Liquidity Looked in the Mirror but Insolvency Stared Back

New data from the U.S. Education Department confirm that view.

In November, the House of Representatives amended legislation to renew the Higher Education Act with a provision that would extend to three years, from the current two, the �cohort default rate," which gauges the proportion of student loan borrowers who default within a certain time period after they leave college.

The change, proposed by Rep. Timothy Bishop (D-N.Y.) and Rep. Raul Grijalva (D-Ariz.), is designed to make the cohort default rate a more realistic assessment of how individual institutions (and lenders) are faring in keeping student borrowers on track to repayment, both to gauge students’ indebtedness and potential failure by colleges in ensuring that their students are getting an affordable and valuable education. read more

In search of an insurance policy

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

Foreclosures nearly double from year ago: report

Another subprime-mortgage-meltdown-sized risk could be looming for investors: global warming.

That alarm was sounded at an investor summit at the United Nations headquarters in New York, at which 480 investors, pension fund leaders and corporate executives from around the globe were warned that the vast majority of companies are ill-prepared for the Earth's changing climate.

Many oil producers, utilities and manufacturing plants have yet to factor in the added expense if the United States -- as is expected in the next few years -- imposes caps on carbon-dioxide emissions. Similarly, many companies with big real-estate holdings in U.S. coastal regions haven't calculated their exposure to increased tropical storms and rising seas.

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