Today I woke up wondering how can we get through the economic crisis. How am I going to help myself if I get retrenched? How can I help my family members and friends if they are affected. Let's forget about government assistance. Consider it that we don't qualify for it. How exactly can we get through the tough times?
In the case of economic crisis and without government assistance I believe the community should come together and form a Financial Self-Reliance Society which members of the community together form a society with the aim of helping each other financially.
I believe that many will shoot down such a suggestion for not being viable but believe me, it can work because such societies do exist. Think Australian credit unions and informal finance groups in Asia.
For instance, the community of a suburb forms a Financial Self-Reliance Society which in essence act like a bank but with a community focus on helping members to weather through the tough times. When the commercial banks stop lending and if without government assisstance, members can apply for soft loans from their society such as paying off necessity expenses. But one critical aspect must be emphasised is that the society should run for profits. Yes, interests should be charged on the loans albeit at much lower rate than the commercial finance rates.
Running for profit is to bring home the point to borrowers/members that the society does not exist to provide free lunches to them. The society is formed only to assist members financially, and other auxilliary assistances, that they otherwise wouldn't be able to from outside sources.
But how is this possible?
It is not impossible and of course it takes up time and resouces but the most important aspect is participation and financial contribution by members who are cashed up. Inspirations can be drawn from the Chinese clan associations across South China and the Chinese diaspora which have became history in today's world. But back in the old days Chinese immigrants in host countries were usually discriminated upon by the government and local population and so clan associations were formed to assist members from financing to organising funerals. Through such organisations did they manage to get through the toughest of the tough times and eventually settled in the host countries often with substantial economic powers.
One lesson we can learn from these associations is that when we are united we can pull through adversity. Although the hey days of the clan associations are long gone but another form of financial assistance group was born and took their positions, known as informal finance in the academic circle. I am not referring to loan sharking.
The type of informal finance I am referring to is a group of people coming together to pool their money and loan that money to a member of the group who need it most by bidding up the interest rate although often the base rate is way lower than commercial rates and not to mention on a much better term. And I can tell you that it works for having seen how the entire process functioned. Families in dire need of cash flow to get through their financial crisis resorted to such informal finance since the banks or government wouldn't help and turning to loan sharks will only compound their financial problems.
This is why I believe that a Financial Self-Reliance Society can work. Imagine there are such societies in every community council we would see a society becoming self-reliant and innovative without resorting to taxpayers money. The system would work even better if there is government support by providing incentives for such societies to be formed. Add in a bit of regulation and providing expert support I believe such a system can flourish sparing the government time, effort and resources to focus on other critical areas of the economy.
So far my suggestion on how we, as a community, can help ourselves during tough economic times is only surfing on the skinny but I will spare you the details of the nitty-gritty but nonetheless it is a 'why not idea'.
“I believe that I was lucky to have suffered. Some people don’t realise that in suffering there is great potential, because if you are deprived for any reason, politically, socially financially, or otherwise, and if you set your mind in the right direction, you will find that the only way to survive is for you to excel, by being better.”
- Talal Abu-Ghazaleh
There is a Chinese Saying which literally means "Turning adversity into opportunities" and I believe yes, we can.
In the case of economic crisis and without government assistance I believe the community should come together and form a Financial Self-Reliance Society which members of the community together form a society with the aim of helping each other financially.
I believe that many will shoot down such a suggestion for not being viable but believe me, it can work because such societies do exist. Think Australian credit unions and informal finance groups in Asia.
For instance, the community of a suburb forms a Financial Self-Reliance Society which in essence act like a bank but with a community focus on helping members to weather through the tough times. When the commercial banks stop lending and if without government assisstance, members can apply for soft loans from their society such as paying off necessity expenses. But one critical aspect must be emphasised is that the society should run for profits. Yes, interests should be charged on the loans albeit at much lower rate than the commercial finance rates.
Running for profit is to bring home the point to borrowers/members that the society does not exist to provide free lunches to them. The society is formed only to assist members financially, and other auxilliary assistances, that they otherwise wouldn't be able to from outside sources.
But how is this possible?
It is not impossible and of course it takes up time and resouces but the most important aspect is participation and financial contribution by members who are cashed up. Inspirations can be drawn from the Chinese clan associations across South China and the Chinese diaspora which have became history in today's world. But back in the old days Chinese immigrants in host countries were usually discriminated upon by the government and local population and so clan associations were formed to assist members from financing to organising funerals. Through such organisations did they manage to get through the toughest of the tough times and eventually settled in the host countries often with substantial economic powers.
One lesson we can learn from these associations is that when we are united we can pull through adversity. Although the hey days of the clan associations are long gone but another form of financial assistance group was born and took their positions, known as informal finance in the academic circle. I am not referring to loan sharking.
The type of informal finance I am referring to is a group of people coming together to pool their money and loan that money to a member of the group who need it most by bidding up the interest rate although often the base rate is way lower than commercial rates and not to mention on a much better term. And I can tell you that it works for having seen how the entire process functioned. Families in dire need of cash flow to get through their financial crisis resorted to such informal finance since the banks or government wouldn't help and turning to loan sharks will only compound their financial problems.
This is why I believe that a Financial Self-Reliance Society can work. Imagine there are such societies in every community council we would see a society becoming self-reliant and innovative without resorting to taxpayers money. The system would work even better if there is government support by providing incentives for such societies to be formed. Add in a bit of regulation and providing expert support I believe such a system can flourish sparing the government time, effort and resources to focus on other critical areas of the economy.
So far my suggestion on how we, as a community, can help ourselves during tough economic times is only surfing on the skinny but I will spare you the details of the nitty-gritty but nonetheless it is a 'why not idea'.
“I believe that I was lucky to have suffered. Some people don’t realise that in suffering there is great potential, because if you are deprived for any reason, politically, socially financially, or otherwise, and if you set your mind in the right direction, you will find that the only way to survive is for you to excel, by being better.”
- Talal Abu-Ghazaleh
There is a Chinese Saying which literally means "Turning adversity into opportunities" and I believe yes, we can.
1 comment:
Agreed. In fact, I have also similar thought while putting together presentation on Financial Permaculture / Permaculture Ecovillage. More details available on my blog www.sohominium.blogspot.com. Maybe we could work jointly to fine tune the most workable version in Australia / Malaysia.
Eric Lim
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