HUMANITY'S OPORTUNITY WITHIN THE ECONOMIC CRISIS

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LYNN TWIST - OPORTUNITY WITHIN THE ECONOMIC CRISIS

We're living in a time of economic crisis--a time when the economic system, the money system itself, the markets are unraveling in a way that I haven't seen in my lifetime and most people haven't seen in their lifetimes. And this is a very frightening time for people. At the same time, if we can recognize that what is unraveling is that which has no viability. What is unraveling is that which is not sustainable. Practices, ways of being with money, markets that are not based in true value are starting to fall apart.

If we can see that what's happening is a truing, a recalibration, and an expression of us being in overshoot, it helps us see how to deal with it on a personal basis. It doesn't mean it's not going to painful. It doesn't mean that there's not suffering. It doesn't mean that we shouldn't be paying close attention to how we use money, what to do with the investments we have, and being mindful of the job we have and the salary we earn. These considerations seem larger than life under the current circumstances.

But if we look on a larger scale, if we step back from the personal drama, the fear, that we're all caught in and that the media reinforces, we can see that we're living at a time of enormous excess, avarice and greed. This has created financial structures and systems that are inappropriate and completely unsustainable. And now they're falling apart.

At the end of this, we're all going to be better for it, because we're going to be in a truthful, more accurate, more appropriate relationship with ourselves, with money, and with the resources on this planet. We can get through this. And if we make adjustments in our own life that are consistent with a new future for human life, rather than the greed and exploitation that was the basis for most of the actions of the markets, we'll make choices that will pan out for our own future and for all future generations.

It's a difficult time. I don't deny that. But it can also be a beautiful time. We can move towards thrift rather than accumulation; we can move toward appreciating what we love rather than being afraid of what we've lost; we can focus our utmost attention and intention not on what we're losing, but on what we already have that's so valuable and nourishing to us. We can stop clamoring for more of what we don't really need and take care of what we have--both in our own personal lives and on this planet for the sustainability of life itself.

This is a time that I think history will look back on and say, "These are the people, this is the generation of humankind that went through a transformation that made the future of life possible. These are the people who had the courage to make profound changes in the way they were thinking, as well as in the way that they were behaving, that gave the future to life itself." And it's going to take courage on all of our parts--big changes in our personal, little lives--that will ultimately be historic and profound for us and for everybody who follows us.

So, I'm privileged to be living at this time. I'm excited about being the generation that goes through this courageous period. You too can take that frame of reference and see that there's privilege to being the people who need to make these changes, rather than seeing this as a horrible thing that has befallen us-i.e., as victims. And for me, it's a crisis that we've sort of been waiting to have happen. Everybody kind of knew it was coming. You could feel it. CEOs' salaries being completely out of range and out of sight; greed on Wall Street being at an all-time high; and industries, like the automobile industry (God bless them) not being able to change fast enough and really think in a new way, at a time when that's demanded now of all of us.

Lynne Twist is a global activist, fundraiser, speaker, consultant, coach, and author who has dedicated her life to global initiatives that serve humanity and the planet, including co-founding The Pachamama Alliance http://www.pachamama.org and the Soul of Money Institute, which furthers the work of her award-winning book, The Soul of Money http://www.soulofmoney.info.

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EXPLODING MYTHS ABOUT MONEY
ALTERNATE CURRENCY
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PAY IT FORWARD

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Grameen shows poorest of poor can be creditworthy


By Ambika Ahuja September 3, 2009 AP

BANGKOK - The global financial crisis has highlighted a curious success story: A bank that doles out loans to some of the world's poorest, least-creditworthy people continues to have a payback rate of nearly 100 percent.

In this Wednesday, Aug. 19, 2009 photo, Nobel Peace laureate and a 2009 recipient of the Presidential Medal of Freedom from U.S. President Barack Obama, Muhammad Yunus, center, chats with friends before a function at the Foreign Correspondents Club, in Bangkok, Thailand. The global financial crisis has highlighted a curious success story: A bank that doles out loans to some of the world's poorest, least creditworthy people continues to have a payback rate of nearly 100 percent. (AP Photo/Apichart Weerawong)

Nobel Peace Prize winner Muhammad Yunus, known as the "banker to the poor," quips that the Grameen Bank he founded owes its success to "sub-sub-subprime borrowers" who also own nearly all the bank's equity.

When Yunus approached traditional banks over 30 years ago about lending to the poor in Bangladesh to start small businesses, he was told it could not be done.

But since 1983, the bank has lent more than $8 billion to nearly 8 million people in Bangladesh who have had a 98 percent repayment rate. About 4 million more have been similarly helped through partner organizations in 38 other countries - with an average repayment rate of 95 percent.

Yunus thinks his model could teach big commercial banks some lessons.

"We have now shown that the poorest of the poor can be creditworthy," he said in an interview with The Associated Press during a recent trip to Bangkok. "Our loan repayments are as high as ever."

Grameen takes on clients who have no collateral, no credit history and no lawyers. The vast majority of them are women. Most take out loans for $200 or less each time.

Yunus attributes micro-lending's success to a system of "moral responsibility" that makes approval and repayment of the loan the concern of the community as well as the individual borrower.

Here is how it normally works. A group of five prospective borrowers from similar social and economic positions come together to determine an appropriate loan for each. The request then goes before a larger council of borrowers, who are also shareholders in the bank, and finally to the bank for approval.

It's not entirely surprising that Grameen and other microfinance institutions have been largely unscathed by the financial turmoil, said Mayumi Ozaki, a microfinance specialist at the Asian Development Bank. They generally support tiny businesses such as retail shops, vegetable growing and craft making that are not affected much by a global trade slowdown.

But the success of Grameen is also attributed to building relationships and trust.

"Microfinance loan officers visit their poor clients frequently," she said. "They have good knowledge of the creditworthiness of their clients, and the clients as well value the trust and have a good credit discipline."

Ozaki says it's hard to draw too many lessons for big commercial banks, whose transactions are usually much larger and more complicated. But the success of microfinance "shows that successful banking operation on whatever scale is about understanding the risk and managing it well and not overreaching," she said.

Such overreaching, as well as lax oversight, contributed to the U.S. credit crisis.

One big problem in the U.S. was that lenders made risky loans to people with shaky credit under the false assumption that housing prices would keep rising. Those loans were then packaged into securities and sold to investors around the world. When borrowers started defaulting in growing numbers, financial firms were left with huge losses. Scores went out of business.

American government regulators, meanwhile, had little power over mortgage brokers and other firms that catered to so-called sub-prime borrowers. Only now are lawmakers talking seriously about stricter regulations for the mortgage industry.

Yunus said at Grameen, "We know the limits of our operations and we know how much risk the bank and our clients can take."

A focus on consumption, rather than income-generating activities, contributed to the American credit fiasco, he adds.

Grameen also has been successful because it's grounded in what he calls "the real economy," rather than "fantasy economy" of ever-climbing asset prices. A loan for a goat, for example, produces tangible benefits that can support a family.

"The closer you are to the real economy, the safer you are," he said.

Grameen's model has been replicated successfully in more than 100 countries, including the United States. Established in the U.S. since early 2008, Grameen America lends investment capital to people who otherwise would not have access or would have to rely on money from pawnshops and loan sharks.

The failure of traditional banks to provide this kind of credit is a "big hole" in the American financial system where millions cannot open bank accounts, according to Yunus.

The global financial meltdown "has given us an opportunity to create a financial system that is more inclusive," said Yunus, who was in Bangkok to launch the Yunus Center in partnership with the Asian Institute of Technology, a university, aimed at poverty reduction in the region.

Yunus' latest project is advocating what he calls "social business," which combine altruism with business models to bring corporate efficiency and innovation to help the poor. The goal is to solve social issues and not to maximize profits.

But unlike charity which has no mechanism to regenerate its funding, the business must recover its full costs and recoup its investment.

Joining with multinational companies, Grameen has successfully launched a yogurt business, Grameen Danone, which provides malnourished children with a low-cost source of nutrition. Grameen Veolia has built several water treatment plants that provide clean drinking water to the poorest in Bangladesh, where some groundwater is contaminated by arsenic. BASF Grameen provides cheap treated mosquito nets to help prevent malaria.

Despite cynicism about whether such cause-driven projects could be done on a large scale with no profit incentive, Yunus remained optimistic. He has faced plenty of naysayers before.

"When things fail, then it's time to ask questions, fix the problems and redesign the system so it works for everyone," he said. "That's the challenge of the day."

© 2009 Associated Press