Peer-to-peer loans

Online microlending co-ops are still few and far between, but so far they seem to be another successful symptom of the Internet’s potential for empowering individuals. The most prominent representative of microlending are the London-based Zopa and the San Francisco-based Prosper. Prosper has so far facilitated $178,000,000 funded loans and has 830,000 members. Borrowers get low-cost loans and lenders get good returns, all without the involvement of banks. All the loans are spread out over groups of lenders rather than the equasions being 1-1 relationship situations. This makes it safer for lenders to get their money and easier for borrowers to get their loan applications picked up.  On both Zopa and Prosper all applications are subject to interest rate auctions between lenders and those who can offer lowest interest get the deals. Borrowers and lenders enter into legally binding contracts upon reaching a deal. All in all, for smaller scale loans, this is a smarter and fairer way to go about lending and borrowing money than giving more of it to the rotten banks.

The green side

Yes, this is yet another post on the green issues, you’re not just seeing things! BBC has unleashed a site called BBC Green, which is not only a great source of information on green-related issues around the country and beyond, but also an excellent planner for individuals’ own changein their lifestyles. It’s also just fun – there’s clothes swapping events, how to shop organic without going bankrupt, a month-to-month guide on how you can grow your own produce in your backyard.

The concept here is ‘think big, start small’, which completely agrees with the structure of user interactions on the site. You can join and get serious or just try it out – it gives you 3 starting points depending on your level of awareness and activity and walks you through all small and large scale steps you can take to make a difference in your energy comsuption efficiency, resource usage or your carbon emissions. The ‘Action plan’ can get you an estimate on out how much each step will cost you, how much carbon emissions you’ll avoid, and so forth. I think part of the problem about people not making the effort to do things more efficiently and eco-conciously is that there is simply too little information about how to live the green way without spending too much extra time or money. Sources like this might well bring us all closer to where we should be.

The mess we’re in

I’ve been trying to understand bits of the financial crisis, but I can’t say that getting the whole picture has been my latest strength. Here’s the Subprime Primer, which may help minds alike grasp a few more bits and pieces of what’s going on.

Tyrannosaurus Cash

I feel something should be done with the monetary system, and not just in the UK, but everywhere in the world where paying by card and doing Internet transactions is common place. Retailers and other commercial businesses should allow more freedom of use of bank cards and online payments. Fees for spending amounts smaller than £5 in shops and £10 in bars should be eliminated – this would allow more spending freedom for the consumers and eventually more profits for businesses. All this would increase the velocity of the circulation of money and who knows, maybe eventually even bring down the shopping prices.

The history of people fiddling with the idea of having cards as media of payment goes back to the early 1900s. The first credit cards as we know them were introduced in 1966 and since then they’ve become a favored form of payment for much of the population. The digital age is here in so many ways, so what’s keeping a wide-spread standardization of payments from happening? Does it really cost so much to the retailers to carry out the card transactions? I paid a 50 pence extra charge on a £3 purchase for using my card yesterday, which makes the fee over 15% of the entire purchase. As far as the pure transaction costs for banks, they are supposed to be a relatively small fixed percentage of the purchase, so to me it seems like the fixed fees applied in bars and shops are there not just to cover the transaction costs, but also to discourage the use of cards. Why does this take place? The bank charges, exactly as they are, should be transferred to the consumers instead of influencing the policies of retailers. By the way, Sweden supposedly found a way to make this all work.

If one was to push this issue further, why not think of abolishing cash and introducing a strictly card-only system? This would allow more transparency of transactions and eliminate a lot of ways in which cash is misused, but now this is probably a too-extreme measure. What can I say, I can’t wait for tomorrow.

Micro credit

Micro credit is a form of facilitation of small loans to individuals in the developing world, who are otherwise considered not bankable and as such unable to obtain any loans in their own countries. I was first struck by the deep contrast of human existence and owning capabilities between Africa and the Western world when I read ‘The Shadow of the Sun’ by Ryszard Kapuscinski. It seemed utterly inconceivable that a family’s income could depend on a single pot, in which they would cook a dish and sell it to the fellow villagers for a small sum of money. The book inspired me to strive to understand more aspects of poverty and inequality both in Africa and worldwide.

Micro credit focuses on supporting forms of micro entrepreneurship and employment generation for mostly community based initiatives. The project started in Bangladesh, where it has enabled impoverished people to engage in self-employment projects that allow them to generate income, begin to build wealth, and at times exit poverty. The biggest micro-credit organisation is probably Kiva, which facilitated loans for nearly 2000 entrepreneurs. It’s strange to think that so much can depend on so little.

Biting the bullet

Can we approach the most troubling issues of the world without a coordinated political and economical initiative? Bjorn Lomborg drew public attention to reaching a consensus on resolving the world’s most troubling issues. According to the Copenhagen Consensus we should first enhance HIV prevention, fight the malnutrition occurring in the 3rd world, establish a better organised free trade worldwide, and help African countries stop malaria. Global warming was the last thing on the list of things we should strive to resolve right now, as it would require most investment to produce relatively little effect.

The talk drew my attention to the immense problems we have to face, but also to the immeasurable trivialities we seem to get caught up in while positioning ourselves politically and ideologically. How far should our perspectives reach? I’m not setting out to convince anyone that the global warming consequences or blood sheds should be left alone, but I feel that there is much more beyond to resolve and explore both in fields of technology and medical research. The human mind has evolved to understand distances we can travel and time stretches we can perceive within our lifetimes, but with our current understanding of history, space, and biology, we should strive to push ourselves and our perspectives a little further.

The agricultural history dates back roughly 2000 years and we’ve been developing the industrial side of our existence for only about 300. At times I feel that humanity is squabbling with itself rather than focusing on what’s ahead. The European politics, with yes, some important issues, but overall with an immense amount of human potential simply flushed down the drain to short-term and short-sight visions and solutions. How come is so much of the world still so far behind compared to its current capabilities? Going back to economics, it would take $40-70 bln a year to resolve most of the disease/malnutrition quagmire by 2015. I really do not mean to bash, but the $100 bln the US is pouring into Iraq seems a little out of place right now.