WALL STREET CRUNCH SPREADS TO MAIN STREET AND BEYOND
Micro finance hits the skids: Beware of similar trends where you live
The Credit Crunch of 2008 primarily hit ‘Wall Street’ and all associated with her. Think of this as Phase 2 of the Credit Crunch – and the worst hit are those at the bottom of the pyramid.
Undoubtedly, this new crunch is being precipitated by political pressures to control a largely unregulated micro-lending industry. Politicians have added a powerful impetus to consumer complaints and allegations of hardships resulting from “inhuman levels of financial exploitation” in the micro-lending industry. It started on the Indian sub-continent and has spread outwards from there.
Even Nobel Prize-winning economist Muhammad Yunus, the so-called father of micro finance, has fallen victim to this revolt. He was previously managing director of Grameen Bank, which has lent small sums to about eight million deprived people in Bangladesh, to help them start or run their own businesses as a first step out of poverty, since being created in 1983. Through partnerships with global brands, Grameen had secured employment for more than 30,000 people.
In India, politicians have accused bankers of profiteering from the poor and, in some places, banned further lending or recovery of debts. Aggressive selling by scores of unregulated micro finance firms has pushed huge numbers of already desperately poor farmers deeply into debt.
Beyond ‘Main Street’ this is really the Indian sub-continent’s equivalent of America’s subprime loans. It has given governments and banks further legitimacy to regulate and control.
While changes in Europe and the USA to separate ‘Main Street’ and ‘Casino’ banking have created some more certainty, this new broadside from ‘the bottom of the pyramid’ threatens to spread a new level of financial havoc around the world.
Links to related stories
- Impoverished Indian families caught in deadly spiral of microfinance debt - The Guardian, 31 January 2011
- Microfinance guru Muhammad Yunus faces removal from Grameen Bank - The Guardian, 21 February 2011
- MindBullet: WALL STREET HEARS THE CLOSING BELL – FOR THE VERY LAST TIME (Dateline: 15 March 2016, Published: 17 March 2011)
- MindBullet: JUST DON'T MENTION THE WORD 'BANK' (Dateline: 1 September 2011, Published: 05 November 2009)
Warning: Hazardous thinking at work
Despite appearances to the contrary, Futureworld cannot and does not predict the future. Our Mindbullets scenarios are fictitious and designed purely to explore possible futures, challenge and stimulate strategic thinking. Use these at your own risk. Any reference to actual people, entities or events is entirely allegorical. Copyright Futureworld International Limited. Reproduction or distribution permitted only with recognition of Copyright and the inclusion of this disclaimer.