Group lending is a delicate mechanism and is not very easy to implement. The first documented success was in Germany in the beginning of the last century. The Grameen Bank is a success. But initially it was bailed out several times by the world bank. The bank took this as their pet project in their missionary zeal to induce ``development`` in poor countries. Yunus was projected as a hero. At least a part of it was/is political. The grameen bank today is a far cry from the grameen bank of the past. Moreover attempts to replicate it without subsidies have failed in Chile, Chicago and almost everywhere else.

I also do not understand how the metric of welfare at micro and macro are different. Without any clear cut understanding of this issue, these are nothing but bombastic statements which play to the galleries. The grameen bank has improved the welfare of poor people in Bangladesh. This is a great achievement. Hence, it along with Yunus deserves the Nobel.

Difference between rotating credit and group lending.

Rotating credit increases utility by getting rid of indivisibilities. Group lending facilitates credit by converting group reputation into collateral.

Rotating credit: There are 4 people each of whom want to buy a refrigerator which costs $800. Each of them can save only $200 per month. Left to the individual all four have to wait for four months to buy the refrigerator. Now let them put $200 into a pool for four months. A person is chosen at random and offered $800 every month. Note now that 1 person waits for 1 month another for 2 etc. To the extent that people discount future comsumption, aggregate utility goes up.

Group Lending: Consider an investor who needs credit to fund a project with a good or bad stochastic outcome which can be observed by both the investor and the creditor ex-post. In such cases credit is offered with a risk premium as long as the net surplus is positive. In the case of a lbad outcome the creditor gets nothing and hence the risk premium. Now suppose that the outcome is not observable by the creditor, in this case to avoid loan payment the investor will always announce the bad state. Knowing this the creditor will not offer credit. To get over this problem creditors demand a collateral which will be confisticated if the loan is not paid. The problem is that the poor, who need credit the most, do not have collateral and as a result do not get credit. To overcome this problem, individual credit is given to a socially close group who can monitor the outcome of each others performance. Credit is also given in tranches and in case of default the entire group is excluded from future credit. Note that it is in the interest of the group to provide cross insurance if there is default and to socially ostracize a person who defaults when the outcome is good. This social penalty now acts as the required collateral.

Mr. Yunus had no chance of winning Nobel Peace prize if BanglaDesh would have
continued to be part of Pakistan. There would have been a very high chance
he would have been killed by uncounth and murderous west Pakistani army by now.
Thanks to Indira Gandhi and Hindus, a Bangaladeshi muslim today could earn a
Nobel Peace prize.

Mantolives #107 {``How many Indian Muslims or Ahmadis won Nobel Prizes... despite Sadna`s fudged inconclusive statistics? ``}

Manto Bhai,
I can understand your haste to counter the illogical points and illiterate stance of your primary adversary. I do not, however, agree with your description of Indian Muslims` ability to gain international recognition, which we all know is based on presenting a certain acceptable image to the west. Nobel prizes and Hollywood movies are all bestowed to reward and promote a certain condescending viewpoint that satisfies western disdain for Muslims. Begin and Sadat won the Nobel ``Peace` Prize despite the fact that both were unrepentant former terrorists.

A. Q. Khan, a scientist of Indian Muslim origin, would certainly have had a couple of Hollywood thrillers and some other recognition had he been a Jew achieving great things for the ``defense`` of Israel. Come on, you are capable of much better logic.

Arju mian...

Statistics show it is better to be considered a Non-Muslim in Pakistan than be a Muslim in India...

Kiya samjhay?

Re: # 101 by masadi:

There are two reasons why local public goods should be provided locally:

1. Minority rights within a democracy;

2. Information.

Let me illustrate through examples.

1. The federal government is ruled by a hindutva party who belive that science must be taught in schools and the `bande mataram` sung. If the majority of people prefer not to sing b.m. the govt. is willing to abandon it. It turns out that the majority of people support the hindutva party and do not object. So b.m. is made compulsory. Now there is a Muslim village where people want their kids to learn science but not at the cost of singing b.m. So kids stop attending the school. The ruling party does not care as it has majority support.

2. Now suppose that there is only one teacher in the empty school and his preferences are completely aligned with the rest of the villagers. The govt. decides to stop funding schools with no attendence. Let the govt. be far away and let it know that the preferences of the teacher are completely aligned with that of the villagers. So it asks the teacher about school attendance. The teacher in fear of loosing his job reports full attendane.

Note that the intensity of the above mentioned problems get reduced with local governance. These two examples are drastic simplifications and caricatures. But, nevertheless, they provide an important lesson in the provision of local public goods.

#118 by Mantolives on October 15, 2006 9:11am PT


Indian Muslims (including Ahmadis)


You do realize that it`s against the LAW in the land of the pure to include ahmedis like yourself with allah`s homies...you don`t want to go to jail now, do you?

Dear friend,

For all your refrains about my third rate bachelors degree, your personal attacks etc... you are the poor expatriate away from your ``utopia`` while I am doing well in my own country.
Still... one wonders why there aren`t any Nobel Prize winners amongst Indian Muslims (including Ahmadis)... when there is one each for the equivalent in Pakistan and Bangladesh?

YLH Munna #107

Zeemax, others...
Though many Bangladeshis would not admit it... but Muhammad Younis would not have a ghost of a chance of winning a Nobel Prize in a United India...
The two states based on the partition of 1947 .... and the Lahore Resolution... Pakistan and Bangaldesh have each produced one Nobel prize winner...
How many Indian Muslims or Ahmadis won Nobel Prizes... despite Sadna`s fudged inconclusive statistics?

You are absolutely right this time. Partition of 1947 opened plethora of opportunities for Muslims in Pakistan`s. Now any uneducated moron can become Pakistani president or prime minister. Partition has permitted uneducated idiots to become vice-chancellors, and head educational bosies in Pakistan. In India they would have to earn PhDs to become presidents (Dr Zakir Hussain, Dr Fakhruddin Ali Ahmed, Dr Kalam!!).

With your third rate bachelor degree, you would have nothing more than a clerk in India, while in Pakistan you can claim to be ``head of department of Economics``. You are absolutely right. Manto munna lage raho!!

Re: # 114

behram,

...... i feel your pain, but trying to talk to a man who thinks that america is behind the floods in bangladesh is kind of useless - no ?............ masadi suffers from a fatal pathological condition similar to penis envy for which there is no cure - the patient usually ends up castrating himself or blowing himself up ..........

General Musharraf`s gloriously illegitimate 7 years can be summed up with one couplet from Bahadur Shah Zafar`s ghazal -- ``do arzoo maiN kut gaye -- paanch intezzaar maiN``.

Re: # 102 by masadi on October 14, 2006 11:30pm PT

Dear Vibrating mullah-o-crat masadi:

You are totally ignorant with your world view about political-economy of the world. You are just creating a fuss to get recognized with your bs, and hence maybe someday make money out of the``khalain`` that your ilk have been trading in with for all these years.

Being a muslim jihadi, your society kills minorities, and then get the cover of your pristine doctrine. Nowhere it is mentioned to harass and hurt those who do not follow your dogma, yet it is people like you who bring the evil out of ordinary peace loving muslims. Those who are considered as secular amongst the muslim land are tainted as western lovers, etc. because your evil mind has been bought by the wahabi elements of your society.

People like you should be marginalized and the sooner it is done the better. Your values have brought enough disgrace in the last 30 years or so, and true Pakistani patriots can not afford to see their mother country go further into decay.

Masadi, shame on your existence for straying the gullible Pakistanis to your ``la-la land``. Gullible Pakistanis who can barely use their decision making skills about the world events. You shamelessly identify yourself as someone with knowledge and yet you hide in the cover of your faith and your holy books.

{behram writes <<< This freaking racist vibrating mullah-o-crat masadi`s constant anti-America hate posts is not what America is all about >>>

They feel threatened when the facts about their fake heaven are revealed. }

No masadi, the fake resides in your muslim world, and not in the open western civilization. Being an authentic Persian, I know exactly where the present day muslim world stands.

{The land of booze and bikinis emerges as just another dung hole for humanity- it is as if their whole life was just proven to be a lie.}

This land is for freedom, and is a whole lot humane than the land of the bearded ones, and those who kill women and children. This land is whole lot better than the land that molests children. This land is a whole lot better by respecting dogs and animals, and environment, than the muslim land that kills animals. This land is whole lot better where religious minorities like yourself can practice their own faith, than the muslim world where religious minorities are treated inhumanely.

You are totally despicable. You are a bigot who wants superiority of your faith, and frankly the world has had enough of your shenanigans.

Shoo away you evil minded person.

Respectfully submitted,

#103 by masadi on October 14, 2006 11:57pm PT

It`ll help more than anything coming out of lulu.com..The guy has actually made a difference in the lives of people..what have you done for allah`s homies lately?

i couldnt understand the whole story since musharaf took the dictatorship of pakistan .... i cannt understand where pakistan is going ..... what does musharaf want what does baynazir and nawazsharif want ...... none of them is clear ........... even musharaf doesnt know what does he want ....... in his book ........... ``In The Line Of Fire`` he has described somthing else has done something else....... and i believe ..... the decision he took ...... were never his decision

#110 by echoboom

Thanks but you forgot ......... ``aaaaaaaaaaaakh ...........Thoooooooooooooooo`` .. LoL

Powerful stuff indeed
By a shareef & caring American
http://www.politicalgateway.com/main/columns/read.html?col=661

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