Tier escapes housing-sale bust

I'VE written before about how many Americans feel entitled to a comfortable ride through life and then rush to dole out the blame when things get bumpy.

Now this entitlement culture is on display again with the mortgage crisis. Some elected officials, particularly those on the presidential campaign trail, are promising to bail out lenders and borrowers, freeze interest rates and stop home foreclosures.

Consider the recent installment of CBS' 60 Minutes, which offered a critical look at the wave of foreclosures sweeping across much of the country. What bothered me were profiles of young couples who, once they could no longer afford the mortgage payments and discovered they couldn't refinance because they owed more than the house was worth, simply abandoned their homes, skipping out on their agreement with the loan company. read more

"Suze Orman gives Financial Advice on ""Opraha"" TV Show"

There is a misperception that the high interest rates of microfinance gouge the recipients. To the contrary, borrowers benefit significantly despite high interest rates.

Why? Returns on investment for microenterprises are extremely high. Studies—including those by my own organization—have estimated returns from microenterprises fall in the range of 50% to 100%. When a borrower is earning such high returns, paying interest rates in the range of 26% (what SKS charges), or even higher, is perfectly acceptable to a borrower.

Such high returns exist in microenterprises because microentrepreneurs in the developing world run businesses (1) that primarily use family labor, which is more productive than hiring outsiders, (2) that have low infrastructure costs (e.g., village groceries are often home-front stores), (3) that are in the informal sector so there are no taxes and legal costs, and (4) where financial capital is a small percentage of the overall inputs, which are primarily labor. read more