San Diego Housing Bubble News and Analysis

Our family is doing this, on a small scale, and from our experience, as well as impartial third party analysts, this is a good program. You get to keep up with the progress of your borrower, you can chose from many countries and different types of people, and the payback rate is remarkably high and prompt, often ahead of schedule.
If you believe as I do that foreign aid usually does more harm than good--entrenching dictators and feeding corruption--then this is a good free-market way to help these budding entrepreneurs.

It is exactly when the economy is poor that we need to give most. I too have an account at Kiva. I've loaned to 4 or 5 people. So far I've had 1 default and 1 payback and a couple of partials. I think I'll go back and check now.
Josh

I donate to a group here in SD (actually the organizer lives in Orange County) that operates a micro-credit program in Tijuana through World Vision. I think the total loan balances are up to a few hundred thousand dollars at this point. If anyone is interested I can post the contact information for the point man on this.

yes Dave I'm interested

I would hardly call this a "donation." Donating is giving a gift--not hoping to make money from the "donation." This is a low level shyster scheme.

I consider any loan sans adequate collateral a donation!

Hello Dave,
Blessings to you for having a great and generous heart.
In the past I have donated goods to the Sister that has been ministering to the inmates at the Tijuana Jail. I would appreciate it if you could give me your contact in Orange county.
Thanking you in advance,

Blessing,
Rev. Sara Victoria

Email this guy first. Just mention that you're interested in the Tijuana Micro-Credit Program.

Cory Trenda: ctrenda [at] worldvision [dot] org

Oops, I didn't see this. Sorry for the delay...

Email this guy first. Just mention that you're interested in the Tijuana Micro-Credit Program.

Cory Trenda: ctrenda [at] worldvision [dot] org

Micro loan is the best idea for charity. I only wonder why economist didn't come up this idea earlier.

But it works better than the "donation", who cares what it is called.

Am I the only one who cynically thinks microlending may be a late stage symptom of a desperate credit bubble?

I'm usually pretty cynical myself, but I think the opposite: microlending is actually a refreshing example of basic capitalism. It puts money to work work where real value is created.

I don't think so. I think micro-lending is a niche that CAN work well IF it's done in moderation.

Like any lending "innovation," micro-lending has its place. But once it becomes too widespread - like securitization and sub-prime lending (generically) - then it will blow up just like every other lending innovation that moves beyond its natural (limited) niche.

The trick to all credit innovations is to realize their limitations. The problem is that the natural order of things is to push the innovation until it starts to fail. And by then it's too late.

Whether this is charity or not is debatable, but economists did think of this many years ago:

http://en.wikipedia.org/wiki/Muhammad_Yunus

A growing cohort of economists doing studies of third world development are coming to the conclusion that foreign aid does more harm than good. It entrenches dictatorships and bureaucrats, stifles self-help, undermines naturally occurring markets, and has a clear empirical record of failure. A recent study comparing African countries who got a lot of aid over the years to those who got little or none, found the latter group did far better.
Micro loans foster capitalism from the ground up. The entrepreneurs who take advantage of it, usually women, have to show a plan, execute it, and suffer peer pressure if they don't repay. A great way to fight poverty.

I think these are terrific ways to encourage independence.

kiva.org is the best use of the internet I have ever seen. Truly it is. I am signing up as soon as I get home tonight.

Not only that, but I'm telling everyone I know (and I rarely mass email anything).

Thanks so much for sharing this with us...the amount it helps worldwide is immeasurable. I want to be a part of that.

I opened an account and made 8 25-dollar loans today. From what I read it looks like the borrowers ("entrepreneurs") pay a lot more than 12% in interest. In any case, us (lenders) don't get any interest, just the satisfaction of helping.

Thanks for mentioning this program. World Vision's microcredit effort in Tijuana currently has about $500,000 loaned to over 1250 microentrepreneurs--and it's growing! Our year-to-date loan loss rate is just 0.2%.

There are a couple ways to get involved to help expand the program to help more borrowers:
--Go to www.worldvisionmicro.org where you can donate at little as $25 or finance an entire loan and actually read about the hard-working person being helped. You can choose borrowers from several countries, and if you choose Mexico and snoot around a bit, you can find and finance Tijuana business-operators.
--You can also get some friends together and co-finance a loan through the site as a group!
--An entire revolving Community Bank of 10-25 borrowers can be underwritten for a $10,000 donation, and the funds recycle over and over to help more and more people over time. Email me at ctrenda [at] worldvision [dot] org if you'd like to underwrite one of these Community Bank giving circles (read more soon on the website above on how this brilliant group-loan strategy works to get loans to people with no collateral). Most of this underwriting is coming from San Diego entrepreneurs who want to find positive ways to address the economic disparity right across the border.

I am going to ask a very crass question. Why do folks feel compelled to help people in other countries when there are several kids/children starving in this country? Just curious.

Do we really think that when the world changes and we are poor, that there is going to be another nation in the world that will remember generous thing that Americans did and return the favor? I highly doubt this. You think folks in China are going to help us, folks in the Middle East, in Europe, in Asia? I seriously doubt anyone would give a hoots if we went under and have starving children here. In fact, several probably look forward to it.

So again, why are we helping out other people when we're in trouble ourselves?

I understand the argument that we are all human and well also should help each other out all over the place, but one thing that bothers me is.... who really lended us a hand during Hurricane Katrina (besides Canada, aye ) or during 9/11...I don't think there is anyone else in the world more generous than people here.

It's like what the flight attendants say...Put your mask on first, then put on the mask of others....Dude, the planes going down, a lot of us aren't wearing masks to be helping the other ones put on theirs.

Flu: Charity has nothing to do with nationalism. This "us" versus "them" approach is misguided IMO. Besides, efforts like Kiva hardly count as charity: you get your money back, after all, sans interest.

I also donate money through regular paycheck deductions to children in the US, Flu.

But I am also aware that the we cannot survive without other countries being prosperous too. So I feel compelled to help that along, and kiva.org is the best way I've found yet to do that.

If you feel the US can be all that it can be while half the globe is impoverished, I have to question your ability to see the big picture.

Yeah lets make third world villagers debt slaves like us because we are so prosperous.

I beg to differ. Charity is possible when we are in a position to help others. Perhaps not that I have issues with individuals like you and me doing this, but I don't understand why OUR nation (Congress) authorizes "relief" packages to foreign countries, when plenty of kids here need it...ESPECIALLY since the last time I checked, the U.S. wasn't running a budget surplus. And like I said, when our well is dry, how many other countries are really going to help us? This isn't about patriotism/nationalism...It's about survival. We're really not in a position to help others out anymore.

I think it's time for the rest of the world who are prosperous to start showing their world leadership and pitch in to help others in need. We (as a country) are broke.

What really bothers me, it seems like so many foreign nationals despise americans and yet have no problem taking our donations. Folks laugh about our nation debt/deficit, but don't have a problem accepting aid packages that Congress authorize.

I see, you were talking about Congress-mandated aid. That is off-off topic in this thread. In any case, any foreign aid approved by Congress is usually peanuts. Let me explain. The US protects its farmers with huge trade tariffs imposed against certain imported products, like corn and avocados, etc. The result is that we, U.S. consumers, pay $1.50 for one avocado that would cost $0.25 or less in a free-trade world.

This amounts to you and me being forced to give charity to U.S. farmers. That is bad enough. But what is really atrocious is the fact that the current scheme amounts to stealing from farmers in poor countries. By imposing tariffs, we artificially reduce the income of third countries by billions. In exchange, the US Congress sends a few million dollars as "foreign aid".

And you still think we are being too generous? I don't think so. I hope this Thanksgiving our farmers were very grateful for their continued windfall. Unfortunately, they take it for granted and believe they are entitled to all those subsidies, price support schemes, and trade tariffs.

(/libertarian rant OFF)

I'm happy to help people who need microcredit locally and in the US. Two reasons to help people overseas, though: 1. Third-world entrepeneurs need (a lot) less money to get started, and 2. Their odds of getting reasonable local financing is much lower.

The key feature of microcredit is that you're helping ambitious people who want to help themselves by creating a self-sufficient business. Donations (in addition to having problems with corruption) tend to destroy local businesses by giving away what the local businessmen are trying to sell. Growing local business reduces the need for donations, and returns your donation when it's done.