Microfinance

portmanmicrofinancevillagebanking.bmpNatalie Portman wants to use her MySpace diary to end poverty. She’s supporting a campaign to raise $200 million for Finca International, a pioneer in microfinance, the Financial Times reports today.
“I have seen that ending poverty is possible – it is just a mouse click away,” Ms Portman said at the campaigns launch.
The Financial Times reports that Portman will contribute a video video diary about Finca for its MySpace page.
“People check their MySpace pages 10 times a day, why not harness that tool to build support for microfinance,” Portman says.
Why not? Perhaps because there is little evidence that microfinance is an effective way to reduce poverty, much less end it all together. Like many claims that begin with the phrase “I have seen,” Portman’s claim to have witnessed the end of poverty is most likely anecdotal evidence at best, if not outright hyperbole.
Portman’s first video is now available on Finca International’s Village Banking MySpace page.
Hollywood joins royalty to seek $200m for microfinance [Financial Times]
Village Banking [MySpace]

Earlier on DealBreaker

As It Turns Out, Lending Tiny Sums Of Money To Poor People May Not Bring Peace or Propsperity:
[10.30.06]
More Gratuitous Grameen Bashing [11.9.06]

A Big Fancy Party For Mohmmad Yunus

yunusandclinton.jpg
We’re not exactly sure why we didn’t get the invitation to this party Steve Clemons details at the Huffington Post:

Last night, Washington’s political stars turned out to pay homage to the banker who started in 1976 lending $27 to 42 people in one village in Bangladesh.
Muhammad Yunus and many of his colleagues from the Grameen Bank were feted at an extraordinary reception and dinner gathering — on a Sunday night — at the Willard Hotel in Washington and hosted by the United Nations Foundation.
Among the guests were former President Bill Clinton and Senator Hillary Rodham Clinton, Congressman and Mrs. Tom Udall, Senator and Mrs. Paul Sarbanes, Pew Research executive and former Washington Post “Outlook” Editor Jodie Allen, Ted Turner and his companion Kathy Leach, Bruce and Hattie Babbitt, former Senator and UN Foundation President Timothy & Wren Wirth, former State Department Legal Adviser William Howard Taft IV, former Senator Donald Riegle, Ashoka founder William Dreyton, Kathy Bushkin, Kenneth Adelman, John Cochran, Diane Rehm, John Henry and Ann Crittendon, and many others.

A Grameen Gala and Ted Turner’s Birthday [Huffington Post]

Mohammad Yunus Gets A Sloppy Wet One From Jon Stewart


We’ve given Nobel Peace Prize winner Mohammad Yunus a pretty hard time around here. So, in the interest of pretending we care about fairness, here’s his most recent interview from the Daily Show. Host Jon Stewart is obviously drinking the same Kool Aid as the rest of the world, and basically slobbers all over him. Our only question is this: if they like Yunus so much, why did they make him dress like an extra from the old Battlestar Galactica series?

Separated At Birth: Graydon Carter and Mohammad Yunus

graydon3.jpgmohammayunuslookslikegraydoncarter1.jpgOne of these guys is a bloated gas-bag with an undeserved reputation for doing great things. The other used to edit Spy magazine.

  • 09 Nov 2006 at 3:04 PM
  • Banks

More Gratuitous Grameen Bashing

yunus.jpgWhen we linked to some mild criticism of Nobel Peace Prizer Muhammed Yunus and his Grameen Bank of Bangladesh—and then expanded on these thoughts on an episode of WallStrip—the fans of microcredit went a bit berserk. So, of course, we’re coming back for more.
Today’s critique comes from Jeff Tucker of the Mises Institute. Now admittedly, Jeff has never been a fan of Grameen or Yunus. In the past he’s said that Grameen “is more of a cult than a financial institution” and said that “[a]t best, its operations are wasteful and Ponzi-like; at worst, they are parasitical, usurious, and communistic.”
So you won’t be surprised that Jeff hasn’t exactly been won over to Grameen by the Nobel Committee. Writing at the Mises Institute’s website, Jeff says:

We are told that Yunus discovered a wonderful new way of making profitable loans to the poor by doing something that all conventional bankers in Bangladesh had overlooked. Half the population lives below the poverty line in Bangladesh. Are we really supposed to believe that banks blithely overlooked millions of poor people out of bias or hatred or snobbery?
Even if we can accept that he had some sort of entrepreneurial insight that no one else had, Grameen has been giving loans to poor women for thirty years. Are we really supposed to believe that conventional bankers were so stupid as not to spot this opportunity even after decades of demonstration? Yunus says that he discovered that the poor are “bankable” but if this were true in the way that he says, others would have discovered the same profit opportunities and done it without help from government.
Actually, Grameen is not really free enterprise at all. Yunus’s first pile of cash came from the United Nations. Then he went to the Bangladesh government. Then he went to US foundations. In the 1980s and ’90s, the bank received nearly $150 million in grants. At the same time, he started borrowing at low interest rates from governments around the world, and lending out the same money at higher rates. His institution keeps the difference.

Microcredit or Macrowelfare: The Myth of Grameen [Mises.org]

yunus.jpgIt was kind of exciting that a bank and a banker won the Nobel Peace Prize this year. We thought we were being a bit mean spirited when we pointed out that we couldn’t quite figure out what making tiny little loans had to do with peace. Turns out we weren’t skeptical enough. As Richard Posner points out on the Becker-Posner Blog, microfinance is probably way overrated.

The evidence for the efficacy of microfinance in stimulating production and alleviating poverty is so far anecdotal rather than systematic. The idea of borrowing one’s way out of poverty is passing strange. And I am unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit.

Microfinance and Third World Poverty and Development [Becker-Posner Blog]