The Robin Hood Tax is the UK version of the Tobin Tax which was at the beginning of ATTAC in France ten years ago.

As an anti-poverty campaign, it is more pragmatic than the economic theories of Tobin Tax definitions or the political demands of the Attac network.

Supported by a coalition of 48 organisations, the Robin Hood Tax campaign spells out what the income should be spent on.

And in the spirit of our times, it uses Twitter and YouTube.

The video is set to private until the launch which is set to 0.05am in parallel with the 0.05% tax that Robin Hood wants to take.

However, Mervyn King, the Governor of the Bank of England, dismissed the idea of a Tobin Tax only recently, according to the FT.

Of course, this tax doesn’t get to the root of all evils, but at least it’s bound to capture people’s imagination!

Updates here.

The problems are deep and they are institutional above all else. One just has to ‘follow the money’:

– who pays government officials?
– who pays civil servants?
– who pays politicians?
– who pays bankers?
– who pays central bankers?

What is the difference between what we believe happens and what is really happening with money: who prints it and for what purpose? More on Money as Debt also known as Credit.

Journalists write their opinions down. Not necessarily facts… Nor do they understand the difference between money backed by the real economy and money created out of thin ear, or through ‘quantitative easing‘, at the cost of Nation states…

By John Willman, Business Editor

Published: December 23 2008 23:32 | Last updated: December 23 2008 23:32

The Treasury is looking at a scheme to persuade Britain’s wealthy to donate an extra £5bn a year to help relieve world poverty, at no cost to the exchequer.

Although the richest 20 per cent give most to good causes in absolute terms, they donate on average 0.8 per cent of their income to charity, compared with the 3 per cent donated by the poorest fifth.

The scheme was devised by Nobel Prize-winning economist Sir James Mirrlees and drawn up with Renu Mehta, founder of the Fortune Forum networking organisation for the super-rich.

Dubbed the MM (Mehta/Mirrlees) proposal, the scheme advocates a 50 per cent tax relief on donations towards the UN’s millennium development goals, which would effectively match pound for pound what wealthy donors give.

The cost of the tax relief would be met from the government’s overseas aid budget, effectively doubling the amount diverted to encourage donations and helping the UK meet its goal of contributing 0.7 per cent of national income to development.

Sir James, who is chairing a review of the UK tax system for the Institute for Fiscal Studies, believes the current incentives for charitable giving, with a maximum of 40 per cent tax relief through gift aid, are poorly understood.

A 50 per cent tax relief would prove much more attractive, as it did with a scheme to raise money for universities in Hong Kong where the Nobel laureate is now based. If adopted in all G8 nations, it could raise more than $78bn, he believes.

Ms Mehta said her aim was to raise the level of charitable giving in the UK, currently 0.9 per cent of gross domestic product, to US levels of 1.9 per cent.

Donors would be able to specify to which development sector their money was allocated – clean water or disease prevention, for example. Money raised would be kept separate from the government’s aid programme to reassure donors it was spent efficiently and not wasted on excessive administration.

The scheme is under consideration by the Treasury at a time when the financial crisis is expected to lead to a sharp drop in charitable legacies on which many good causes rely.

“The MM proposal sets out to boost voluntary donations for these issues whilst simultaneously freeing general government revenues to concentrate on addressing issues of high domestic priority,” Sir James said.

Copyright The Financial Times Limited 2008

Ah Ha!!! This guy is on to something. I now have another link to add to the “Get Involved Links” Curtis Stephen from the New York City paper City Limits introduces us to Darryl Penrice.

Darryl Penrice likes to talk. His preferred topics of conversation can roam anywhere from the music of the late rapper Tupac Shakur and the murky underside of politics in America to the mechanics of microeconomics. But if there’s one subject that the 32-year-old Brooklyn resident and self-professed “ghetto prodigy” loves to discuss more than anything else, it’s a vision of a new way to fight poverty that he’s obsessed with making real.

For the past year, Penrice has been anything but silent about his proposal, meeting with an assortment of potential investors, city officials, nonprofit groups, college students and major grant-making institutions. In the midst of an outreach campaign, Penrice has been trying to earn support – especially the financial kind – to transform the website that he’s created from a prototype into a full-scale, anti-poverty platform that he contends will have a significant impact in the lives of people experiencing economic hardship in New York and well beyond. “I know what I have,” Penrice declares. “I’m not the most religious person in the world, but if God gave me a gift then I’m going to share it. This is something that can feed millions of people.”

Penrice plans for his initiative – an interactive website called Poverty’s Demise.org (or as he calls it, “PDO”) – to combine the open source atmosphere of Craigslist with the opportunity-expanding aims of Kiva.org, which allows for “microfinance” lending to entrepreneurs in developing countries. But in many respects, if Penrice’s ambitious plan ever goes live, it will launch an unprecedented Web-based undertaking.

Penrice envisions PDO as an outlet for person-to-person financial transactions in which donors help economically disadvantaged individuals – who have been screened and approved for participation – and struggling working-class families pay for essential daily living expenses, including everything from food and rent to utility bills and child care costs. Under the proposal, which Penrice details extensively on his website, the tax-deductible donations would be sent to recipients in the form of “universally redeemable” bar-coded certificates to be exchanged at participating retailers and service providers for specific goods and services. Incentives are also provided to both donors and recipients for volunteerism, and the purchase of healthy food and environmentally-friendly products.

The PDO model would also help to ease the burden faced by those on public assistance and seniors, both of whom are subjected to often-frustrating bureaucracies, Penrice charges. “The government is spending billions right now, but nothing is being done to fix a system that isn’t very efficient,” he says. “A lot of people are against welfare, but how can we tolerate a society where people who worked for 40 or 50 years are forced to choose between their medication or groceries?”

As he seeks to create a high-tech community-oriented platform that circumvents government and nonprofit social services, Penrice is clearly aiming big. He’s hoping to land an investment of $4 million to make an initial run. In addition to setting up an office, hiring programmers and sparking the first wave of donations, Penrice plans to focus on New Yorkers in need before branching out nationwide. One endeavor that Penrice hopes to launch through PDO is a program he calls Broader Horizons, where disadvantaged families are sent abroad. “Can you imagine taking a kid from Bed-Stuy and dropping him off in Japan for a week? The problem with generational poverty is that Dad is in jail, Mom is smoked out, and you think the whole world is a ghetto.”

“Strongest takes all” can be replaced by rules that ensure the poorest have a slice of the action is another Yunus quote from the same article.

Enjoy reading the whole story!

I don’t understand why it’s a surprise to the press and to financial observers that microcredit is still lending lots of money despite the global financial credit crisis.

Microcredit is not phony, it’s not a dishonest way to drum up money for a big financial corporation. Microcredit doesn’t give people money then adjust the rate on the interest. Microcredit doesn’t sell the risky loans to someone else to try to further profit on them.

Microcredit also makes loans to people who pay them back. They generally don’t make loans to greedy people. Microcredit makes loans to people who are just trying to better themselves.

In fact, the only way microcredit has been hurt is by less money coming in from these big financial institutions that were making these other phony loans. They were only were trying to get into loaning to poor people because they saw the profit margin there. This may well help microcredit in the long run.

Anyway, Time magazine interviewed the head of Women’s World Banking, Mary Ellen Iskenderian, to ask her about this microcredit “phenomenon”
TIME: To what extent and in what specific ways is the worldwide credit crunch impacting microfinance in developing countries?

Iskenderian: There is evidence that microfinance is resilient to global market movements, compared to traditional lending, as it falls outside of the mainstream economy. And there does still seem to be equity available for microfinance; recently, for example, a couple of large private equity deals were completed in India. Repayment rates remain very high, 97% or 98% in many places. That results from good, old-fashioned credit methodology — you know a household’s capacity to repay. That’s the kind of old-fashioned banking that some people feel was absent in this latest round of banking disasters. At the same time, we are seeing many microfinance institutions (MFIs) scaling back expansion plans and, in some cases, raising interest rates as a result of the credit-spread increase and the rising cost of borrowing. Certainly, no one is taking their existing funding relationships for granted. My concern is that we have only begun to see the effect of the triple threat of finance, fuel and food issues on microfinance.

TIME: To what extent have the global economic challenges trickled down to impact the poorest of the poor?

Iskenderian:The impact on the poor, including the clients of our network, has probably been most evident in rising food and energy prices, which have meant that families may face trade-offs like the choice between paying back their loans or putting dinner on the table for their families. Microfinance doesn’t target the poorest of the poor, as they need other types of intervention. It targets the economically active poor at the bottom of the pyramid. There are signs that micro-entrepreneurs will see higher interest rates, since the global credit crunch will likely require MFIs to raise interest rates as funding becomes more scarce. I am particularly concerned about the ramifications for women since, for many poor women around the world who are otherwise excluded from formal financial systems, access to microfinance is their only economic lifeline.

TIME: What prompted the development of a financial instrument like micro-insurance, and what’s the broader impact of new financial instruments aimed at the world’s unbanked?

Iskenderian: Product diversification came out of a recognition that lending alone is not the solution if our end goal is long-term poverty alleviation, which is why we in the industry no longer talk about microcredit, but microfinance. Many entrepreneurs in the developing world are only one seemingly minor catastrophe — like a hospital stay — away from financial disaster, so housing loans and insurance and savings products help create and preserve assets, leading to broader benefits for the economy as a whole. I can’t tell you how many times I’ve heard women clients in our network ask, “Why can’t I save for my child’s education, instead of taking out another loan to pay for it?” The poverty alleviation benefits are magnified when microloans are supplemented with savings and insurance products.

In Dreams from My Father he tells of his late mother, Ann, a freethinking and fearless white woman from Kansas who married a black man from Kenya. Barely two years into the marriage, she was left to raise Mr Obama alone, yet she returned to college, studied for an anthropology degree and remarried, to an Indonesian student whom she followed to Jakarta with her son. She worked in Asia running microfinance projects that allowed women to become self-sufficient. “She was very clear that the best indicator of how a country is going to develop is how it treats its women and whether it educates its girls,” Mr Obama recalls.

World turmoil may spur Islamic finance
Afp, Doha  – The  Daily  Star  Dhaka
Wednesday,  October 29, 2008

The fast growing Sharia financial system may receive a further boost as an alternative to capitalism amid the credit crunch and banking crisis, Islamic academics and clerics believe.

Already said to be worth 300 billion dollars and expanding at 15 percent a year, the Islamic system forbids the levying or payment of interest, preferring shared ownership and splitting of profits.

The global economic meltdown shows “the need for a radical and structural reform of the global financial system. The system based on the principles of Islam offers an alternative which could reduce risks,” Hatem al-Naqrashawi, head of theological studies at Doha University, told AFP.

“Islamic banks don’t buy credit but manage concrete assets… which shelters them from the difficulties that American and European banks are experiencing,” explained Abdel Bassat al-Shibi, managing director of Qatar International Islamic Bank.

Islamic finance is different from capitalism in two main ways. It bans interest-bearing loans, seen as usury, a practice forbidden by Islam, and also forbids speculation. Instead, it favours sharing risks and profits between a bank and a client.

Sharia compliant products include Ijara, a way of buying a house through a lease and subsequent ownership, rather than through a mortgage. Others are Musharaka, the sharing of profits and losses, and Murabaha, under which the seller declares the profit margin being made on the sale of a commodity.

Murabaha is seen as a way of enabling a buyer to avoid taking an interest-bearing loan, though some Islamic scholars say it is too similar to the charging of ‘riba’, or interest.

In the past three decades, the number of Islamic financial institutions has risen above 300, spread among 75 countries. Their total assets are more than 300 billion dollars and are growing an at average rate of 15 percent a year, according to studies.

“The collapse of capitalism based on usury and paper and not on the trading of goods on the market is proof that it is in crisis and shows the Islamic economic philosophy is holding up,” prominent Egyptian-born Qatar-based cleric Sheikh Yussef al-Qaradawi told a recent conference in Doha .

“We have all the wealth… the Islamic nation has all or nearly all the oil and we have an economic philosophy which no one else has,” he said, referring to the fact that Islamic countries, headed by Saudi Arabia, hold a large part of the world’s proven crude oil reserves.

Suleiman al-Audah, an influential Saudi cleric, called for an “international Islamic summit to define the framework and the stages of an Islamic economic alternative.”

Some Islamists admit, however, that this alternative is not yet operational.

“Theoretically, the Islamic economic system offers a complete and solid mechanism… but in practice, the Islamic banking experience is not yet mature, because it offers limited products like ‘Murabaha’,” Audah, a moderate Islamist, told AFP.

His caution is shared by Egyptian Islamist intellectual Fahmi Howaidi, for whom the Islamic system “could bring solutions to certain banking problems but cannot be a magic wand” to end the financial upheaval which is shaking the world.

1. the excellent Poverty News Blog
2. the SlideShare contest on the credit crunch where I shall submit a version of what I presented recently here
3. the invitation of the Treasury Select Committee to send questions regarding what they call the “banking crisis” to bankingcrisis@parliament.uk
4. maybe you’d like to sign our online petition targeted at the Treasury Select Committee? See http://tinyurl.com/666rwd

But nobody has set a better example and achieved better results within the constraints of our capitalist system than Dr. Yunus!