This year's Nobel Peace Prize was given to the guy (Muhammad Yunus )who started the microcredit industry. On the surface, microcredit sounds like a great concept: make loans to these poor people whom the traditional banks will not touch. But, after scratching the surface, I find the whole things very fishy: 1. The default rate: Yunus claimed the default rate is only 1.5%. This is much much higher than that for the comparable population sample in US. 2. The interest charged on such loans is very high: 20%. This interest is comparable to those charged by loan sharks to poor people. To understand how high the interest is, unless a borrower can make more than 20% returns on such a loan, she is better off without it. In an economy that grows 5.7% (source, CIA factbook), I just don't see how many people in Bangladeshi can break even on such loans. Any comments?