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'The new financial system should be rooted to the ground'

Mar 20, 2009

Grameen Bank founder and Nobel laureate Muhammad Yunus says the crisis presents a historic opportunity for change. The new system should be inclusive of the three billion people at the bottom of the population who stand to lose their jobs, incomes and food for no fault of their own.

Tokyo: IPS Correspondent Catherine Makino caught up with Yunus, considered the guru of microfinance, while he was on a visit to Japan this week.

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IPS: How are the poorer countries going to cope with the long economic recession?

Muhammad Yunus: They don't have any control over the situation because they are the victims. We need to urge the world to fix the mess by using G-20, the United Nations, the World Bank and the International Monetary Fund. But there isn’t any easy solution.

IPS: Do you think the crisis will get worse?

MY: Maybe it will go deeper and continue to get worse. The first point I would like to bring out is that although this crisis has taken over all the pages of newspapers and all the hours of television, this is not the only crisis in town. There are other crises and we should not forget that.

IPS: What are the other crises and when did they begin?

MY: In 2008 the financial crisis began, but before it began there was another crisis which was making headlines all over and creating terror in many people’s minds -- food crisis. The food crisis didn’t disappear, it was simply overshadowed and it could get worse. And 2008 was the year when the oil crisis shot through the roof and that crisis hasn’t disappeared either. They’re just keeping their heads down, and at the next opportune moment it can come back again. There’s also global warming and it’s getting worse.

"There are other crises and we should not forget that"

IPS: Why do you think these crises came together now?

MY: This big package all happened in one particular time, 2008. The reason I’m reminding you is because it is not in the papers. I think all these crises have the same fundamentals, and are not a separate expression of different parts of society or different parts of the economy. They all emerged from the same basic default that we have inside the structures we have built and we have to address those before we can fix anything up.

IPS: Do you see that as an opportunity to fix a system that does not work for everyone?

MY: This is the greatest opportunity because the crisis opened up opportunities. If things go right, even if it is a little bit shaky, nobody wants to touch it because it’s working. Now, if it’s not working, everybody’s upset, everybody’s worried, so this is a good time to address those things. It is a good time to touch things we thought were sacred.

"The real victims are the three billion people at the bottom of the population who didn’t contribute whatsoever to this crisis"

We have to sink into this opportunity, pull all our energies and minds together on how to make this opportunity useful and use it right now. We don’t want to miss this great opportunity in human history.

IPS: What’s your opinion on how this crisis started?

MY: This crisis was not created by us. It was created by a very small number of people in one country (the United States). If a small number of people can create such a disastrous situation for all the people of the world, then something needs to be seen here, a lesson to be learned. They rocked the whole foundation of our system and created misery for so many people. Today's capitalism is half-baked.

IPS: How about the wealthy people who were affected by the economic crisis?

MY: Those who will be losing billions of dollars are worried about it, but when it comes down to it, they will still be left with billions of dollars, and similarity those who have millions will be left with millions of dollars. Their lifestyle will not change.

The real victims are the three billion people at the bottom of the population who didn’t contribute whatsoever to this crisis. They will be losing their jobs, incomes and food and it will get worse. They became the victims of the banking system, which we need to change.

IPS: Will the bailout packages help?

MY: We talk about the bailout packages which will get the economic machine moving, but no one is talking about the bottom half of the population. Can’t they put at least 10 percent bailout packages for the people who have been victimised by all this? This is the issue we cannot forget, and I insist we do not go back to the same old ‘normal’ situation that we are coming from.

It has to be a new normal situation which will create a new direction. It will be a bailout for the people who have been victimised by this institution.

IPS: How has Grameen Bank’s programme of microcredit been affected by the crisis?

MY: We haven’t been touched by the financial crisis. Big banks have floundered, but we haven’t. Today we have eight million borrowers who take out 100 million US dollars each month, paying back 99 percent of the time.

Our model can go all over the world, including developed countries. In New York City, Grameen America lends about 2,200 dollars to women.

We’re also talking to China and India. There are a lot of migrant workers in China who are losing their jobs. Beijing is very interested social business and India wants to get started.

IPS: How would you change the financial system?

MY: I suggest the economic system be totally redesigned. It worked for big business and rich people, but it didn’t work for two-thirds of the world because they were excluded from it. Nobody will get through the cracks in the new system. The financial system should be rooted to the ground, not making a fantasy economy built with castles in the sky which was the root cause of these problems.

Today’s business is profit making and we are human beings, not robbers. Presently business is based on selfishness, which caused the crisis, but we are also selfless human beings.

The new system should be inclusive of two-thirds of the world. For example, most people in the U.S. cannot even get a bank loan; they have to go through payday to get loans. Payday loans charge 100 to 500 percent interest rates. This is the failure of the banking system. Everybody should be entitled to a loan. Grameen even loans to beggars, who will buy fruit or candy and sell it.

IPS: Your company is involved in social business.

MY: The common principle of social business is a company created to help a social problem. Grameen Danone has used social business to address malnutrition in Bangladesh. We produce yogurt with all the micronutrients mixed in and sell it to malnourished children, so they become healthy. This company is trying to solve the malnutrition of children by business, not charity.

IPS: What other joint ventures and multinationals are you working with?

MY: We have now developed social business along with multinationals to appeal to communities to convince people we are human beings and not robbers. We have Bangladesh Intel (which is NASDAQ, Internet technology for rural towns), Verolia Water (creates clean water in Bangladesh) INTC, Groups Dabibe (yogurt to help fight malnutrition for children) and we are talking to Volkswagen, Adidas and Alliance on new projects.

Source : IPS
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