The host asks all the right questions….and there are some very telling answers in my opinion….Mehmet Asutay provides some incisive contributions which I always have time for

My initial response to some of the defence given for the industry is as follows;

• In terms of risk sharing, this is an oft cited defence but can easily be broken down further, these transactions are not between equal sized parties with relatively similar assets at risk; the ownership of one house being the largest asset an individual owns compared to a bank which has a significant balance sheet (even the smaller ones) and can absorb the loss of one property is not exactly the type of risk sharing which it is always prompted as

• Regarding the investments in halal products, there is talk of how resilient these have been during the financial crises, however this doesn’t cover some important facts which should be stated. If an investment is low risk, it will typically make less of a loss in times of downturn and correspondingly make less of a return during an upturn too – this is a basic understanding of risk and return, but is not mentioned when talking about the performance over the last deep recession.

Another important point with halal investment assets which should be considered is the ethical dimension and how any definition of what is considered halal and ethical will differ based on preference. Although there are ways to standardise these when it comes to retail offerings, there will always be valid opinions which depart from this standard practitioner view. To add to that, how can something not be compromised in some way? Everything within this monetary system must be contaminated in some way, and this cannot be ignored – there is no parallel financing system in place.

Can trade not be organised in any other way – has it not been so in history? The underpinning of this economic system in exploitation and the shedding of blood is a truth that cannot be avoided. Does money make us happy or ignorant, is this what changes the world, or what qualities have changed the world?

Any discourse on the nature of progress cannot be exercised in a limited manner, it must consider broader perspectives than just a narrow reading of economics and statistics….

“It’s the era of socially responsible investment – ooh hello, Saudi Aramco”

With interest rates so low for so long (emergency measures they say?) the chance to earn greater returns, could be too much to pass by, even if it risks loosing face for the supposed ethical stance adopted for the sake of good PR(opergander)

This piece from MoneyWeek reflects on the difficult decision which exposed most of the investment community, in being very quick to discard any thoughts of ethics when it came to investing with a regime which very publicly killed a journalist not so long ago…

One of the most telling stats is how much a bond sale is oversubscribed. This gives an idea of the amount of orders compared to the original amount on offer; for Saudi Aramco’s $10bn sale, they received almost $90bn of orders – almost 10 times oversubscribed….! That’s quite a lot of disapproval folks!

RIBA-nomics

Previous posts which referred to fiat currencies not having any intrinsic value as they are not supported by commodities such as precious metals, lacked one vitally important point.

These currencies are indeed backed by something…..as I learnt through RT’s Max Keiser;

MEN WITH (BIOLOGICAL/CHEMICAL/NUCLEAR) WEAPONS

This certainly brings into light the ideals of liberty, freedom and democracy.

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RIBA-nomics

Consider this piece by Dr Nazeer Ahmed about the Atlantic slave trade although focusing in this extract on the sugar trade;

The introduction of sugar transformed America, Europe and Africa alike. Its impact on history was far greater than that of Mayan gold treasures or the rich silver mines of Mexico. To understand how it happened, it is important to know the process of sugar extraction….

…..the Native Americans were not suited for the kind of backbreaking work required on the sugar plantations. So, labor had to be imported.

At first, Muslim slaves from Portugal and Spain were imported, but it was soon realized that Europe could not meet the increasing demand for labor. African labor was ideally suited for this task

Sugar processing yields molasses as a by-product. Fermented molasses yield rum. Molasses were processed into rum in the factories that sprang up in New England, as well as in…

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What if we are unable to value those elements most crucial to our survival? What is the benefit in resource allocation via capitalism then?