Peter Burgess Dialog
Alan Longley 2013

Some background about “Microshares” ... an idea conceived by Alan Longley to reward and engage more of society in economic performance

Burgess COMMENTARY

Peter Burgess

Gmail Peter Burgess Fwd: an explanatory note 2 messages alan longley Tue, Feb 19, 2013 at 9:16 PM To: Peter Burgess hello peter,

I am following your blog! The below email was ignored by its recipients, and by others I forwarded it to except kind Howard Finkelstein, who advises Nicole, the subject of the email. Nicole is the fiance of a son of a friend of mine. Nicole is active in the NY microfinance community. I send you this copy because you thought of one of the ideas in it, the structured utilization of premptive rights in regards microshares, I extended your concept to include mathematical algorithms on mobile devices etc.

I liked your idea of a jobs bank.

Alan Longley

---------- Forwarded message ---------- From: alan longley Date: Sunday, February 3, 2013 Subject: an explanatory note To: clairelesley@aol.com, John Van Der Tuin

Hello John and Claire,

Regarding the books for Nicole: some months ago Truro resident Robert Reich (teaching at Berkley), was kind enough to return an email of mine concerning issues discussed at www.quantcorner.com, which Nicole has also read. Before too much time goes by, I will send him more material, some of which might involve goings on in Massachusetts (One reason I am slow in my microfinance work is that little of it pays off in an immediate sense).

I thought I would explain the circumstances with Howard Finklestein, the lawyer who has done work for both Nicole and I. I met Howard years ago when I was early to a meeting of The Microfinance Club of New York. I related to him my experience of both U.S. Embassy members and oil company officials calling microfinance 'liquid communism,' a throw-back to the 1930s, when efforts to institute small denomination loans were squashed as leftist (The existence of small loan initiatives in the past might explain why Mohammed Yunnis won the Nobel Prize for Peace and not for Economics in 2006). Howard and I talked about politics a bit; Howard thought it was funny when I said that it was my fate to be considered extremely leftist by various U.S. government officials and oil executives, whereas I vote Republican and sometimes take some heat for this in my predominantly Democratic locale.

Howard has a good sense of humor. At lunch once I explained that part of my reason for being Republican dates back to the Indian policies of Andrew Jackson. He thought this was funny, but did go on to suggest that the Native American Community could well use microfinance institutions, but, for the most part hadn't done so. So I drafted a letter to some Native Americans I know - never have I had an icier reception from them, I communicated to Howard their feelings about debt & past difficulties with repossession of collateral.

Predominantly through Howard, The Microfinance Club of NY agreed to start a pilot program in which I would transcript the proceedings; the transcription was done in India through the efforts of a friend of mine. The project was dropped, however...I will provide details (which are complex) if you wish. Attached is a transcript of a presentation by Elisabeth Rhyne, the author of one of the books I gave you Friday (it reads much faster than the book, please forward to Nicole if you wish).

Attached also is a letter from The Federal Reserve Board to me, asking for my suggestions regarding the Fed's Flow of Funds Accounting, suggestions which I never gave (for a variety of reasons), but this work formed the economic basis for my subsequent work in microfinance. My editor at the time is now a senior executive at Bloomberg; it was under his auspices that I analyzed the holdings of the 1000 largest banks. He said at the time that the letter was probably unique in that it might be the only time the Fed has asked advice of a member of the press. The guy is probably going to remember this and I am giving thought to proposing something to Bloomberg.

This email is getting too long, so I will give a detail about what part of this might involve.

The detail: small concerns with hopes of competing with large, publicly owned companies, should have a sentence such as this in its certificate of incorporation filed with the state: 'It is the intention, purpose, and mission of the Corporation to issue its own securities in pursuit of trade in many ways, and therefore, in accordance with N.J.S.A 14A:5-29(1), no shares of capital stock shall carry any pre-emptive rights.'

“Microshares” is the name I have given to shares so issued. When you download music from the Apple store, would Apple ever give you a fraction of a share as an incentive, or cash credits that could eventually be used to buy shares? No, because to do so would be to invite competition from companies growing more rapidly from a smaller base with provisions such as above. In fact, large companies without provisions such as above might be subject to derivative suits from existing shareholders should they employ microshares.

Securities are frequently issued in pursuit of trade among the very wealthy. Upon analysis I concluded that the lack of a more democratic form of this activity is a major bottleneck in the exploration of wealth producing algorithms at all levels of wealth. Such exploration is essential to a strong economy, the lack of a such an exploratory mechanism is a major opportunity. For these reasons I created The Adaptive Economics Association, Inc., a private foundation, to pursue the democratization of this mechanism.

The structural sentence suggested above, however, should perhaps be modified so that it does not eliminate pre-emptive rights. Microequity could become very interesting if mobile devices could become loaded with pre-emptive rights that could be algorithmically dealt with. This is part of the alignment of interest of microfinance and algorithmic trading that I am trying to encourage (maybe not in my lifetime), and which Nicole at John's birthday party expressed an interest in.

Summarily, impoverished economies lack clear title mechanisms to property that could back loans, necessitating the development of systems such as the one Nicole is working on, in which mobile telephone communication records are used to determine creditworthiness. Microshares could be disseminated through mobile devices, providing a swath of real assets - beneficial in themselves but also useful to establish credit.

Fondly,

Alan Longley

2 attachments Microfinance for Bankers and Investors Transcript.doc 61K fedr0001.pdf 928K
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Peter Burgess
Tue, Feb 19, 2013 at 10:43 PM
To: alan longley

Dear Alan

Good to hear from you. Let's try to have a telephone conversation later in the week, maybe Friday.

All sorts of things are going on, and I am very much trying to stay engaged. There are important things to do. Peter [Quoted text hidden] -- ____________ Peter Burgess TrueValueMetrics ... Meaningful Metrics for a Smart Society twitter: @truevaluemetric @peterbnyc www.truevaluemetrics.org blog: http://truevaluemetrics.blogspot.com blog: http://communityanalyticsca.blogspot.com mobile: 212 744 6469 email: peterbnyc@gmail.com skype: peterburgessnyc Books: Search Peter Burgess at www.lulu.com