Comments on: Poverty and financial crisis http://stetoscope-blog.com/2008/10/15/poverty-and-financial-crisis/ Listen to the world heart beat Fri, 28 May 2010 23:43:20 +0200 http://wordpress.org/?v=2.8 hourly 1 By: Heartburn Home Remedy http://stetoscope-blog.com/2008/10/15/poverty-and-financial-crisis/comment-page-1/#comment-188 Heartburn Home Remedy Wed, 15 Apr 2009 12:52:09 +0000 http://stetoscope.wordpress.com/?p=274#comment-188 If you ever want to hear a reader's feedback :) , I rate this post for 4/5. Detailed info, but I just have to go to that damn msn to find the missed parts. Thank you, anyway! If you ever want to hear a reader’s feedback :) , I rate this post for 4/5. Detailed info, but I just have to go to that damn msn to find the missed parts. Thank you, anyway!

]]> By: stetoscope http://stetoscope-blog.com/2008/10/15/poverty-and-financial-crisis/comment-page-1/#comment-125 stetoscope Thu, 16 Oct 2008 15:13:25 +0000 http://stetoscope.wordpress.com/?p=274#comment-125 That is exactly my point. Banks just allocate to wealthy people or company and help them to nurture their growth and their wealth... But not investing on poor people they create two worlds the rich one and the poor ones. May be banks should be forced to allocate a part of the growth they produce with rich ones to the poor ones in order to nurture growth with poor people. May be it would not eradicate crisis but it may eradicate anger... That is not last but that is not least. That is exactly my point. Banks just allocate to wealthy people or company and help them to nurture their growth and their wealth… But not investing on poor people they create two worlds the rich one and the poor ones. May be banks should be forced to allocate a part of the growth they produce with rich ones to the poor ones in order to nurture growth with poor people.
May be it would not eradicate crisis but it may eradicate anger… That is not last but that is not least.

]]> By: Wallen's http://stetoscope-blog.com/2008/10/15/poverty-and-financial-crisis/comment-page-1/#comment-126 Wallen's Thu, 16 Oct 2008 09:09:46 +0000 http://stetoscope.wordpress.com/?p=274#comment-126 Interesting view! Banks main role in a capitalist system is indeed allocation of capital. The second role is contributing to the liquidity of the capital market - this role was held mostly by investment banks. The third role that came in the recent decade was to create instruments to spread risks which in turn (in theory) should help banks in their first role - allocating capital. Since allocating capital efficiently helps nurture growth, indirectly it helps reducing poverty. However, to make poverty reduction a direct (and compulsory) objective of all banks, would reduce their ability to fulfill their first and most important role: efficient allocation of capital. Microcredit is extremely interesting because it is an efficient way of allocating capital and impacts directly poverty. I doubt that we will see major banks entering massively this market but more and more smaller financial institutions are entering this market to the benefit of all. Now, microcredit is not a magic bullet in the sense that poverty won't be erased just with this but it allows a segment of the population to benefit from capital markets. It's already a first step... The crisis we are leaving imho is a crisis of "complexity". Products that nobody understood where created and sold on the premise that it allows to spread risks. People just forgot that risk needs to be understood to be assessed... Interesting view! Banks main role in a capitalist system is indeed allocation of capital. The second role is contributing to the liquidity of the capital market – this role was held mostly by investment banks. The third role that came in the recent decade was to create instruments to spread risks which in turn (in theory) should help banks in their first role – allocating capital.

Since allocating capital efficiently helps nurture growth, indirectly it helps reducing poverty. However, to make poverty reduction a direct (and compulsory) objective of all banks, would reduce their ability to fulfill their first and most important role: efficient allocation of capital.

Microcredit is extremely interesting because it is an efficient way of allocating capital and impacts directly poverty. I doubt that we will see major banks entering massively this market but more and more smaller financial institutions are entering this market to the benefit of all. Now, microcredit is not a magic bullet in the sense that poverty won’t be erased just with this but it allows a segment of the population to benefit from capital markets. It’s already a first step…

The crisis we are leaving imho is a crisis of “complexity”. Products that nobody understood where created and sold on the premise that it allows to spread risks. People just forgot that risk needs to be understood to be assessed…

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