Archive for the 'debt' Category

Gold at 42 cents an ounce

I’m a gold bug. I’ve bought it as a means of trying to give my measly savings some security against the obviously totally bogus totally manipulated paper money crap.

Gold had been rising steadily in (manipulated)price in the medium terms for about 10 years. So many ‘alternative’ websites were going on about gold going to $2,000, $3,000, $4,000, enve $5,000, etc an ounce.

Well where are those voices now? Gold reached it’s peak at about #1,900 and ounce now it’s about $1,570. It’s lost about 18% of it’s value. Where are those voices? Those crystal ballers who magically “knew” what price gold would go to.

Where are those voices? Why are they not crying at the fact that gold has lost 18% from it’s high. If it were a sham bank, the ‘alternative’ webosphere would be mocking the said fraudulent institution with glee, preparing the champagne for when the collapse went past the point of criticality.

Come on you Mistic Meg’ers (mistake meg!) when gold went up to $17,00… $1,800 you were going “I told you so”, well you didn’t see this 18% loss did ya?

I’ve been getting a tad tired of the ‘alternative’ webosphere on occasions, and often wonder if it’s not part of a game of ‘bipolarisation’. And the ‘crystal balling’ about gold prices is especially tiresome.

Well I’m tired now, so I’ll call it a day.

P.s. I’m not the slightest bit worried about the gold price, cos I’m only interested in the LONG TERM and savings. If you speculate on gold, well, you just as bas as those crap heads wheeling and dealing in derivatives. Gold at 42 cents an ounce does NOT worry me at all. I have total confidence that gold offers THE greatest safety net for savings protection. If gold really did go to 42 cents  an ounce, I’m fairly certain the fictional money we use today would experiencing far grater problems, e.g. there may only be 5,000,000p in circulation!

P.p.s. I know the value of gold hasn’t really increased or decreased, rahter the fictional value of the dollar has been manipulated relative to  gold. The upward trend of $ against ounce of gold was fully legitimate due to money being debt and the cranking up of the money presses in ‘quantitative easing’ exercises. That “gold has lost value” seems to me to be re-calibrrating or just simple  manipulative suppression. The long term future of gold is absolutly assured. So do yourself a favour don’t give a crap about the “price of gold”. Either going up or down. When you want to protect you earnings, buy gold. Do also with the sincere intention of spending it.

Are you a MF’er?

i.e. did you invest in MF Global?

If you did, then to me, you deserve to have lost your money. In my eyes it’s not much different from investing in Goldman Sachs, or getting financially involved with the IMF.

Watch this.
FBI Probes Trading Firm MF Global’s Sudden Collapse

“MF Global invested in the Debt of Italy Spain Portugal and Ireland. leveraged by 40:1”

So here we have a leech company living off the debt difficulties of others.

And guess what, Gereld Celente, that ‘Knight of the little people”, had investments in this company. So Gerald, your lovely man of the people’s image – rather like your rather questionable investment – has crumbled.

haha.

I don’t give a monkey’s if you say Farmers invest in futures. That sounds like spin to me. Don’t try and put yourself in with Farmers. Somehow, just somehow, I doubt it’s the same kind of futures your investment with MF Global involved.

Gerald was/is a MF’er

Gerald admits his loss:
Gerald Celente: Don’t be next in line to get M-Effed – MF Global. http://12160.info/video/geraldcelente-don-t-be-next-in-line-to-get-m-effed-let-me-break-i

[KR213] Keiser Report – ‘First Call’ For The Big, Blonde Hair & Shiny Teeth
http://maxkeiser.com/2011/11/23/kr213-keiser-report-first-call-for-the-big-blonde-hair-shiny-teeth/

Futures are gambling and phony usurious economics.

Like all gamblers, they smile when their gambling pays off, but weep when it fails.

Shame on you.

Hudson talks silly

If you keep punching yourself, why on earth do you wonder why you’re so sore afterwards?

Here, Hudson dwells well within the realm of the normalised “democratic” process and all its fraudulent economics, but then he goes and moans (on behalf of the people of Greece) about it.

Hello.

 

THE REAL TRUTH ABOUT FIAT MONEY AND THE BANKING SYSTEM!

Presented in the medium some people have as their primary source of learning.
Whatever’s needed for the breakthrough I guess.

h_ttp://www.youtube.com/watch?v=yCdlsZLNSJE

Drink Me

DRINK ME

Students and youth of the World unite.

Gerald Celente on Max Keizers “On the Edge”

On YouTubem it’s in 3 parts

On the Edge with Max Keiser-Global insurrection-02-25-2011-(Part1)

(P.S. I don’t agree with what Gereld says was the cause of WW1)


_http://www.youtube.com/watch?v=ny6YI2JCP9Q
_http://www.youtube.com/watch?v=4Z5c8pg1xsY
_http://www.youtube.com/watch?v=-FnEogia1GE

Twilight

It finally looks like Brits and Yanks are starting to pay the price for the bankruptcy of perverted economic and moral bankruptcy (neo-imperialism) they allowed continue (largely unopposed and suckled off) for decades if not centuries. In all honesty, I can’t say I have any sympathy for them, after all, they keep voting for proven killers and killers-to-be, they are utterly deluded that the political system UK and US (I don’t care if you call it Democracy or what – as it’s totally irrelevent) is anything other a great failure.

“Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap.”   – (Galatians 6:7 KJV)

The greatest protests the world has ever seen (Feb 2003)  against the looming obliteration of Iraq were encouraging (despite the fact Iraq had been under 12 years of murderous sanctions and wicked bombings by the rAF and USAF) but when the bombing started, those same people were pretty much content that ‘Febuary’s first step‘ meant that they had done their ‘bit’. How miserable.

As regards to the self declared non-elected leaders of the so called anti-war movement, they proved to be a disgrace. manufactured dissent, firmly thinking within the box, (I’m beginning to hate the expression “Thinking outside the box” because  ‘outside the box’ is not really outside the box at all. It’s actually still well within the establishments box – that of permitted dissent, besides, saying ‘out of the box’ is just about said by almost everyone these days who are attempting self-projection, believing they are subtly callin themselves clever, but in actual fact, they are drawing attention to themselves by trotting out tired and boring populist expressions. Saying ‘thinking outside box’ is now confirmation they are actually in sheeple box. I’ll grant Steve Jobs an honourable exception here) or simply cowards;

Actually it’s all three.

The so called ‘anti-war’ movement should have called for certain politicians (bLiar, Straw & Brown for a start) should have been hung drawn and quartered – not an extreme act at all, as it’s a similar philosophy bLiar & Co. used (so called pre-emptive military action*) – putting bLiars head on a spike outside Westminster would have saved a million innocent lives, but in fact it’s even more moral based compared to bLiars pretence at a moral stance, in that bLiar’s justification was a clear lie, Saddam was never going to attack, but it was abundantly clear bastard bLiar and jackass BuSh, Howard and Aznar were going to destroy Iraq – illegally. Lets not forget those so called Muslim Countries that did nothing, or those like France, China and Russia that stood by calculating no detriment to their own interests (and very likely thought they would ‘gain’ in the long term from it).  

Selfish Brits of course would have none of putting bLiars demon head on a spike – for passers by to spit at. It’s simply not on to kill a pathological liar, a cheat, hypocrite, willing partner in infanticide (over half a million Iraqi kids during 12 years of abhorrent sanctions). Blair is English, speaks English, wealthy, held power, and is white. All attributes which entitle him to escape punishment for his murder lust. Iraqi’s on the other hand are poor, darker-skinned, powerless, Iraqi and Muslim… BOMBS AWAY !!!

So the justice of having bLiar publically executed is unlikely to be realised, but at least they could have called for him to be publically beaten to a pulp, allowed to recover and then beaten to a pulp again and again; treatment herr mudjesties forces did to the people of Iraq.

Or at least allow some Iraqi mourners whose kids were blown to smithereens to given a damn good shiner and had a bloodied nose and a decent scar across his repulsive face and scratch his eyes out with their fingernails.

Despite the failing of the ridiculous so called ‘ant-war’ movement, people should not have ceded their morality to these anti-war ‘leaders’ and/or buried their moral conscience into an emotion-proof dungeon. They should stopped paying tax, refused to purchase goods from nations in the correctly named Coalition of the Killing, they should have taken out as much of their money from the banks and so on. But no, they were unwilling to risk any ‘luxury’. February (for those who bothered) was fine. And if you didn’t do any of those things, you could try, starting from tomorrow.

Today the UK and UK citizens still vote of liars, cheats, embezzlers, killers, killers-to-be, immoral shells (probably freemasonic/cabbalistic Satan worshippers – openly conscious of the fact or not) wanting to bend the law to their advantage and use it as a club to pummel the people who voted for them, while giving reassurances that everything’s ok, we’ll all pull through. I haven’t heard that other war-criminal Winston Churchill’s been called upon yet, but the stopwatch is running.

Face facts. Voters hands are bloodied with the crimes of the elect-ees. There is no escape from that.

So, the fact the western snake is starting to consuming its own tail, is actually a strange sence of poetic justice.

I do feel sorry for those that DID speak out against the white hot evil their nation spewed (and keeps spewing) out, but such people are tiny in number.

This post follows partly from watching Francis Fukuyama on fora.tv. Re: Noam Chomsky, StefZ said on Famous for 15 megapixels wrote something like “people keep saying Chomsky is a leading intellectual”. Fukuyama seems to be same. He’s preaching to the choir and gets promoted and admired by it. I first heard this (similar) ‘in-house’ point on the BBC”s Question Time in which Salman Rushdie’s literary award was dismissed as it was a bit of a Trades Union award / closed shop kind of honourarium. Fukuyama says some absolutely ridiculous and incredibly ignorant things (which I may describe in one of my final posts {assuming this isn’t it}) His rubbish words lapped up by his audience (TED’s a bit like this too – got it’s head up it’s ass, believing it occupies some kind of multi-dimensional high ground)  show what deep shit the planet we are in, a secular occidental bog of collapse. All of these occidentials (and Tariq Ramadan sadly seems little different) are like this. Beyond Sun Tzu, Confusious and Lao Tzu name 5 Chinese intellextons. Beyond Ghandi, and Siddhartha Gautama, name 5 leading Intellectuals, Name 10 African Intellectuals. Name 10 South American intellectuals. Don’t be surprised if you can’t – the West won’t let you. You’re only an intellectual if you play the game. And what a sick game it is.  

As well as residual feelings from my previous post, this post is also a result from the commentators on Craig Murray’s site and indeed Craig Murray himself. Craig posted something about no hope a week or so ago expressing he saw no hope and failed to realise the way he’s courting (conventional)politics with zero resistance (see above)  is why there is no hope. The commentators on that post and his subsequent post are the same. His commentators are of course far worse (I actually have a decent amount of respect for Mr. Murray, but it pains me that he’s performing like a half-way house). The commentators are those who talk-the-talk mighty fine, but don’t walk-the-walk, yet they believe they are radicals or true liberals and that the system is perhaps sound but just going through a rough period. Hah! Dupes(many of them). “Ooooh, we are going to drown” they cementing their feet in large blocks and throwing themselves off the jetty.

I am old, and no longer have fresh questions to ask about this world. I know how it run, I know the score. I know where it’s headed. Indeed Mr. Murray, there is no hope at all – at least in places where this globalised hegemony reaches – which is pretty much everywhere.

I look back on my youth (up to perhaps my mid 20’s) and remember a time when I thought there was actually something good and exciting about this world. I was really scared of it’s vastness and diversity.

Not now.

It’s all the same and it stinks. It’s suffocating the good people – mostly poor and innocent – people of traditional culture and values.

The western heartless, godless self pontificating/promoting arrogant world is fast approaching it’s doom. It’s fully realisable. Actually, it’s could be postponed but definately not with a prevailing ‘mind’.

Let the TSA continue to humiliate the people who voted for Clinton / Bush / Obama or whatever tyrant puppet is in control. Let the Irish idiots who voted for their funny-money politicians and loved them when they yields were high and the champagne flowed feel the consequences of their acton. Let the Brits feel austerity and have moe lies and deceptions flow from the mouths of the people they voted for (and will vote for next time) while more Yemeni, Somali, Pakistani, Haitians, Burmese, Roma, and of course the Palestinians in an ongoing Holocaust and other peoples etc.. continute to be oppressed by these secular power holding vampires.

It’s just a pity the good people will suffer too. 

My posts here are going to become very infrequent. There is no point. Even those USans who know 911 was a lie (WTC 7 – the main achillies heel of that horrific (ritual?) massacre) won’t do anything meaningful to stop the rot. The centres of power in China will continue as long as it believes it’s elite is making money, as will Russia, Brazil, India, The huge central asian ‘Stans’ are all on the same path, and I will not forget to mention the rotten seed of it all:  Israyhell. Israyhell is close to openly assuming it’s apocaplypic position as leadingnation in the world and so their champagne will also run dry soon. The powerfully built Jew with curly hair proclaiming(falsley) to be the messiah is almost ready to make his appearance. His paradise will he hell and his hell will be paradise, but you’re already in his paradise, faux-democray being a useful tool propagating it, and you will just vote again in his paradise to get even more paradise. And if you don’t believe the dajjal will get you, the dying environment and the GM(junk) food will.

After a last fling of time wasting, I’m purging my time wasting hobbies and am going to knuckle down with acquiring knowledge of my Creator and worshipping him accordingly.

That’s all that matters. Nothing else.

I will try and respond to the funny and thought provoking, most welcomed comments people graciously spend their time leaving here, and I may, occasionally, when I’ve decided to read current events for a quick break, post here again but like this world is entering its twilight, so is this blog while spiritual being makes effort to emerge from its self imposed twilight.

The twilight is just about here now, but I’ll leave with this; A pic of from the newz-journo-junk organisation called the BBC. Source: http://www.ZION-NEWS-OUTLET.co.uk/news/uk-11773665
(copy the link and although the above is correct, to read the article, replace the ‘ZION-NEWS-OUTLET’ part with ‘bbc’)

Big heads up to http://kevboyle.blogspot.com/ by the way.

* of course there was nothing pre-emptive about it. The Pre-emptive doctrine was ‘strike them before they strike us’ and of course you realise they would NEVER have struck us. but shich is the extent ir perverse and mind-rotting ssumes you act now to

meltup

Thanks to Matthais Chang at FutureFastForward

Meltup 55m
http://www.youtube.com/watch?v=eb1n1X0Oqdw

I don’t have much time right now, but I’d like to give initial thoughts on meltup (which I’ll add to later).

The first is there is a mistake or dishonesty in the section talking about gold. Here’s two screenshots at around about the 25 minute mark.

If you watch the documentary you probably spotted the flaw, and it’s a flaw that the AGW’ers sank into (again accidentally or deliberately – I’m not sure, but in the AGW case, I think the latter) with atmospheric CO2 and global temperatures.

This documentary is trying to sell you the idea that “precious metals do better when the FED begins to raise artificially low-interest rates”. They use arrows they choose to ‘show’ this over the time. Hopefully you can see this is a highly questionably claim indeed. in 1980, the gold price went from about $850 to about $400 over almost a two year period but interest rates went up and up and up from about 10.5 to a peak of about 15.5% That is in total opposition to what they are saying yet it covers the narrow time span that they decided to look over.

It’s actually much easier to ‘see’ it in the video than it is to try and describe by tapping it on the computer.

Notice that the next gold chart from 2002 onwards they DON’T show the interest rate when GOLD has spiked to $1240 devaluing tokens while interest rates were near zero. Doubtless, they would say this is because the interest rate during that period is being kept artificially low. Sounds plausible isn’t it? This is a good demonstration of how easy it is to switch off your brain when listening to “econspeak” ALL interest rates are artificial. LOL. And like most american perspectives, america is the only focus here. The influences of the rest of the world are not given any time on these charts.

One more thing. The documentary talks about silver having greater % price swings than gold. Well yeah, one very important factor is because solver is cheaper than gold, so the speculators can muck about with it more easily. Saying the bailouts may have been in part to artificially suppress precious metal prices. Crumbs. again that’s a very difficult and precarious call to make, and like most “econspeak” you can easily find a way around the “logic”. By allowing the gold price to increase, the bailouts could have been made using those very things just discussed – gold and silver so that the dollar printing presses wouldn’t have to be made to operate at furious speeds. That sounds reasonable too right? – but of course it’s probably just as as guilty of ‘econspeak’ as they offered! 

So whats going on?

The thing is the virtually ALL the talking heads that manage to make it into the corporate news (or more frequently in the news strata below that or further below in the independent news) are people who operate within the world of fraudulent economics. Let me qualify that, they believe in the capitalistic economic system we have as long as the effects of that economics are not too extreme. That is, as long as the debt doesn’t get too high, or the interest rate isn’t too high or the inflation rate isn’t too high etc etc etc then the system is OK and the cumulative ills of the system can be lived with.

One example is Max Keiser. Mas is great at bringing to peoples attention much of the $financial fraudsters running and ruining our lives, but he advocates interest rates as a means to bring the system back into line. Others state the economy should have been allowed to enter a recession a few times over the last decade to (again) bring the economy ‘back on track’.

Instead of a furious calamitous up/down extremes collapse they are advocating a long drawn out continually degrading health of the economy.

The problem is that we do not use a proper monetary system. Using physical exchanges of gold and silver are the greatest remedy of this but the problem is that we have become SO entrenched in this economic scam and previously the ill effects were slow (and so liveable) that it seems we cannot imagine what it is to exist outside it.

When people don’t understand something, to fill the imagination black-hole they are quite willing to put almost any image in its place. Any grasp of a concept is better than no grasp at all (so people think – or should I say, so I think people think!).

Most have lost touch with what a system of economics is actually for, which is simply to facilitate a fair trade for the benefit of two traders. This fundamental of economics is for mutual benefit and devoid of greed because it is balanced. Many humans are greedy yes, but (as I am trying to point out) [I believe] this is because they are intertwined in a rotten system that gives apparent benefit to those who are greedy i.e. the system encourages greed.

In a simple system, greed can be effectively stamped out as each trader – you and me – would be strongly engaged in the economic (trade) system. and not essentially detached from it as we are today {in essence our status approaches that of a “commodities” and we are expendable}. As such, from the properties of communities and social circles work, a taboo against issues detrimental to the community persist, discouraging it from the offset. And if it does become an issue, the community can spot it and stop it.

Just like the “good” economists are have almost exclusively plays with the Terry Gilliam like contraption with copious cogs, whirring wind meters, pedals, steam valves, vibrations, grubby screens, unmarked levers and buttons, when one starts talking about a cleaner system of economics e.g. one that involves physical exchange of gold and silver people start pulling obscurities from that fraudulent system asking “who would you do xyz then”

*groan*

They scuttle back to what they know – the very thing that’s killing them.

And when a solution comes their way to the ‘problem’ they enquired about, they scoff at it if it doesn’t fit within the fraudulent system we have and instantly dismiss any of the restraints that the solution may include.

As I’ve been saying for a while, people need a FUNDAMENTAL BREAK from most of the systems we in the oxymoronic ‘developed’ and ‘developing’ world have today.

But people simply cannot.

Oh dear, I shoudn’t have written ‘wo what’s going on’.

 

PROHIBITION OF INTEREST: DOES IT MAKE SENSE? By M. Umer Chapra

 

PROHIBITION OF INTEREST: DOES IT MAKE SENSE?
By M. Umer Chapra

Taken from the JUST Newsletter/Commentary bulletin.
http://just-international.org/index.php/component/option,com_rokdownloads/Itemid,130/id,18/view,file/

It is not Islam alone which has prohibited interest. Other major religions like Judaism, Christianity and Hinduism have also done the same. The Bible disapproves of interest severely and makes no distinction between usury and interest.1 Those who took interest were
branded as wicked2 and could not, according to the Third Lateran Council (1179), be admitted to communion or receive Christian burial.3 The Qur’an also prohibits interest strictly and declares those who take interest to be at war with
God and His Prophet (2:279). This raises the question of why there is such a harsh verdict against interest in all these religions. Is there any sound rationale behind it?

Those who are against the prohibition assume that interest was prohibited mainly because of the injustice it inflicted on the poor, who were charged an exorbitant rate of interest for loans borrowed by them to satisfy some urgent need. This, they argue, led to exploitation
and further impoverishment of the poor. They, therefore, conclude that the prohibition of interest is no longer valid because banks in modern times do not resort to such exploitation.

The assumption on which this conclusion is based does not, however, reflect the historical realities. During the Prophet’s days, peace and blessings of God be on him, borrowing was not undertaken by the poor. This is because by the end of the Prophet’s life, when the prohibition of interest became strictly enforced, the needs of the poor were taken care of either by the rich or the bayt al-mal (the Public Treasury). Therefore, the poor did not have to borrow to fulfil their needs.

This leads to the question of who borrowed and why? Borrowing was resorted to primarily by tribes and rich traders who operated as large informal partnership companies to conduct largescale trade. This was necessitated by the prevailing circumstances. The difficult
terrain, the harsh climate, and the slow means of communication made the task of trade caravans difficult and timeconsuming. It was not possible for them to undertake several business trips to the East and the West during a given year. Only a few trips could be undertaken.
Hence, it was necessary for the caravans to muster a large volume of financial resources to purchase all the exportable products of their society, sell them abroad, and use the proceeds to bring back the entire import needs of their society.

Before Islam such resources were mobilized on the basis of interest. This was not acceptable to Islam because it led to injustice. If there was a loss, it was the entrepreneur or the trader who had to bear the entire loss in spite of all the trouble he took. The financier, who did nothing more than providing finance, got a predetermined positive rate of return. Islam, therefore, tried to remove the injustice resulting from this. It abolished the interest-based nature of the financierentrepreneur relationship and reorganized it on the basis of profit-and-loss-sharing. This enabled the financier to have a just share and the entrepreneur did not get crushed under adverse conditions, one of which could be the caravan being waylaid on the way.

This shows that, although the extension of meaningful help to the poor carries a high priority in the Islamic value system, it was not the primary reason for the prohibition of interest. The primary reason was the realization of overall socio-economic justice, which is declared by the Qur’an to be the main mission of all God’s messengers (57:25).

Justice, however, needs to be understood in a much wider context. Confining it merely to trade may not be able to take us far enough. Justice demands that the resources provided by God to mankind as a trust must be utilized in such a manner

that the universally-cherished humanitarian goals of general need fulfillment, full employment, equitable distribution of income and wealth, and economic stability are optimally realized. It is the contention of this paper that these humanitarian goals can be realized
more effectively if there is also a humanitarian strategy. An important, though not the only, element of such a strategy is the abolition of interest. The following discussion tries to show briefly how the interest-based financial system frustrates the optional realization of these
goals and how its reorganization in a way that increases the reliance on equity and reduces that on debt can help in their more effective realization.4

1. NEED FULFILLMENT
Financial intermediation on the basis of interest tends to allocate financial resources among borrowers primarily on the basis of their having acceptable collateral to guarantee the repayment of principal and sufficient cash flow to service the debt. End-use of financial resources does not constitute the main criterion. Even though collateral and cash flow are both indispensable for ensuring repayment of loans, giving them undue weight leads to a relative disregard of the purpose for which borrowing takes place. Hence, financial resources go mainly to the rich, who have the collateral as well as the cash flow, and to governments who, it is assumed, will not go bankrupt. However, the rich borrow not only for productive investment but also for conspicuous consumption and speculation, while the governments borrow not only for development and public well-being, but also for chauvinistic defence buildup and white elephant projects. This does not only accentuate macroeconomic and external imbalances, but also squeezes the resources available for need fulfillment and development. This explains why even the richest countries in the world like the United States have been unable to fulfil the essential needs of all their people in spite of their desire to do so and the abundant resources at their disposal.

2. FULL EMPLOYMENT
The living beyond means which the interest-based financial intermediation has the tendency to promote through the easy availability of credit, has led to a decline in savings in almost all countries around the world. Gross domestic saving as a percent of GDP has registered a
worldwide decline over the last quarter century form 26.2 percent in 1971 to 22.3 percent in 1998. The decline in industrial countries has been from 23.6 percent to 21.6 percent. That in developing countries, which need higher savings to accelerate development without a significant rise in inflation and debtservicing burden, has been even steeper from 34.2 percent to 26.0 percent over the same period.5 There are a number of reasons for this. One of these is the rise in consumption by both the public and the private sectors. This saving shortfall has been responsible for persistently high levels of real interest rates. This has led to lower rates of rise in investment, which have joined hands with structural rigidities and some other socio-economic factors to reduce the rates of growth in output and employment.

Unemployment has hence become one of the most intractable problems of most countries, including those in the rich industrial world. Unemployment stood at 9.2 percent in the European Union in 1999, more than three times its level of 2.9 percent in 1971-736 It may not be expected to fall significantly below this level in the near future because the real rate of growth in these countries has been consistently lower than what is necessary to reduce unemployment significantly. Even more worrying is the higher than average rate of youth unemployment because it hurts their pride, dampens their faith in the future, increases their hostility towards society, and damages their personal capacities and potential contribution.7

A decline in speculation and wasteful spending along with a rise in saving and productive investment could be very helpful. But this may not be possible when the value system encourages both the public and the private sectors to live beyond their means and the  nterestbased financial intermediation makes this possible by making credit easily available without due regard to its end use. If, however, banks are required to share in the risks and rewards of financing and credit is made available primarily for real goods and services, which the Islamic system tries to ensure, the banks will be more careful in lending and credit expansion will be in step with the growth of the economy. Unproductive and speculative spending may consequently decline and more resources may become available for productive investment and development. This may lead to higher growth, a rise in employment opportunities, and a gradual decline in unemployment.

3. EQUITABLE DISTRIBUTION
The inequitable allocation of financial resources in the conventional interestbased financial system is now widely recognized. According to Arne Bigsten, “the distribution of capital is even more unequal than that of land” and “the banking system tends to reinforce the unequal distribution of capital.”8 The reason is, as already indicated, interestbased financial intermediation tends to rely heavily on collateral and to give inadequate consideration to the strength of the project or the ultimate use of financing. Hence, while deposits come from a cross-section of the society, their benefit goes largely to the rich. As Mishan has rightly pointed out: “Given that differences in wealth are substantial, it would be irrational for the lender to be willing to lend much to the impecunious as to the richer members of  ociety, or to lend the same amounts on the same terms to each”.9 The Morgan Guarantee Trust Company, one of the largest banks in the U.S., has admitted that the banking system has failed to “finance either maturing smaller companies or venture capitalists,” and “though awash with funds, is not encouraged to deliver competitively priced funding to any but the largest, most cash-rich companies.”10

In contrast with this, risk-reward sharing could be more conducive to the realization of equity. It would tend to compel the financier to give due consideration to the strength of the project, thus making it possible for competent entrepreneurs from even the poor and the middle-classes to be at least considered for financing if they have worthwhile projects, adequate managerial ability, and a reputation for honesty and integrity. This may enable society to harness the pool of entrepreneurial ability from even the poor and middle classes.
The rich contribution that such entrepreneurs can make to output, employment and need fulfillment could thus be tapped.

There is no reason to be unduly apprehensive about loan losses from such financing. The experience of the International Fund for agricultural Development (IFAD) is that credit provided to the most enterprising of the poor is quickly repaid by them from their higher earnings.11 Other small-loan programmes have yielded similar results in several countries. Nevertheless, it may be desirable to arrange insurance of small loans to provide protection to financiers against fraud and mismanagement.

4. ECONOMIC STABILITY
Economic activity has fluctuated throughout history for a number of reasons, some of which, like the natural phenomena, are difficult to remove. However, economic instability seems to have become exacerbated over the last three decades as a result of turbulence in the financial markets. One of the important reasons for this, according to Milton Friedman, a Nobel laureate, is the erratic behaviour of interest rates.12 The high degree of interest rate volatility injects great uncertainty into the investment market and makes it difficult for
entrepreneurs to take long-term investment decisions with confidence. This drives borrowers and lenders alike into the shorter end of the financial market. The result is a steep rise in highly leveraged short-term debt, which plays an important role in destabilizing financial
markets.

One may wish to pause here to ask why a rise in short-term debt should accentuate instability. This is because short-term debt is easily reversible as far as the lenders are concerned. Its repayment is, however, difficult for the borrowers if the amount is locked up in medium- and long-term investments with a long gestation period. While there is nothing basically wrong in a reasonable amount of short-term debt, which Islam allows on the basis of its sales-based modes of financing for real goods and services, an excess of it tends to get diverted to speculation in the foreign exchange, commodity and stock markets.

The 1997 East Asia crisis has clearly demonstrated this. The Eastern tigers had healthy fiscal polices which could be the envy of a number of developing countries. However, the large inflow of short-term foreign funds led to rapid growth in bank credit to the private sector.
This created speculative heat in the stock and property markets. It was the old mistake of lending on collateral without evaluating the underlying risks. As soon as there was a shock, there was a rapid outflow of funds, which had come primarily, on a short-term basis. This led to a precipitous fall in asset prices and exchange rates, making the borrowers unable to repay to the local banks, which could not in turn repay their short-term loans from foreign banks. There was thus a banking crisis. The IMF had to come to the help of these countries by arranging a huge amount of loans. What this ended up doing was to enable the foreign banks to get back their loans and go scot-free. The burden of the debt consequently shifted to the governments and, ultimately, to the taxpayers of these countries.

The 1998 collapse of the hedge fund, LTCM (Long-term Capital Management),  was also due to highly-leveraged shortterm lending. On the strength of their own equity, the hedge funds are able to borrow enormous amounts which they use to speculate in the international commodity, stock and foreign exchange markets, and thus end up destabilizing financial markets around the world. The leverage of LTCM was 25:1 before the crisis, but rose to 50:1, and ultimately to 167:1, after the crisis.13 If the Federal Reserve had not come to its rescue, the whole world economy could have been driven to the precipice of a serious financial crisis. The heavy reliance on short-term borrowing has injected a substantial degree of instability even in the international foreign exchange markets. Daily turnover in the international foreign exchange markets was $1,490 billion in April 199814, which was 49 times the daily volume of world merchandise trade.15 This indicates that a substantial volume of foreign exchange transactions is for speculative purposes. According to Andrew Crockett, General Manager of the Bank for International Settlement (BIS), “Our economies have thus become increasingly vulnerable to a possible breakdown in the payments system.”16

If it is not desirable to rely largely on short-term credit, then the more desirable thing to do would be to rely on long-term borrowing and equity. Of these two, equity financing is preferable because it would introduce greater health in the economy through a more careful scrutiny of the projects financed.17 A number of world-renowned scholars like Henry Simons, Hyman Minsky, Charles Kindleberger, Joan Robinson, G.L. Bach, and Kenneth Rogoff have hence concluded that an economy where there is greater reliance on equity would tend to be more stable than a debt-based economy.18

CONCLUSION
Thus it may be seen that greater reliance on equity financing has to be an indispensable part of the strategy of any system which wishes to actualize the humanitarian goals of need fulfillment, full employment, equitable distribution of income and wealth, and economic stability. The reason why capitalism has not been able to realize these goals effectively is not because its goals are not humanitarian or the people in capitalist countries do not have the will and the resources needed for this purpose. The primary reason is the conflict that exists between its goals and its strategy. The goals are humanitarian, originating from its religious past, while the strategy is social-Darwinist, based on the concept of survival of the fittest. It relies primarily on the rate of interest for allocating financial resources. This gives an edge to the rich and leads to not only concentration of wealth but also a rise in conspicuous and wasteful consumption. This hurts the realization of goals. It also contributes substantially to the prevailing instability in the international financial markets. Mills and Presley are, therefore, right in concluding that:

“There are sufficient grounds to wish that, in hindsight, the prohibition of usury had not been undermined in Europe in the sixteenth century. More practical wisdom was embodied in the moral stand against usury than was then realized”.19

1. For the Babylonian, Jewish and Christian
views on interest, see, Johns, et.al. in Hastings,
Vol.12, pp. 548-58; and Noonan, 1957, p.20.
For the Hindu view, see Bokare, 1993, p.168.
2. See the Bible – Ezekiel, 18:8, 13, 7; 22:12.
See also Exodus, 22: 25-27; Leviticus, 25:36-
38; Deuteronomy, 23:19; and Luke, 6:35.
3. Johns, et.al, p.551.
4. The subject has been discussed in greater
detail by the author in Chapra, 1985, pp.19-
29 and 107-145; 1992, pp. 327-34; and 2000
a and b.
5. Figures have been derived from the Table on
“Consumption as percent of GDP” in IMF,
2000 Yearbook, pp.177-79.
6. OECD, Economic Outlook, December 1991,
Table 2, p.7; and June 2000, Table 22, p.266.
7. A question may be raised here about the
current low rate of unemployment in the U.S.
in spite of a substantial decline in household
saving. There are a number of reasons for this.
One of the most important of these is the large
inflow of foreign funds which “has helped to
fund a pronounced increase in the rate of growth
of the nation’s capital stock”(Peach and
Steindel, September 2000, p.1). Once there is
a reversal of, or even a decline in, this inflow,
it may be difficult to sustain the high rate of
growth in output and employment. In addition
the stock market may also experience a steep
decline.
8. Bigsten, 1987, p.156.
9. Mishan, 1971, p.205.
10. Morgan Guarantee Trust Company of New
York, 1987, p.7.
11. The Economist, 16 February 1985, p.15.
12. Friendman, 1982, p.4.
13. IMF, World Economic Outlook, December
1998, p.55. Leverage indicates the extent of
borrowing on the basis of equity. A leverage of
25:1 means a loan of $25 on the strength of a
capital of $1. When the leverage is high, it is
difficult for borrowers to repay their loans when
asset prices fall.
14. See Table 1 of the BIS Press Release of 19
October 1998 which gives the preliminary
results of the foreign exchange survey for April
1998. Such a survey is conducted by the BIS
every three years.
15. World merchandise trade (imports plus
exports) amounted to $908.7 billion in April
1998 (IMF, International Financial Statistics,
November 1998). The average value of the
daily world merchandise trade in April 1998
was thus only $ 30.3 billion.
16. BIS Press Release, 22 June 1994, p.3.
17. See IMF, World Economic Outlook, May
1998, p.82.
18. Simons, 1948, p.320; Minsky, 1975; see
also the summary of Minsky’s argument cited
by Joan Robinson, December 1977, p.1331;
Kindleberger, 1978, p.16; Bach, 1977, p.182;
and Rogoff, fall 1999, pp.211-46.
19. Mills and Presley, 1999, p.120.
2001

* This paper is a significantly revised and
updated version of the paper, “A Matter of
Interest: The Rationale of Islam’s Anti-Interest
Stance,” published in the October 1992 issue
of Ahlan wa Sahlan, pp.38-41.
Dr. Chapra is Research Advisor at the Islamic
Research and Training Institute of the Islamic
Development Bank, Jeddah.

Apocalypse soon. Has the pretence that ‘debt isn’t out of control’ finally vanished?

http://iraqwar.mirror-world.ru/article/217832 reproduces an ICH published report. Here’s a quick extract: ZeroHedge: — For Greece, with on and off balance sheet liabilities at over 800%, it’s game over. For the Eurozone, with the same ratio at about 500%, it is also game over. For the US, at 500%+, it is, you guessed it (sorry Joseph Stiglitz), game over.

Here’s more news: Germans say euro zone may have to expel Greece

And more news: Spain’s deficit has soared to 11.4 percent of its gross domestic product amid its deepest recession in decades, but the government has pledged to cut the gap back to a eurozone limit of 3 percent by 2013 by cutting 50 billion euros in spending… unemployment running at 20 percent. Underscoring those doubts, the premium demanded by investors for buying Spanish rather than German government bonds ES10YT=RR has risen in recent weeks and the cost of insuring Spanish bonds against default by the government has also risen

If I read that right (and I’m not an economist), people are shorting Spain and taking credit defalut swaps on the Spanish government.

And more: Greece: “From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards”

Europe and the Euro is going belly up, The UK public purse is in a dire situation (the killers in the Downing Street cabinet should have nationalised Barclays, not Northern Rock) and Goldman Sachs has already done spectacularly well with nearly God knows how many hundreds of Billions granted to it by the US govt to leverage and make new scam packages like it’s never scammed before, oh, and line the pockets of the already filthy rich. Iceland doesn’t want to pay the UK and the dreadful charities who invested in oppressive fraudulent Icelandic ‘financial instrument’ houses. Ireland is up the swanny, Italy? well it’s the gangster economy that it always was, Singapore, seems to be going down (and will take Indonesia Thailand and Malaysia with it)

And the supposed Alt A and Option ARM crisis hasn’t fully crashed in yet.

http://www.youtube.com/watch?v=KhEsqLcWHyA

Worried? I can understand so.

Surprised? You should be. E-MONEY is the game (see above Greece’s bizarre announcement that Reuters reported).

I’m wholly unapologetic for believing this is the plan. E-money has been on the cards for a while. Whose cards you might ask? Quiz the supremacists (if they are willing to speak to you – being an animal to serve their purposes that is) Those supremacists who firmly believe they, and they alone, hold an unconditional covenant handcuffing God are getting their way. What’s happening is in ALL serious philosophies. The end times are rolling on up. To these rather nasty people it doesn’t matter because remember, it was their Rabbi who defeated God in an debate. It’s them, not God who are calling the shots. They might throw God some manna occasionally and might allow God to run in the yard for 30 minutes each day in-between water-boarding, kicking grit in his ‘eyes’, putting him in stress positions and shouting at God that He’s an anti-Semite for destroying Zion after they altered Deuteronomy so that they can lend on interest. God, Islam tell us, declares WAR against whose who engage in usury.

As for the God fearing Jews: brothers, (or perhaps more accurately: cousins) we’re going down! All of us. Why is it this likely new purge of good Jews a is being predicted (e.g. Alan Hart and others) has continuously come as a result of those who perverted your faith. At least we can have some weird sense of justice when they realise ‘God in cuffs’ was simply an illusion they were allowed to see.

Oh Boy.

 


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