On this week’s Festival Submission
Saving Solider took a lot of issue with my Festival submission. He jumped all over me highlighting the downsides.
1) There’s a reason why there’s a question mark in the title. I’m not saying that it’s fully guaranteed like FDIC. I think I outline some of the risks in the post. I was just presenting a personal finance idea that appeals to me.
2) Along with the risk of participants defaulting, I also outline how participating is potentially less risky than some other investments because of the sociology of immigrant status. Imagine you are an immigrant who barely speaks English. Banks aren’t willing to lend to you because you have no credit history. You aren’t willing to go to the bank because no one there speaks your language. You can barely fill out the form. You don’t have pay stubs. You don’t have tax returns, a mortgage, or a credit card. What do you do to raise capital then? For many people, participating is the best and only way of raising entrepreneurial capital for buying a business for $30K-70K. What if you want to raise more capital? You aren’t going to screw over your friends. And word will get around if you do. My mother’s gossip channels run around the country, into Canada, and Korea, of course.
3) My reasons for considering participating are that I know this social group very well. These are families who took care of me while my parents were hard at work. These are the people who went to church with me. They will be the pall bearers and eulogizers for my parents, guests at my wedding. I have a lot of trust in this group. As I stated, it’s about vetting the participants, something not easily done over the Internet with a credit rating on Prosper.com.
So I have very good PRO arguments why I should do this. I see Saving Soldier’s point, but I’m not in it with con-men. I’m in it with my extended community of people who are like family to me. If anything, I’m the young one who’s most likely to let them all down if I get laid off.
I may have made a mistake in writing about this subject at all, but to me, ‘geh’ is a real life example of micro-financing like Grameen Bank and Prosper.com. If you set it up right, it can work. I’ve watched it work and it can work very well.
Tim MMF wrote:
Hey, thanks for the comment. I’m curious…how do you make one of those save-o-meters?
Posted on 29-Mar-06 at 2:30 am | Permalink
mapgirl wrote:
Pull it out of the page’s HTML source code. Give me some time, and I’ll send it to later.
Posted on 29-Mar-06 at 8:53 am | Permalink
Mike wrote:
The pressures to meet social obligations is felt much stronger in immigrant and close knit minority communities, sociologically speaking.
The reason we even have things like the FDIC is because the larger society is too large and complex to enforce morality on the individual level.
I thought your piece on the geh fascinating, whether you decide to do it or not. Plus there’s risks with almost every kind of high return investment there is.
Posted on 29-Mar-06 at 9:28 am | Permalink