Microfinance - What can we Learn? KYC

I'm a regular listener to Peter Day's World of Business Podcasts on BBC Radio 4. A recent program about the workings of Microfinance, its benefits and potential pitfalls, brings me back to a very important concept in banking... Know Your Customer or KYC.

As microfinance depends on using one's social capital than actual collateral as the basis of a loan, it is paramount to really know the customer who's taking out the loan. It is the strength of this social capital that really pushes the customer to make the loan successful, right from asking for the right amount of loan, to using the money wisely, and then repaying it promptly. Perhaps the bankers should have kept this in mind instead of making all those NINJA loans!

You have a mortgage? Oops! Maybe you can't choose where you live!

An interesting post on the ever excellent Planet Money blog points out how the recession is preventing people from moving around, as they are staying put in their mortgaged home (that might be underwater on the mortgage). What would be interesting to see is whether a whole generation grows up being less likely to own a mortgage, and preferring instead to rent. Or maybe home ownership as part of the American Dream is just too deeply embedded in the American psyche?

A little wall street humor..

I refer to myself as a jaded wall street worker. Part of the reason for this is all of the unsavory behavior going on with the likes of Bernie Madoff, Jerome Kerviel etc. What is actually true is that most people on wall street are honest and just want to get paid to do the right thing, but we get a bad rap for the scammers who invariably get attracted by the money on wall street.

Someone sent me a link to this little piece "A Parable On How Wall Street Works" on the blog An Investment Banker's Take On Life". What's not so funny is that a significant percentage of people on wall street would actually do this if they could!

Is Clustering a way to Thrive?

The excellent NPR Planet Money Blog had a posting Why Clusters Of Like Businesses Thrive about the advantages of having similar (or even identical) businesses cluster together in a particular area. Briefly, having other nearby businesses with similar needs and concerns as your own business seems to result in many benefits such as reduced ad-spend, increased safety, better access to wholesalers and customers, etc. In return, you may have a lower margin, but make it up on much higher volume.

I was wondering how this concept applies to individuals with similar cultural background clustering together. One of the obvious advantages of living in a neighborhood with a distinct cultural flavor could be that a residents association could negotiate better prices from nearby businesses for all members of that community; there would be stronger collective power to influence the local politicians for neighborhood enhancement; there would be more of a feeling of a neighborhood and a sense of belonging to the community, something that I really miss here in New York City; religious and cultural events could be celebrated with greater enthusiasm and participation.

The disadvantage would be that you would miss out on the richness of exploring the different approaches to life that other cultures have.

I am sure there are lots of other angles to this that I am missing out on? Would love to hear some other viewpoints on this.

Maybe Money(or Tax rate) is the only important factor?

Continuing my thoughts from the last post, I see this article explaining how bankers and investment managers are planning to move to Geneva from London because of its lower tax rate. Interesting how none of the other factors I had dwelt upon earlier were nowhere on the article's radar! On the other hand it did mention that availability of good schools was an important factor too (although I feel that most places will generally be able to provide this nowadays, albeit at a high cost).

Where Should We Live?

What factors decide where one lives? Until a few years ago, there was not much choice — one simply lived in the environment and culture where they happened to grow up. In the last fifty or so years we have seen people migrating from "third world" countries to the first world for a better life for their kids or freedom from persecution, etc.

Increasingly however, as more and more places in the world seem to be rising to a globally accepted standard of living, what is(are) the determining factor(s) for where one decides to grow roots? Is it just money— where one can build up a nice nest egg? Or is it where one has family? Or where one has friends? Or is it where one has access to the cleanest air and water? With the emergence of a global community, with global morals and norms, and the primacy of English as a sort of de-facto lingua franca, do cultural factors still play a very important role in this decision? With fast jet travel, is distance from family that big of an issue? Is it further reduced by constant contact through phone and videoconferencing technologies?

This is one of life's tough questions for me, and I have to struggle with myself to answer these questions honestly. I seem to be just going through life right now on the basis of momentum. So I may just keep going this way as long as I have a decent job that pays relatively well, and put off any decisions until I am forced to make one, or maybe worse, until I have no choice!

Or maybe it truly doesn't matter. Maybe our lives will become more mobile and semi-nomadic as travel becomes easier?

The Overlook

This blog is about perception and reality. It is a reminder to me, a jaded worker on Wall Street, that there is much that is beautiful that we miss out on when we fail to stop and look, feel or perceive. I'm not sure what exactly I am looking for, except that whenever I stop to see and think, I will find something beautiful, whether it is an image, a thought or an inspiration. Come to think of it, what is already beautiful is just the idea that there is an infinite level of complexity in each and every moment that we witness, and that is what makes this life worth living.