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edw519

"The default rate to date is 0.16 percent."

Stunning.

Compare that to the ho-hum attitude many Americans have toward credit responsibility.

I'd ask what's happened to our country, but I'm afraid you guys might actually answer.

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Comparing Kiva loan recipients to subprime borrowers here in the U.S. is not a good analogy.

Kiva screens and follows-up with the borrowers, something which was noticeably absent in the mortgage loan market:

William D. Dallas, the founder and chief executive of Ownit, acknowledges loosening lending standards but says he did so reluctantly and under pressure from his investors, particularly Merrill Lynch, which wanted more loans to package into lucrative securities.

He recalls being asked to make more "stated income" loans, in which lenders do not verify the information provided by borrowers and brokers with tax returns, pay stubs or other documentation. The message, he said, was simple: You are leaving money on the table aEUR" do more of them.

http://www.nytimes.com/2007/05/08/business/08lend.html

If Kiva ever turns into a similar free-for-all, then expect their default rate to rise, too.

Simple. In Africa it is so difficult/expensive to get credit that there are almost risk free loans that are not getting founding.

Second, they write status reports back to the site, so they know they are not being "used" by some "big company" - they know there are humans on the other side of the computer.

In America, there's so much capital to lend that lenders have to round up riskier and riskier borrowers just to give their money away. In Kiva countries, capital is so scarce that they can take the cream of the crop of borrowers, and then take the top 5% of them. Apples to oranges in so many ways.

> Compare that to the ho-hum attitude many Americans have toward credit responsibility.

So these third world countries are so successful because their businesses don't take any risks?

Just to add a something... you're also talking about a potential life changing opportunity. When was the last time you used your credit card and felt like it would change your life? If it did change your life for the better you would probably want to give back to the system, no?

I think most people would... It has nothing to do with being american, it's the conditions these people are living in that make them appreciate the help.

Is this a counterpoint to my comment?

No, not exactly... I was trying to add that the borrowing being done on kiva is not the same as the "ho-hum" loans being taken out by "americans".

If someone really helps you get ahead then it's likely you will want to repay them and I think that's what you can see happening at kiva. It's not a big home loan or a credit card... it's a chance to really help improve their lives.

You should man up and repost the comment you made and then deleted...

I've used a credit card to invest small amounts into my life and make it a lot better. Whether it helped me or not doesn't really affect whether I want to repay it though. I don't quite understand that.

The only ho-hum loans that I've seen people take out is 100k to 150k school loans for useless schools.

I think the point he was trying to make is that the average American is so far ahead, financially, of people in third world countries that we take for granted the availability of money and credit. There are people starving to death over there because they don't have the money or means to feed themselves. They can't get jobs because there aren't any companies. People who might want to own a company can't do that because there is no one to lend them the capital to get started. They're in an impossible situation that's difficult for us to understand because we're so far removed from it.

So, when all of a sudden, out of nowhere, some company comes along and says to all of these people, "Hey everyone, we'll loan you the money you need to start a business so you can live", the people are offered an opportunity to change their lives to such an extreme degree that they're willing to do whatever it takes to get the money and pay it back. Here, in the Western world, if you start a business, fail, and lose half a million dollars, you can brush it off and try again with a different idea and investor. Granted, it might take you a while to find someone else who is willing to put the capital up, but you can. Over there, they can't. They have only one shot, so they take it and do the absolute best they can because it is an opportunity that will only come once.

With that in mind, nearly every loan in the Western world can be taken with a ho-hum attitude becuase the opportunity will present itself again. That just isn't the case for those people.

Yes and thanks for taking the time to write this...

Yes, you don't understand and you probably never will. I know I did a terrible job of getting the point across but now given your statement I don't think it would have helped much anyway.

You may well be right in what you're saying. But:

All of this anti-credit for Americans stuff makes me laugh. This is because, relative to other countries, I think the high availability of credit and investment capitol is the strongest economic asset the US has.

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