure, the traditional social pressures that are
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  Speaker 1: already in place to ensure loan repayment, right, which happens
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  Speaker 1: on a weekly basis. Is that correct? Yeah, people make
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  Speaker 1: weekly repayments because it's usually much more affordable. And the
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  Speaker 1: do the bankers on bikes. I love that these guys
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  Speaker 1: ride around bicycles and visit them and they give them,
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  Speaker 1: you know, their little payment for that week. Yeah. They're
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  Speaker 1: they're collection agents and they'll have maybe several in each village. Right. Ever,
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  Speaker 1: so these people are also these people's neighbors. But they're
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  Speaker 1: not like threatening collection agents, not necessarily. I don't think
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  Speaker 1: with Gramming Bank it's very threatening. Um, but yeah, So
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  Speaker 1: imagine a guy who's a collection agent that's also your
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  Speaker 1: neighbor who works for a lending institution that you borrowed from,
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  Speaker 1: showing up at your front door every week in a
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  Speaker 1: society where you're good names on the line, you're gonna
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  Speaker 1: make those repayments. And it's successful. Actually, um, not just
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  Speaker 1: Gramming Bank, but across the board with micro lenning in general.
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  Speaker 1: They have a ninety seven percent rate of repayment, which
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  Speaker 1: is which seats traditional banks. It's proof that it works.
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  Speaker 1: It is proof that it works at the time. So
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  Speaker 1: let's talk about how it works. The you know, Gramming
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  Speaker 1: Bank and other micro lending institutions aren't running around and
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  Speaker 1: just grabbing like you know Pedro and and um Showshana
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  Speaker 1: off the street. These are just two names that came
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  Speaker 1: up with about searching. They don't grab them and and
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  Speaker 1: say hey, here's some money, take some money. You know,
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  Speaker 1: these people actually have to have you know, business plans
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  Speaker 1: or at least ideas of what they're going to use
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  Speaker 1: the entrepreneurs without an opportunity basically, and so what it
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  Speaker 1: is is they're funding people in developing countries, which, as
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  Speaker 1: I said before, is kind of an extension of the
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  Speaker 1: entrepreneurial spirit that the US has founded on, and it's
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  Speaker 1: happening overseas now, right, spreading a little bit a bit
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  Speaker 1: of that capitalist love worldwide, which is love love. So Chuck,
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  Speaker 1: like I said, let's talk about how it works. If
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  Speaker 1: you wanted to go and and and make a loan,
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  Speaker 1: how would you do this? Would you go to Gromming Bank,
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  Speaker 1: fly to Bangladesh, go here's some money, give this to
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  Speaker 1: this person. You need to get alone and get the
• 10:31
  Speaker 1: plane ticket though, right, yeah, now you would go online.
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  Speaker 1: Um is one way to do it. And I like
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  Speaker 1: the model used that. Well, there's two ways. There's the
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  Speaker 1: not for profit model, in the in the profit model.
• 10:41
  Speaker 1: But should we talk about kiva dot com first? Yeah,
• 10:43
  Speaker 1: that's a good one. That's the not for profit model, correct, right,
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  Speaker 1: And basically you you will present your business plan as
• 10:50
  Speaker 1: an applicant UH from places like Lebanon, Tatzikistan, Molly, all
• 10:57
  Speaker 1: over the place, all over the place. Nicaragua has a
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  Speaker 1: lot of people on there. And then there's users on
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  Speaker 1: the other end that that sign up and actually contribute
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  Speaker 1: toward this loan UH and good faith that you have
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  Speaker 1: a ninety seven percent chance of getting your money back
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  Speaker 1: with no profit attached. But it's it's a good will
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  Speaker 1: gesture and basically they people contribute as little as twenty
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  Speaker 1: five dollars until that loan amount is uh full. Right,
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  Speaker 1: So it'll be like you know, somebody's picture, and then
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  Speaker 1: like the name of their business, and then like what
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  Speaker 1: their business does. It's like adopting a person in a
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  Speaker 1: foreign country, very much like that actually, and you're kind
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  Speaker 1: of you're kind of adopting their business temporarily, right. So,
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  Speaker 1: so it'll also have a description of what they plan
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  Speaker 1: on using that specific loan for. Right, So it'll be
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  Speaker 1: like maybe purchasing timber for resal er um, purchasing agricultural
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  Speaker 1: supplies like seed or whatever. Um, And it has like
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  Speaker 1: a little bar and it has the loan amount, the
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  Speaker 1: total what they need at the end, and then it
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  Speaker 1: will fill up as people contribute, So a lot of
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  Speaker 1: different people can contribute to a single loan. Then it
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  Speaker 1: reaches add percent. And in a lot of cases that
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  Speaker 1: a site like kiva um will use a third party
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  Speaker 1: lending institution like maybe Gromming Bank in Bangladesh, but a
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  Speaker 1: local community bank usually actually issue the loan, right, Yeah,
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  Speaker 1: you can't just send him a check because they wouldn't
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  Speaker 1: have anything to do. You know, sometimes they do. Sometimes
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  Speaker 1: some some sites actually do issue um these loans themselves,
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  Speaker 1: but for the most part, they'll they serve as a
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  Speaker 1: intermediary between you or I who's contributing our money and which,
• 12:30
  Speaker 1: of course which we could though, I'm just kidding. Um.
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  Speaker 1: And actually, the cool thing about Kiva is that you
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  Speaker 1: can contribute as little as twenty five bucks. I'm gonna
• 12:39
  Speaker 1: sign up for this and also check. They have gift
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  Speaker 1: certificates too, So the cool thing about the gift certificate
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  Speaker 1: is is like, let's say you give a gift certificate
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  Speaker 1: to me, and what you've done is you've made it.
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  Speaker 1: You bet her do this. Um, you've contributed twenty five
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  Speaker 1: bucks basically in my name to this this Whoever's business
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  Speaker 1: in Nicaragua. Yeah, and I get the bucks back, I
• 13:05
  Speaker 1: don't think so, Okay, if you do your cheap bastard um.
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  Speaker 1: The distinction is that you don't get any extra money back. Well, no,
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  Speaker 1: there's no interest return on your investment. No there isn't.
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  Speaker 1: But these people are paying interest the average uh, the
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  Speaker 1: average interest on a micro loan worldwide. It's about does
• 13:26
  Speaker 1: that just keep the whole thing afloat is that what
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  Speaker 1: they use that money for. Supposedly. We'll get to that
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  Speaker 1: in a second, because there's actually criticism of micro lending,
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  Speaker 1: believe it or not. So that's the not for profit
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  Speaker 1: when it's really just a socially responsible investment where you
• 13:39
  Speaker 1: can usually expect to get your full amount back but
• 13:41
  Speaker 1: not any interest. Then there's the for profit model, right yes,
• 13:45
  Speaker 1: like micro place dot com that's pretty much the that's
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  Speaker 1: on par with Kivas like those are the two big
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  Speaker 1: micro lending sites. And this isn't a bad thing because
• 13:54
  Speaker 1: people are trying to make a profit and it still
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  Speaker 1: works out great. They get their money and um, you
• 13:58
  Speaker 1: can get a yield as high as five percent it
• 14:00
  Speaker 1: which I was reading an article and some guy was saying,
• 14:02
  Speaker 1: compare that to c ds. You know, you you get
• 14:05
  Speaker 1: a CD. That's that's giving you three percent interest. You've
• 14:08
  Speaker 1: got a great CD right there. And a CD doesn't
• 14:10
  Speaker 1: give some poor Bangladeshi a leg up, No, it doesn't
• 14:13
  Speaker 1: his petticab business, although there are If you have UM
• 14:16
  Speaker 1: four oh one k and you start looking around, more
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  Speaker 1: and more investment banks are creating mutual funds that loan
• 14:22
  Speaker 1: to micro lenders like grab me bank, that kind of thing.
• 14:26
  Speaker 1: A personal story about this, actually, I want to hear it. Buddy.
• 14:28
  Speaker 1: You didn't know this, did you. I worked on a
• 14:31
  Speaker 1: I did a voiceover for a friends documentary he did
• 14:33
  Speaker 1: about the tsunami survivors and he works for a nonprofit
• 14:37
  Speaker 1: agency like missionary work type thing, and I did the
• 14:41
  Speaker 1: narration for it. And one of his uh, one of
• 14:44
  Speaker 1: the guys he focused on like four different stories. One
• 14:46
  Speaker 1: of his stories was a guy who had a petticab,
• 14:48
  Speaker 1: you know the little bicycle cabs, and he got a
• 14:51
  Speaker 1: micro loan I don't remember who it was from after
• 14:53
  Speaker 1: the tsunami to buy a second and third petticab, and
• 14:57
  Speaker 1: then the money he got from that, he opened a
• 14:59
  Speaker 1: little or like a little small hut store. But the
• 15:02
  Speaker 1: dude was able to build a house and like restart
• 15:04
  Speaker 1: his family has lost his whole family. He met another
• 15:06
  Speaker 1: woman and they ended up having kids and just like
• 15:09
  Speaker 1: the coolest story. And I don't think he had to
• 15:11
  Speaker 1: borrow more than like a hundred bucks or something. Man, Well,
• 15:15
  Speaker 1: that's that's a point. Actually, um bucks. I think in
• 15:19
  Speaker 1: the article I compared it to the the Peruvian sola
• 15:24
  Speaker 1: um so twenty five bucks. On August two thousand nine,
• 15:27
  Speaker 1: when I wrote this article, the exchange rate was I
• 15:31
  Speaker 1: think seven U s dollars to seventy three Peruvian soul as, right,
• 15:36
  Speaker 1: So I mean if you if if somebody gets a
• 15:38
  Speaker 1: thousand dollar loan, that's almost three grand and soul as,
• 15:42
  Speaker 1: which that's a that's a ton of cats. You can
• 15:43
  Speaker 1: buy a lot of timber in petticabs. I have a
• 15:47
  Speaker 1: personal story about micro lending. Really, I borrowed some money
• 15:50
  Speaker 1: from my dad once and I still have an outstanding balance.
• 15:54
  Speaker 1: Is how your leg is broken? Yeah, well my thumb.
• 15:56
  Speaker 1: And that's funny. You should bring that up, my friend.
• 15:58
  Speaker 1: That was a great set up. You may notice that
• 16:00
  Speaker 1: this is actually it bears a striking resemblance to loan sharking,
• 16:04
  Speaker 1: which still exists in a lot of countries. And actually
• 16:07
  Speaker 1: I read that micro lenders are starting to give loan
• 16:10
  Speaker 1: sharks a run for their money because there is no
• 16:12
  Speaker 1: attendant threat of violence driving the amount of business, and
• 16:15
  Speaker 1: their interest rates are much much lower. Yea, what is it?
• 16:18
  Speaker 1: I looked it up. Actually I couldn't find what a
• 16:20
  Speaker 1: loan shark rate might be. Oh often like a thousand
• 16:23
  Speaker 1: percent three Yeah, just astronomical amountain. Yeah, and you you
• 16:28
  Speaker 1: will have your legs broken. Yeah, yeah, they don't. You
• 16:31
  Speaker 1: know Mohammed Unus he won the Nobel Peace Prize. He's
• 16:34
  Speaker 1: not really into late breaking, I don't think anymore. And
• 16:37
  Speaker 1: you can tell look at him. Did you see him
• 16:39
  Speaker 1: in the article. He's got his little Nahru jacket on
• 16:41
  Speaker 1: and he just looks like, you can trust me. I
• 16:43
  Speaker 1: helped the poor. Here's go build a business. Yeah. So yeah,
• 16:47
  Speaker 1: that that that little amount that you contribute really has
• 16:50
  Speaker 1: a huge effect in the developing world, right right. Um,
• 16:55
  Speaker 1: so that's pretty much the nuts and bolts of how
• 16:57
  Speaker 1: it works. Like I said, there's mutual funds, right and supposedly, um,
• 17:04
  Speaker 1: it actually does have an impact a lot of people.
• 17:07
  Speaker 1: As we were saying that export of capitalism of the
• 17:10
  Speaker 1: American dream. Yeah, I like to tie you made there
• 17:13
  Speaker 1: or that other people have made that you highlighted. Well,
• 17:15
  Speaker 1: there's a there's a theory that um globalization prevents war
• 17:19
  Speaker 1: that hasn't been fully panned out yet. A lot of
• 17:21
  Speaker 1: people thought that that the interdependent economies of the nineteen
• 17:26
  Speaker 1: twenties and thirties would prevent war, and we still had
• 17:30
  Speaker 1: World War two. Um, so that's that that that kind
• 17:34
  Speaker 1: of undermine that I personally think that we just weren't
• 17:37
  Speaker 1: at the stage of globalization yet that we are now,
• 17:40
  Speaker 1: and that I think globalization can prevent We're just because
• 17:43
  Speaker 1: money Trump's ideology any day, Especially if you are in
• 17:49
  Speaker 1: such a position of power, um that you are commanding
• 17:54
  Speaker 1: armies or economies or nations or whatever you're You're probably
• 17:58
  Speaker 1: gonna go with your economy over idea. Right, I got
• 18:01
  Speaker 1: another quote from your own article. Well, this kind of
• 18:04
  Speaker 1: backs that. This is what the Nobel Committee said when
• 18:06
  Speaker 1: they awarded units the prize and oh six lasting piece
• 18:10
  Speaker 1: cannot be achieved unless large population groups find ways in
• 18:14
  Speaker 1: which to break out of poverty. And dude, that's pretty succinct. Yeah,
• 18:18
  Speaker 1: a lot of people were surprised when UNUS won the
• 18:20
  Speaker 1: Nobel Prize. Yeah, but how can you break out of
• 18:22
  Speaker 1: poverty is by getting a microlone starting own business. There's
• 18:26
  Speaker 1: a there's another theory that um poverty or terrorism is
• 18:29
  Speaker 1: bred by poverty rather than um religious ideology or dogma.
• 18:33
  Speaker 1: I could be down with that. So yeah, you go, whoa, whoa, whoa, whoa.
• 18:38
  Speaker 1: Let's stop this gehad and maybe we can explore some
• 18:41
  Speaker 1: business opportunities instead, Like wouldn't you rather open up a
• 18:44
  Speaker 1: jihad stand then blow yourself up in the middle of
• 18:46
  Speaker 1: that market? Right yeah? Um, And if you have a
• 18:49
  Speaker 1: stand in that market, you're not gonna want suicide bombers.
• 18:52
  Speaker 1: There's bad for business. Um. Well. A lot of people
• 18:56
  Speaker 1: say there's not a lot of evidence though, right on
• 18:58
  Speaker 1: the other side of the coin. Yeah, there's a eleconomists
• 19:00
  Speaker 1: I quote in this saying there we we are utterly
• 19:03
  Speaker 1: devoid of evidence. And there's some there's some studies that
• 19:06
  Speaker 1: have shown that it doesn't necessarily help. Um. These people
• 19:11
  Speaker 1: may repay it, but there there there's no follow through
• 19:14
  Speaker 1: on them actually using the loan for what they say
• 19:16
  Speaker 1: they're going to. You know, I mean like if you
• 19:18
  Speaker 1: suddenly have three thousand soul as, um, yeah, you could
• 19:25
  Speaker 1: easily do that, or you could, you know, pay rent
• 19:28
  Speaker 1: or something like that. There's things come up. You know,
• 19:31
  Speaker 1: how much money have you spent that was marked for
• 19:35
  Speaker 1: something more important but you had to deal with something
• 19:37
  Speaker 1: that was an emergency that came up, right, or if
• 19:39
  Speaker 1: you know, someone knows, if your neighbor knows you got
• 19:41
  Speaker 1: a loan and you get robbed or something. I'm sure
• 19:43
  Speaker 1: other things happen. And apparently Michael Lending is still young
• 19:46
  Speaker 1: enough that it requires injections of capital. Like these lending
• 19:50
  Speaker 1: institutions themselves to stay afloat, they themselves aren't self sufficient,
• 19:54
  Speaker 1: which you have to have that self sufficiency to help
• 19:57
  Speaker 1: other people become self sufficient. I think the jury is
• 19:59
  Speaker 1: very much still out and and just the theoretically, it's
• 20:02
  Speaker 1: such a noble idea that I can't imagine it won't
• 20:06
  Speaker 1: be given more and more slack or whatever it needs
• 20:09
  Speaker 1: to continue. And a rate, I mean, you can't argue
• 20:13
  Speaker 1: with that. No, and that rate though has actually led
• 20:18
  Speaker 1: to some really um despicable plots. Yeah. That the Mexican banks. Yeah,
• 20:25
  Speaker 1: the Grommin Bank has actually pointed out that this vastly
• 20:32
  Speaker 1: overlooked segment of the population are dependable to repay loans.
• 20:37
  Speaker 1: So as a result, some banks have come up to
• 20:40
  Speaker 1: create to issue micro loans, but not to help poverty,
• 20:45
  Speaker 1: but to make money specifically lent to the poor. Though.
• 20:48
  Speaker 1: Still Yeah, there's a guy in Mexico who owns the UM.
• 20:53
  Speaker 1: They were kind of like the Walmart of Mexico UM
• 20:56
  Speaker 1: And I can't remember his name, but he's just multi
• 20:59
  Speaker 1: BILLI a their business guy. And he said that his
• 21:03
  Speaker 1: father taught him, if you want to make money, sell
• 21:06
  Speaker 1: to the poor, mainly because there's so many of them. Right,
• 21:09
  Speaker 1: So he started his business and made a bunch of
• 21:12
  Speaker 1: money selling to the poor, selling you know, cheap consumer
• 21:15
  Speaker 1: products through his retail stores. Well, he founded a bank
• 21:19
  Speaker 1: very much like Walmart. He founded a bank called Banko
• 21:22
  Speaker 1: as Teca two. Yeah, they are a micro lending institution
• 21:27
  Speaker 1: that this guy owns, and they issue these small loans
• 21:31
  Speaker 1: to the poor, the working poor, um, but at really
• 21:35
  Speaker 1: astronomical interest rate. Yeah, they drive him further into debt
• 21:38
  Speaker 1: instead of pulling them out of the meyer in the monk, right,
• 21:41
  Speaker 1: and they're still issuing these loans in these traditional societies
• 21:45
  Speaker 1: that have these social pressures, they also use a lot
• 21:48
  Speaker 1: of um micro lending practices like bankers on bicycles. But
• 21:52
  Speaker 1: these guys are the ones who come into your house
• 21:54
  Speaker 1: and right down the serial numbers on all of your
• 21:56
  Speaker 1: stuff until we'll repossess this, and they do um. And
• 22:01
  Speaker 1: it's just it's a perversion of micro lending. It's exploitation. Yeah. Yeah,
• 22:06
  Speaker 1: a p R is up to you said more than sometimes.
• 22:11
  Speaker 1: So if you borrow a thousand dollars, you pay back
• 22:14
  Speaker 1: two thousand dollars. And the problem is is um Banko
• 22:17
  Speaker 1: has Teca specifically lobbied the Mexican government to be exempt
• 22:21
  Speaker 1: from having from a law that forces lenders to state
• 22:25
  Speaker 1: the terms of their loan, including the interest rate on
• 22:28
  Speaker 1: the loan on the loan before they issue it. So
• 22:31
  Speaker 1: a person goes up and goes and wander thousand dollars
• 22:34
  Speaker 1: the the the bank issues it, and the person walks
• 22:38
  Speaker 1: away with their thousand dollars with no idea how much
• 22:40
  Speaker 1: they actually owe. Legally, they don't have to do an
• 22:43
  Speaker 1: arm And you could make an argument either way, right
• 22:47
  Speaker 1: who was responsible with for those arms that you just mentioned.
• 22:51
  Speaker 1: Was it the aggressive predatory lenders? Was it the people
• 22:54
  Speaker 1: who were greedy and said, wow, I can afford a
• 22:57
  Speaker 1: six d thousand dollar house even though I only make
• 23:00
  Speaker 1: of the year the terms of their loan close enough.
• 23:02
  Speaker 1: It's everyone's to blame. Everyone is to blame, but Muhammed Unus.
• 23:07
  Speaker 1: But I did want to point out it's not just Mexico.
• 23:09
  Speaker 1: We're not picking on Mexico. This is happening in other
• 23:11
  Speaker 1: places too. It is happening in other places, and there's
• 23:13
  Speaker 1: a lot of companies that you know we're familiar with,
• 23:16
  Speaker 1: like um City Group, uh, HSBC Holding, Zurich Financial. Uh.
• 23:22
  Speaker 1: And I guarantee you a lot of the people who
• 23:24
  Speaker 1: run those mutual funds that are heavily invested in these
• 23:26
  Speaker 1: micro lending institutions that are for profit and exploitative. So
• 23:32
  Speaker 1: I think if you, uh, if this has piqued your
• 23:34
  Speaker 1: interest in micro lending and you want to go on
• 23:36
  Speaker 1: and maybe contribute a few bucks, do a little extra
• 23:39
  Speaker 1: research to find out exactly what the terms are for
• 23:43
  Speaker 1: the for repayment of those loans, who they're going to,
• 23:45
  Speaker 1: who they're going through, right, uh and if especially if
• 23:48
  Speaker 1: you're gonna do it through a mutual fund or something
• 23:50
  Speaker 1: like that. Yeah, yeah, I love it. I'm going to
• 23:53
  Speaker 1: script together twenty five bucks. You can do that. Yeah,
• 23:56
  Speaker 1: I'll script together fifty paid twenty five to my father
• 24:00
  Speaker 1: and then give you only know your dad bucks. No,
• 24:03
  Speaker 1: but it's something I got you. Yeah. You can find
• 24:06
  Speaker 1: this article how micro lending works in a whole bunch
• 24:09
  Speaker 1: of We have some really cool economics articles on the second.
• 24:12
  Speaker 1: You know that we do just we do. I wrote
• 24:14
  Speaker 1: a lot of them. I did, so did Jay McGrath
• 24:16
  Speaker 1: kicked it on Money for a while um, you can
• 24:20
  Speaker 1: find those by typing in probably economics in the handy
• 24:24
  Speaker 1: search bar how stuff works dot com, which, of course, friends, neighbors,
• 24:27
  Speaker 1: loved ones leads us to listener mail. So, Josh, this
• 24:33
  Speaker 1: listener mail is actually very relevant. I saved it for
• 24:36
  Speaker 1: this episode. Our buddy Stephen, who sent us our signs. Folks,
• 24:40
  Speaker 1: we have people that are actually sending us things now.
• 24:42
  Speaker 1: It's awesome. We've gotten some beer. We have beer from
• 24:47
  Speaker 1: a micro brewery and uh sat Arnold's Brewery in Houston.
• 24:50
  Speaker 1: Oh god, that was it was really really good. And
• 24:52
  Speaker 1: we've gotten some little gifts here and there, and of
• 24:55
  Speaker 1: course fan art is always coming in, but tangible things
• 24:58
  Speaker 1: have been sent to us and we're very grateful for that.
• 25:00
  Speaker 1: I got a Michael Jackson shirt from Ben Ivy that
• 25:03
  Speaker 1: you designed. Really it was cool. You show me that.
• 25:05
  Speaker 1: I'll show jerk. So Stephen, I'm gonna go ahead say
• 25:09
  Speaker 1: his name because he wanted me to. Stephan Bram. He
• 25:12
  Speaker 1: is in Newark, Delaware, and he and his wife are
• 25:16
  Speaker 1: a two person team and opened up their own small
• 25:19
  Speaker 1: business in January oh nine, called Alliteration A L L
• 25:24
  Speaker 1: E T T E R A T I O N
• 25:27
  Speaker 1: nice spelling. Thank you, you've forgotten to finish it with alliteration.
• 25:31
  Speaker 1: Alliteration and he he sent used these signs to go
• 25:34
  Speaker 1: on our studio has our studio name, and underneath one
• 25:37
  Speaker 1: of him it says where Twinkies are revered and moonshine
• 25:39
  Speaker 1: is respected, which we thought was great and I think
• 25:42
  Speaker 1: his daughter helped him come up with that. And then
• 25:44
  Speaker 1: the other one says, uh, where badass knowledge happens and
• 25:48
  Speaker 1: where We've got both of these hung up on our
• 25:49
  Speaker 1: studio and they look awesome. And we just wanted to
• 25:53
  Speaker 1: thank Stephen and say good luck with your business. Yeah,
• 25:55
  Speaker 1: big thanks Stephen and his daughter and heed to us
• 25:58
  Speaker 1: and um he uh he said that they He also
• 26:02
  Speaker 1: wanted us to mention if we could, that they try
• 26:03
  Speaker 1: to use recycled um, recycled wood and stuff to make
• 26:08
  Speaker 1: it a more green business. And these signs we're actually
• 26:11
  Speaker 1: taken from like a children's bed or something like that.
• 26:13
  Speaker 1: Poor kids. But now his daughters in the floor. He's
• 26:16
  Speaker 1: like Josh and Chucker. If you want to support Stephen,
• 26:20
  Speaker 1: he says, his website isn't completely finished. Um, you can
• 26:23
  Speaker 1: go to alliteration dot et s y dot com or
• 26:28
  Speaker 1: email him at info at alliteration dot com. It's two wells,
• 26:31
  Speaker 1: two teas, and Stephan is a great guy. You wish
• 26:35
  Speaker 1: them all the luck in the world, quality business. Well, Chuck. Also,
• 26:38
  Speaker 1: you open this up for me to say this. If
• 26:40
  Speaker 1: you want to send me and Chuck some cool stuff,
• 26:42
  Speaker 1: you can get our information by sending us an email,
• 26:46
  Speaker 1: or you can just say hi, Unicorn's torpedo or whatever.
• 26:49
  Speaker 1: Or buy the website and clicking on the contact button
• 26:51
  Speaker 1: at the bottom and it has the addressed and you
• 26:54
  Speaker 1: can just send it straight to us. But we won't
• 26:56
  Speaker 1: hear from him. Then they can include a written note
• 26:58
  Speaker 1: and written note in a glossy photo. You know. Well,
• 27:02
  Speaker 1: then I have to still have to give the email here, Chuck,
• 27:05
  Speaker 1: all right, whatever, If you want to say hi or whatever,
• 27:07
  Speaker 1: to send an email to stuff podcast at how stuff
• 27:11
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• 27:18
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