Norman Macrae Foundation

[chris macrae]

...

The Foundation's experiences are that Western macroeconomics and macromedia accidentally spun ever less economic outcomes in many global markets - Norman's last article on the Yunus-inspired potential for 10 time more economic community banking be one case   The Foundation welcomes any opportunity to journalise the 50 most exciting projects using yunus type models, inviting youth's most heroic goals and matching leadership investment   First Year Report Approximately $100000 has been invesnetd in each of these 3 areas:   Journal of Social Business   vaiosus micromedi for youth hubs and leafleting and mebryponic portals - for example our leaflet format entrepreneurial bangaldesh is updated at each new major networking evfenjt - eg The Economist boardroom 50 person celebration of Norman Macrae and Muhhamd Yunus Economics Nov 2011   Jamii Bora and maps of Africa's most exciting mobile networks of youth   Norman's Ftaher-in_law workled for 25 years with Mahtama Gnadhi and was fascinated by how Gandhi innovated a totally new eductaion system befrore directly mediating India'sfuture beyoind English Empire. So we are also extremely interested in revolutionary educational projuects empowering job creation and directing productivity of youth to serving heroic goals they vote for   Prior to setting up Norman Macrae Foundation we had spent much of 3 years surveying 2000 people's views on yunus book and circulating 10000 dvds on greatest projects of Grameen in Dhaka   Some of the people who most supported Norman's beliefs and publications: 1976 Roman Prodi translated contiental europe version sof Norman Macrae's survey of Entrepreneurial Revolution in The Economist Dec 1976   The Imnperial family of japan celevbrated Noiramn'[s interaction of economics with Japanese Global Marketing with ward of Order of Rising Sun with Gold bars for making our global marketing more joyful than it would otherwise have been   Sloan management school provided Norman with advances fo0r his Biography on Von Neumann - whose views on the compound reisks economics were perpetrating were even more vivid than Norman's   More technocal references   Norman Macrae 1955 The London Cpoital Market - conclusion Capital Markets are the main conssitiution peoples in p plavce have for investing in intergenerational development; 1972 updateThe Next 40 year- the idea that capital markets should be for global corporations that owe no responsobility to peoples whose savings they take will, if not chnaged, compound global finacial meltdonw by 2010s   1962 Consider Japan: The most exciting nation for everyone to trade with over the next quarter of a century   1963 Sunshades in October- since world war 2 a njew species "macroeconomist" has grwon like topsy- it is sponsored by big government and short-term speculators; its rules pose the gereats riskl to te future of youth   1976 Entrepreneurial Revolution - the last quarter cenbtiry has compounded 10 macroeconoomic errors; the next quarter centiuryfaces the exciting chalenge of redesigning all organsiational system to regain entrepreneurial capacvity- we need to explore how to do this inj diverse ways before nay trends to go global   1984 The net generation faes greaster wordklwide chnage than any in hostory - thios will lead to one of 2 opposite outcomes- euther an era of 10 timesgreater human productivity or george orwell's big brother outcome

.. ....................................................How to Avert A Great Depression Through the Hungry 2010s? Answer, By Making All Banking Very Much Cheaper This was The Economist's Norman Macrae's last article written in December 2008    If banks in rich democracies had been truly competitive institutions, at least one of them somewhere would have seized he main opportunity created by the computer.   This main opportunity was to make all deposit-banking vastly cheaper than ver before. By this cheapening it should make such banking hugely more profitable. Then further competition would search for the cheapest ways to guide all the world's saving into the most profitable (or otherwise most desirable) forms of capital investment, thus enriching all mankind.   Instead, during 2008 the total losses of banks in rich democracies - in North America, West Europe and Japan - soared into trillions of dollars. Fearful for their solvency, these banks virtually stopped lending. The issuance of corporate bonds, commercial paper, and many other financial products largely ceased. Hedge and insurance firms also crashed.   Mankind is thus threatened in the 2010s with its longest great depression since the hungry 1930s.   Why? The strange answer seems to be that other happy consequences of modern technology promised to make this cheapening even faster. Call centres in Bangalore vastly undercut the middle class salaries of Midland bank clerk who until the 1950s expensively answered clients' questions in their branches in the City of London.   Cheap mobile phones kept village ladies in once miserable Bangladesh as fully in touch with market prices as is the chief research officer of the First National Bank of Somewhere in California. His weekly salary is still 1000 times greater than the previous annual earnings of that village lady.   The cost-effective way of running the old Midland or First National then seemed to be to cut its total salary cost by something like 99%. This did not please Western welfare governments, or the decent chief executives of the old Midland or First National bank.                                   *** Awaiting the sensation of a short sharp shock From a cheap and chippy chopper on a big black block - WS Gilbert in The Mikado - why it is uncomfortable to work in an industry which needs 99% redundancies.   Western welfare governments have long preferred to run their banks in high cost cartels, and even invented reasons why this seems to be moral. Their deposit-banks have usually kept in cash only 10% of the total amount deposited with them. If 11% of depositors suddenly feared that their banks might go bust, this could accelerate a run that would send them bust indeed.   Governments therefore thought that depositors would be less fearful if they were assured that the banks were officially and tightly regulated. Actually, this mainly meant that the banks had to hire ever more expensive lawyers so as to escape any crippling consequences from this regulation. The attached quote shows that Samuel Pepys understood this fact of life in his Diaries of July 21, 1662. I see it is impossible for the King to have things done so cheaply as do other men-- Samuel Pepys on discovering an important commercial fact of life in his Diary, 21 July, 1662   The decent bosses of the deposit banks felt that the best way of avoiding sacking nine tenths of their staffs was by competing with a very different sort of financing called merchant banking whose earnings and bonuses were far more generous than those given to their own staff. These merchant banks were of peculiarly differing pedigree.   In London, it was assumed that they could best be run by families like Barings who had done the job for over 200 years. In the 1990s, Barings went totally bust because one of its hired traders bet much of its money on a hunch that a bad earthquake in Japan meant that the shares of Japanese banks and insurance companies would become more profitable.   In Zurich, merchant banks felt it most moral to keep the accounts of their depositors totally secret, especially if these accounts were being used to defraud their own countries' tax authorities. In 2008 those secretive banks were then defrauded.    In Wall Street, Goldman Sachs and Lehman Bros bid up their annual bonuses to millions of dollars for each partner. In 2008 even Goldman Sachs made a loss and Lehman Bros went bust.   A former chairman of the Federal Reserve argues that "fearful investors clearly require a far larger capital cushion to lend unsecured to any financial intermediary now". He therefore thinks that taxpayers money should be ladled into them to make those investors less fearful. This seems far more likely to make depositors intermittently more terrified and cause any depression into the 2010s to linger on and on.   In the 1930. the chief economic adviser to the government of  Siam's was called Prince Damrong. I try always to remember it- quote from former director of International Monetary Fund.   One of the few big banks to make a profit in 2008 was the Grameen Bank (which means Village Bank) in that once basketcase country called Bangladesh. The sole staff in a branch serving several villages was once a woman student. It is now more usually someone who has learnt to use the computer in the right way.   The rest of this report will examine how this marvellously costcutting operation works. Perhaps the most relevant and terrifying analogy is to commercial airlines. In 1945, there were only a tiny number of passenger airmiles flown on them. In each successive year these increased hugely and in this slump time 2009 there will be billions of passenger airmiles flown. In the late 1940s most governments therefore created national airlines and were confident they would flourish in this boom industry, with official regulation assuring they would be safe. Instead all proceeded to lose money, and later privatised but large airlines also did. The present trend is to cost cutting airlines like Ryan Air.   The same will happen to banks. Large banks mislending to the rich have run into losses that have created the slump. Politicians, thinking they are saving the world, are mislending huge sums to these mislenders and will eventually make the slump worst.   How to create cost-cutting banks? To begin with Consider Bangladesh- peculiar as this may seem..