Lebanon’s banking system has helped ease the pressures of the financial crisis within the nation. Photo: thriol (flickr)

Lebanon’s economy grew by 9 percent last year, one of seven nations to show positive economic growth in the midst of a worldwide financial turndown.

This figure is especially surprising when you consider the amount of economic hardship Lebanon has endured recently — including attacks from Israel, strife between the nation’s two political parties, ongoing civil conflict, few natural resources, and a national debt of almost $46 billion.

Lebanon’s economic security has primarily come from its risk-averse banking sector. In 2007, the country’s chief banker, Riad Salameh, advised Lebanon’s commercial banks to "get out of all international investments related to the international markets." Conflict also contributed to what Salameh described to the BBC as the banking industry's "conservative reflex":

The system we created has been tested against wars, against instability, against political assassinations. And our sector would be much more developed if Lebanon did not have political and security risks, but it has also induced us to have a conservative reflex because we were always getting ready for the worst case scenario.

Lebanon isn't going to get through the global economic crisis unscathed — the economy is expected to grow by 3 to 4 percent this year. Still, due to its conservative banking sector, the Lebanese economy is in better shape than most.

Bank balance sheets.

To the average person they are complicated, and frankly, pretty boring. But understanding bank balance sheets is extremely helpful when trying to make sense of the financial crisis.

Once again, This American Life teamed up with NPR's crew from Planet Money to do a very nice job of explaining the collapse of the banking system — in just under 40 minutes.

Protesters clash with police. Photo: pallih (flickr)

Is it possible for an entire country to actually go bankrupt? In Iceland's case, the answer appears to be a resounding 'yes,' setting the stage for concerns that other seemingly well-to-do Western countries may be quick to follow suit.

In case you haven't been following Iceland's increasingly deteriorating situation, the Cliff Notes version of the story is that a handful of entrepreneurs and banks borrowed more money abroad than what was sensible, and in the post-Lehman Bros. credit crisis, things have gone rapidly downhill from there. First all the major banks collapsed and became nationalized, followed quickly by the free-fall of the krona currency, and most recently several government officials have resigned after a series of angry demonstrations by citizens.

All this is especially worrisome considering that Iceland won the UN's "best country to live in" poll just last year. Now the appropriately-termed financial meltdown is hitting its citizens the hardest, as unemployment is expected to reach up to 11 percent this year (compared to 0.8 percent in December 2007). Their country's declaration of bankruptcy has caused many Icelanders to express anger over their government's mishandling of the economy and fear about their future. As one citizen put it, the situation is "kind of like in the Matrix, you wake up and realize everything was a lie." With higher mortgage costs, few jobs and rising food prices, half of Icelanders aged 18-24 are now considering immigrating to countries such as Norway and Sweden for work, further testifying to the severity of people's worries.

To try to combat the crisis, Iceland is now seriously considering applying for membership with the EU, a decided contrast to its centuries-old isolated and independent Nordic character. Suddenly, it no longer feels inconceivable to imagine other western countries forced to declare bankruptcy in the future, especially since Iceland's $1.6 billion loan from the IMF makes it the first western country to receive a loan from the IMF since 1976. Rising unemployment rates across the world raise the uneasy question of which country will become 'the next Iceland,' and when.

Business Week's "The Ugly Side of Microlending” presents a seemingly untold story regarding microfinance. Many (if not all) in the aid and development sector laud the triumphs of micro-credit for the world's poor; and, in truth it has been a driving force for positive change in a number of people's lives. However, when there is a profit to be made a variety of more unsavory business practices arise.

Keith Epstein and Geri Smith do a great job of investigating the variety of for-profit banks that operate within Mexico, painting a bleak picture for unsophisticated and largely uneducated borrowers. Drawn by lack of regulations and a government bogged down by corruption Mexican banks are charging anyway from 50% to 120% annual interest on loans.

So, what does that mean exactly? After a 104 week payment plan of $23 a month, an average borrower will end up paying more than double for a $1,100 Whirlpool refrigerator. What's more-- large corporations such as Wal-Mart are moving onto the scene, having obtained their Mexican banking license last year.

The flip side of microfinance is one that should receive more attention. With the advent of micro-credit to the world's radar screen one cannot blithely assume that all lending institutions are created equal. So what's the answer? More regulation? Increased education? I suppose one cannot discount that America has similar institutions-- the Pay Day cash lending services that frequently appear in strip malls often invite sharp criticism domestically. Either way—it seems clear that for profit banking institutions charging astronomical interest rates seem to be perpetuating the very poverty they are supposedly attempting to alleviate.