Before we go into some of the method of TrillionDA maps - take a preview at http://microprosummit.com - let's commune round why it matters if today's generation are to make the local to global networking decisions that sustain future gen

This op-ed from Europe's senior economist contrasts the choice between microeconomics communal sense and transparency of free markets and the costs to our next generations of having to pick up casino banks who know they have no limit to their recklessness cos they are too big for society to let go under.

The Importance of Dr Yunus

By Norman Macrae 

The Nobel Peace Prize for 2006 was controversially awarded,  in Oslo,  to a " banker  for the poor"  in usually basket case Bangladesh.. Since the  microcredit  system  pioneered by   this Dr Muhammad Yunus really has lifted record millions of  Banngladeshi   women from the world's direst poverty. During his February 2000 book launch in London of "Creating a world without poverty – social business, future of capitalism"  we invited 30 people to have lunch with him at the Royal Automobile Club, St James,   - and I thrill fully to his stated aim to "harness the powers of the free market to solve the problems of poverty"

 To  his fans'  delight  and astonishment , he is  achieving   exactly that.  In the past quarter of a century,  his Grameen bank has lent (without collateral or lawyers) billions of dollars to millions of poor women in the previously starving villages of Bangladesh., and  has got an extraordinary  99% repayment  back.  .His often- illiterate customers have started millions of  successful small businesses in   unimagined  fields like  mobile- telephone- ladies and  saleswomen of the world's cheapest yoghurt. All the successes have been won by keeping  costs incredibly low.  A  banking operation that would cost Goldman Sachs  $100 in New York or London  would cost Grameen  in Bangladesh well under 100 US cents.

  This is a huge development in human history. Money can now be directly channelled into productive  use  by the world's poorest billion people, solving problems statesmen won't  yet believe.. .  Microcredit  would best  woo poor Afghans off growing heroin., which drug - barons buy from them at pence per gram,. then sell that gram in London for up to  £100 ( not a  distribution  system  with the needed cheapness and efficiency at   which microcredit excels). Yunus  would set Afghans, like Bangladeshi, more profitably selling yoghurt instead. Yunus's winning ways with Islamic women  should work even better with unveiled  African mommas, whose fertile soil  plus free  farm trade with Europe can start a huge African farming revolution.

  Most  bizarrely. efficient because cheap lending to the poor has emerged to work its  miracles. , just as crashing because mega-costly banking to the rich threatens  to cause some sort of  initially inflationary  world  slump . Words  like "inflationary" and "slump"  will soon prove dottily  incompatible,  but the west is dotty in assuming  only manufacturing must move to cheaper lands.  Bigger threats or crashes or wise competitive changes face the three occupations our politicians  have deliberately made more expensive by cartelising or otherwise protecting, them  - our farms, our lawyers , and now our banks,  The rulers of oil-rich lands have  similarly made their oil crazily  too expensive ( see this article's final paragraph  for the most probable results).  . That sets a staccato agenda for this article.   We  had better start by examining how microcredit  for the poor almost accidentally ,  without local politicians noticing  and thus trying to stop it, came about

 START IN  A  STARVING   VILLAGE

SA : During Bangladeshi's terrible  famine year of 1974, Dr Yunus ( who had won his doctorate in economics in an  American university)  was back in his 1940  birthplace of Chittagong,  as professor of economics at the university there. He took a field party of his students to one of the famine-threatened villages. His group analysed that all 42 of the village's small businesses (such as tiny farm plots and  market stalls) were indeed going bust unless they could borrow a ridiculously tiny total $27 on reasonable terms.

SB   : First thought was to give the $27 as charity. But Yunus lectured that a social business dollar,  which  had to be paid back after careful use in an income-generating  activity, was much more effective than a charity dollar, which might be used only once and frittered away.  The "careful use", says Yunus, "means that the moment  you bring in a business model , you become concerned about the cost, the revenue, how to bring more efficiency, new technology., how to redesign, each year you review the whole thing.  Charity doesn't bring that whole package." Mercifully, with close overwatch by the students, all those first 42 loans were fully repaid, and lent back. After nine years of further experiments,  Yunus in 1983 founded his Grameen (which means Village) Bank. Its priority was to make loans that were desperately needed by the poor.  This is the reverse of  the usual banking priority , which  is first ( and in credit crunches only) to make the safest loans , those to the rich who can provide collateral,, .

 In the next 23 years, Grameen provided  $6 billion of loans to poor people with that astonishing 99% repayment rate. In 2006, it had  7 million borrowing customers, 97% of them women,   in 73.000 villages of Bangladesh. Microcredit had by then reached 80% of Bangladeshi's poorest rural families . Over half of  Grameen's  own borrowers had  successful small businesses, and had risen above the poverty line. The women predominated because they usually are the poorest people in rural Islam, and proved best in paying back.

When a Grameen bank manager goes to a new village, he has entrepreneurially to search for poor but viable borrowers . He earns a star if he achieves 100% repayment of loans, and other stars if his customers are fulfilling most of  the 16 guarantees that all customers are asked to pledge, ranging from intensive vegetable growing, through sending all  their children  to school, to renouncing dowries. A branch with  no stars would be in danger of closing, so borrowers rally round with suggestions, such as which unreliable repayers to exclude.

An early income generator was the profession of telephone ladies . They borrowed enough to buy a cheap mobile phone from a Grameen subsidiary. They  draw fees for  phoning to see if more profitable prices for crops  are available in a neighbouring village, and from anybody who wants to hire the phone to contact the outside world. This is a job that could only become important in a microcredit setting. The owner of a mobile phone in richer suburbia would not find many customers to hire her set.

One special desire of Yunus was to improve the nutrition of poor children in Bangladesh, and he formed a social business with the largest  French food multinational. This Grameen-Danone  test marketed to find what sorts of fortified yoghurt Bangladeshi children would like.  Although Danone at first wanted large plants with refrigerated systems, Grameen won the debate to make them small plants who bought local milk. It hired very cheap local distributors who knew where there were babies whose parents might buy  yoghurt at a few cents per bottle. To keep the price that low. Danone had  to agree not to pay any dividend from the sales of the yoghurt in Bangladesh, but its $1 million investment remains returnable and it has learnt a lot about sales of a new product in poor countries.

A French water company is forming  a similar social business with Grameen to remove arsenic from Bangladesh's rural water supply ; and President Sarkozy envisages a  course to train French experts in spreading  Yunus's ideas at one of France's grandes ecoles..Some American computer concerns ( including Bill Gates) may join to  find the best way to establish computer centres in remote villages. The telephone ladies will then face competition but constant competition in new technology is one  name of this game, which is why it should also hurry forward in Africa.  

Slump ahead  -  Japanese style?

If a Grameen branch consistently falls below 98%  repayments, it closes; if that first branch in 1974 had failed, it would have cost $27 ..In 2006 giant American banks grossly overlent on subprime mortgages, then sold these   loans on in securitised and even "derivatised" (ie, misleading)  packages to weaker banks, who have been trying desperately to hide the consequences from their shareholders ever since. The   bad debts consequently held  by financial institutions  worldwide   are estimated at  $200 billion by the most glib bankers, and at   nearly $1 trillion., by the more independent IMF .Eiither  overhang  is bigger  than  that at the start of 1929-33's great depression.

        There is still a small risk of a 1929-33 in 2008-12, so read on for two more paragraphs of bad news. Most reputable historians of 1929-33 have concluded that the  wisest  advice given in 1929 was that by the  Cambridge economist Maynard  Keynes, - namely, increase budget deficits before a slump strikes. That is not the view  of  current European finance ministers, Their first plea has been that all banks  should be honest about the extent of their bad debts, . Eh? If each bank's  statement in early 2008 had been appallingly honest about its share of  bad debts, runs by depositors out of   them would quickly have accelerated  far beyond  anybody/s   control.

 But  2008's aptest cautionary tale  is almost certainly  Japan in 1989.  In its miracle decades up to the  mid-1980s,  Japan had a relaxed system of banking to the poor, not unlike Yunus's. The big companies like Nissan bought their ball bearings and other components very cheaply from tiny firms to whom Nissan's own bankers lent  without  collateral or lawyers. Then Harvard  taught Japan its factories should buy components by computer just in time from bigger firms.. Japanese  banks switched to lending only to the rich, and ballooned real estate prices so  that by 1988  one golf course near Tokyo   had a greater nominal land value than the whole  US state of California. When this bubble burst, all Japanese banks had bad debts, which the government helped them to hide (very much as western central banks are now doing by letting banks turn their bad mortgages into safer gilts) .Japanese living standards stopped  rising  dynamically,   right until now. This is the sort of long stagnation-slump into which  western' politicians are most likely leading us, and they will wrongly say it is an inevitable result of  China's and  India's  pinching  our jobs.

Extreme capitalism and communism become the same system when multibillion organsiational system become the perk of an insider group and lose all communal truth for customers, societies, workers and owners. Let.s use Trillion Dollar Auditing to make sure all our childrens enjoy Future Capitalism