Obama's tryst with Islam

I have always been skeptical about Obama's Muslim background.
He does not look like a Muslim. I could not see any shade of it.
But, my friends are enthusiastic about this more than everything else. After all his father is a Muslim, mind you, they tease! This line of thinking makes me uncomfortable and I don't know whether to laugh or cry.
Now I stumbled upon an excellent article by U. Mahesh Prabhu. His piece is interesting and it shed lights on Obama's "Muslim background".

Excerpts:

If you think Obama's full name is 'Barack Obama' then you are half right. His middle name, which is hardly flashed in the media, is 'Hussein'. Thus his complete name is 'Barack Hussein Obama.'

Now the question that would certainly follow is: 'Does he, or not, have a Muslim background?' When the very same question was asked to him sometimes back his answer was 'If I was a Muslim, I would let you know.' and I believed in him. Obama is today a practicing Christian and also a member of the Trinity Church of Christ.

Obama in his campaign website on November 12, 2007 posted a statement with the headline 'Barack Obama is not and has never been a Muslim', followed by 'Obama never prayed in Mosque. He has never been a Muslim, was not raised a Muslim and is a committed Christian.'

Speaking personally about his Muslim lineage, on Dec 22, 2007, Obama spoke thus: 'My father was from Kenya, and lots of people in his village were Muslim. He didn't practice Islam. Truth is he wasn't very religious. He met my mother. My mother was a Christian from Kansas, and they married and then divorced. I was raised by my mother so I have always been a Christian. The only connection I have had to Islam is that my grandfather on my father's side came from that country. But I have never practiced Islam… For a while I lived in Indonesia because my mother was teaching there. And that's a Muslim country. And I went to school. But I didn't practice Islam…'

However, in complete contrast to Obama's aforesaid statement, in the article 'Obama Debunks Claim about Islamic School' Nedra Pickler of the Associated Press wrote, on January 24, 2007, that: 'Obama's mother, divorced from Obama's father married a man from Indonesia named Lolo Soetoro, and the family relocated to country from 1967-71. At first Obama attended the Catholic School Fransiskus Assisis where documents showed he enrolled as a Muslim, the religion of his step-father. The document required that each student choose one of the five sanctioned religions while registering – Muslim, Hindu, Buddhist, Catholic or Protestant.'

In response to the above claim Obama's communication director, Robert Gibbs, responded that 'He wasn't sure why the document had Obama registered as a Muslim.'

What more? Two months later, Paul Watson of the Los Angeles Times reported that the Obama campaign had retreated from that absolute statement and instead issued a more nuanced one: 'Obama has never been a [practicing] Muslim.'

The Times looked into the matter further and learned more about his Indonesian interlude: 'His former Roman Catholic and Muslim teachers along with two people who were identified by Obama's grade-school teacher as childhood friends, say Obama was registered by his family as a Muslim at both schools he attended. That registration meant that during the third and fourth grades Obama learned about Islam for two hours each week in religion class.' The article further continued stating that 'his childhood friends say Obama sometimes went for Friday prayers at local mosque. "We prayed but not really seriously, just following actions done by older people in the mosque. But as kids, we loved to meet our friends and we went to mosque together and prayed." Said Zulfin Adi'

To read the complete story, click here.
And also read : Coke, Pepsi and Obama!
And read : The Indian Obama and American Mayawati.
And read : Deve Gowda is greater than Obama!
And read : Obama, racism and America!!
And read : Karti Chidambaram and Obama!

Karti Chidambaram and Obama!!

Karti Chidambaram is different.
He is the son of P Chidambaram, our Union Finance Minister.
But he seems to be different from the regular politicians.
He is vocal and seems to read a lot. But oflate, he seems to be bitten by the Obamamania!
In Tamil Nadu, it is fashionable for every budding political figure to do a Obama! Vijaykanth calls himself as Obama of Tamil Nadu. Sarathkumar too wants to do the same. Vaiko has gone to the extent of translating Obama's book in Tamil. Now, Where does Karti stand? You can see it in his website. Its central theme is Change!!!
He has gifted himself a website on his birthday.
The website is rich in design, outlook and presentation.

Karti P Chidambaram expresses his views on various issues that need to be urgently addressed by society today. He also encourages youth participation in politics, believing that their idealism and energy can be channelised for the nation's benefit.

The website will serve as a discussion forum for the youth who can come forth and provide their views and solutions on any issue. In time, Karti will engage with citizens on a regular basis for live chats to get the pulse of people's thoughts and views.

The bilingual site, in English and Tamil presents a broad picture of the man, his speeches, interviews and his progress in the political milieu.

The most attractive feature of the website is its theme: Change!!

Now come on, do agree my contention that Karti Chidambaram is different!!

Also read: Coke, Pepsi and Obama!
And read : Deve Gowda is greater than Obama!
And read : The Indian Obama & the American Mayawati
And read : Obama, racism and America!

Just The Tip Won't Do: Expose The Whole Iceberg

Kavita Krishnan has said explicitly and boldly. The following is the excerpts from her article on Latest developments:

No longer can the Sangh Parivar and BJP ever disown its role in terrorism. A former firebrand ABVP leader and so-called 'sadhvi', Pragya Singh Thakur, has been arrested for her role in the Malegaon blasts of September 2006 as well as in the more recent Modasa blasts. Even more ominously, two ex-Army officers are implicated in the blasts, and it has come to light that an institution called the 'Bhonsala Military Academy' in Nagpur has been imparting arms training to the Bajrang Dal.

The Sangh Parivar has reacted by disclaiming its links with 'sadhvi' on the one hand, and on the other, by suggesting that it is inconceivable that a 'sadhvi' could be a terrorist. BJP spokesperson Venkaiyya Naidu has reminded us that according to the rule of law, the sadhvi is innocent till proven guilty, and the BJP has objected strongly to the term 'Hindutva terrorism.'

For a minute, imagine if the story were the same – with just one detail changed: replace the 'sadhvi' with a 'maulvi.' Then imagine the righteous roars that would be voiced by the BJP, demanding blood. In the Jamia Nagar blasts case, the BJP would not allow teenage boys the benefit of 'rule of law;' they castigated the Jamia VC for arranging legal aid, and in UP, Sangh cadre have beaten up lawyers taking up cases of blast-accused. Muslims accused of terrorism, it seems, are guilty even if proven innocent, and are certainly not entitled to the opportunity to prove themselves innocent!

There is ample proof that the sadhvi has campaigned for the BJP in elections, and has appeared in public gatherings with BJP President Rajnath Singh and MP CM Shivraj Singh Chauhan. Under POTA, as under the Chhattisgarh Special Security Act, those who are associated with or have known the accused can be prosecuted as 'conspirators.' Will the BJP tell us why Rajnath and Shivraj should not be prosecuted as 'conspirators' according to the principles espoused by the BJP itself? Surely there is more ground to prosecute Rajnath or Shivraj of conspiring with saffron terrorists than there is to prosecute Dr.Binayak Sen for links with Maoists?

What were Pragya Thakur's known activities? Her role in the communal pogrom in Gujarat 2002 is indicated: in fact, she campaigned for the BJP in Surat in 2002 and again in 2007. Her father, defending her, offers proof of some of the noble work she was known for: "Pragya and her organisation Jai Vande Matram would rescue girls who eloped with boys of another community, sometimes bring them back to their parents." So, like the notorious Babu Bajrangi, Pragya was involved in terrorising, kidnapping and coercing women who had married of their own accord outside their community. Pragya is proof positive of the fact that the same forces who openly indulge in communal pogroms and obscurantism violence against women could in fact be secretly involved in terrorism.

This said, it is also important to ask why the above facts were kept hidden from us for the past two years. Soon after the Malegaon blasts, in nearby Nanded, Bajrang Dal activists were accidentally killed by their own bombs, and investigation had revealed fake beards and 'Muslim-looking' clothing in their home. In other parts of Maharashtra and the country – Parbhani, tenkasi, Kanpur, Faizabad – there have been leads linking saffron forces to bomb blasts. Had these leads been pursued, is it not possible that some subsequent terrorist incidents could have been avoided? The state and ruling establishment is criminally guilty of ignoring these vital leads.

We are everyday asked to believe as gospel whatever is peddled as 'fact' by the police via the media in a terror investigation: to question is to be branded 'anti-national.' It is worth recalling that on November 26, 2007, less than two months after the Malegaon blasts, Director General of Police P S Pasricha had claimed to have 'solved' the case. Several Muslims were arrested and paraded, the names SIMI and Lashkar were bandied about, involvement of Pakistan and training received by the 'masterminds' in Pakistan pointed to. The police over the next two years have confidently given us detailed 'facts' about how the 8 arrested conceived of and executed the blasts. Those arrested were also linked with the Mumbai train blasts, according to the police. The ATS has prima facie "ruled out the involvement of Hindu fundamentalist groups in the Malegaon blasts" claiming that "RDX is only available to Islamic terrorist outfits." (TOI, 12 September 2006) Three of the accused were said to have "confessed" to the crime.

Now, we are told that the motorbike used in the September 29 Malegaon bomb blasts was registered in Pragya's name, and this led to her arrest. Are we to believe that the police took two years to find out the registration details of a bike involved in the blasts? The same police that just have to take one look at a bomb site to tell us confidently the exact nationality and organisational affiliation of the perpetrators? Is there any material at all – including RDX – that ex-Army men cannot easily have access to? Will the police explain to us how the 'confessions' of three Muslim men were secured (will they admit to torture)? Who will restore freedom, and apologise for character assassination and torture, to those who for the past two years have been blamed for blasts they did not do? Most importantly, are we really to believe that the Governments at State and Centre did not know all along about the activities of the Bhonsala Military Academy, and the fact that it was openly holding arms training camps for Bajrang Dal goons from all over the country? Blasts aside, how come such training camps for communal outfits were not deemed illegal and banned even as Bajrang Dal brigades repeatedly conducted anti-Muslim and anti-Christian violence?

The recent revelations in the Malegaon blasts put every ongoing blast investigation under a cloud and a question mark. Clearly, the police suppressed all the trails that led to Sangh outfits and BJP leaders – allowing these terrorists to roam free and contest and campaign in elections – while misleading the nation by framing innocents of a minority community. Is it not all too possible that this is happening in every single blast investigation?

To read more, click here. Thank you, counter currents!!
Also read : Malegaon, Mecca Masjid and Justice!!
Also read : The cat is out of the bag!
Also read : Abhinav, Godse and bombs!!

Saffron Terror!!!

"The ruling coalition has failed to reaffirm a secular agenda in a credible way. Unless it acts with determination and despatch, Hindutva hatred and prejudices will undermine interreligious harmony and tear this society asunder," says, Praful Bidwai, veteran journalist, activist and columnist in Frontline. Excerpts :

The September 2006 bombings in Malegaon outside a crowded mosque after the Friday prayers fit this pattern to a T. Ironically, the police held Muslims responsible, ignoring all material evidence and important clues: the victims were exclusively Muslims observing Shab-e-Barat, or remembrance of the dead, in an adjoining graveyard; the bicycles in which the bombs were planted had Hindu names painted on them.

Militant majoritarianism has held sway in India over the past 20 years and created great fear and insecurity among Muslims. Hindutva’s rise has deeply affected official thinking and given India’s counter-terrorism strategy an Islamophobic edge. A significant number of police and intelligence officials, both serving and retired, have embraced hard or soft Hindutva. Muslim alienation from the government has never been greater. This is especially so where Muslims have been harassed or treated with suspicion, as after the Batla House episode.

The lion’s share of the responsibility for this unacceptably deplorable state of affairs rests with the Bharatiya Janata Party (BJP), many of whose members seamlessly walk in and out of the front organisations of the RSS, and whom the RSS uses at will. Sadhvi Pragya Thakur, for instance, was a leader of the Akhil Bharatiya Vidyarthi Parishad (ABVP) for nearly a decade and campaigned for the BJP during the last Assembly elections in Gujarat. Her associates have a similar relationship with Sangh Parivar organisations.

To read more, click here.

Also read : Counter Terror by Rana Ayub

Also read : Fighting Fascism by Yoginder Sikand

Also read : Of Dharma Yudh and Jihad by Ishthiyaque Danish

Is it the tip of the ice berg?

Meena Menon in a thought provoking, tiring article Nanded case: of lost leads and shoddy investigation in The Hindu asks:

For some time now, there is evidence that all the blasts in the country are not the handiwork of terror groups supported by Pakistan or Bangladesh.

What are the resources of this right wing terror network, its reach and implications?

Only a sustained and meticulous investigation can give results and it is time the government and investigation agencies have learnt some lesson from the slip ups in Nanded. Investigations into the terror activities which seem disparate right now have to be coherent.

Those who forget history are condemned to repeat it.

To read the full article, click here.
Also Read : Anatomy of Sangh Parivar by Ram Puniyani
Also read: Communalism and the Myth by Ambrose pinto

There is no full stop in India!!

Saidullah has won many trophies (Pictures: Prashant Ravi)

Amidst the news of bombs and blasts, riots and tortures, chaos and mayhem seldom we come across such feel good stories. But, India is India. As the veteren BBC Correspondent has written in his book "There is no full stop in India" We may have our Narendra Modis, Pragya Thakurs and there may not be a full stop to this hate mongers' list. Similarly we have Teesta Setalvads, Sandeep Pandeys, Harsh Manders, Ehsan Jaffris. And there is no full stop for that list too. Similarly there is no dearth for unsung heroes in this land as well. One among them is Muhammad Sayeedullah. AMARNATH TEWARY has profiled him in BBC. It is interesting and inspiring.

Excerpts:

Mohammed Saidullah, a resident of Motihari in the Indian state of Bihar, has received many awards and trophies in the last few years for his innovation.

In 1975, when his Jatwa-Janerwa village was swamped under flood waters - an annual monsoon menace - he pleaded with a local boatman to take him to safety.

When the boatman refused to give him space unless he paid for it, the young Saidullah looked for other ways to tackle the floodwater.

Necessity met creativity and in just three days, he made an amphibious bicycle which could easily negotiate the floodwaters.

He modified the conventional bicycle by adding four rectangular air floats to support it while it moved on water. Two fan blades were attached to the spokes of the rear wheel which enabled it to run on both water and land.

The blades were arranged in such a fashion that the cycle could be driven in reverse direction too.

Shining moment

Later, Mr Saidullah demonstrated the prowess of his vehicle before a stunned crowd, which included the then state governor, AR Kidwai, when he crossed the river Ganges in Patna city.

His big shining moment came in January 2005 when the then Indian President, APJ Abdul Kalam, presented him with the National Innovation Foundation's (NIF) lifetime achievement award.

In the same year, he was selected as one of the 12 finalists for the prestigious Wall Street Journal Asian Innovation Awards.

He was also profiled for the Discovery Channel's "Beyond Tomorrow" programme.

In fact, he has won so many awards that he has lost count of them all.

An impressed NIF took away his bicycle and offered to get it patented.But three years later, Mr Saidullah has neither got the patent nor the bicycle.

Saidullah takes his grandchildren
for a joy ride in his cycle-rickshaw

Today, he lives in penury.

Everyday, he pedals about 30 kms on his bicycle to sell honey so that he can feed his family of 16.

But the work brings him a paltry 1,500 rupees ($37) a month.

Grinding poverty

Unable to make the ends meet, he has now put up his roadside half-thatched, half-concrete house and the small plot of land - in Mathia Dih locality of Motihari in East Champaran district - on sale.

His disillusionment is such that Mr Saidullah wants to return all his awards and trophies.

"If you want to destroy someone, give him an award," he says.

After the bicycle, Mr Saidullah also invented an amphibious cycle-rickshaw which he demonstrated before the BBC team in a nearby pond.

"On this, I can take my grandchildren for a joy ride in the water," Mr Saidullah told the BBC.

"But I feel hurt by what the NIF has done to me. They used us for their promotion," he says.

"May I know how many innovators like me have been benefited and how many of us have been destroyed by them?" asks Mr Saidullah, with pain creasing his face.

NIF executive chairman, Anil Gupta, is sympathetic to Mr Saidullah's plight: "We tried a lot, are still trying and will keep trying to explore things being done for Mr Saidullah's amphibious bicycle. But yes his frustration is completely understandable.

"Despite our best efforts, for some reasons we failed to generate any entrepreneurship for his bicycle. We've given him the innovation fellowship of a fixed amount and we are ready to support him in future too," Mr Gupta said.

There is still a chance that things may look up for him.

A senior official in Bihar state's science and technology department, Ajay Kumar, told the BBC he would do all he could to help Mohammed Saidullah.

"Though there is no structured schemes for commercialisation of such innovations in my department but we would certainly help him in getting his product patented after talking with the NIF," Mr Kumar said.

According to Mohammed Saidullah's son, Mohammed Shakilurrahman, the family was not always poor. Mr Saidullah inherited acres of land, orchards, elephants and a big house from his father.

But, the rural scientist sold all his property to pursue his innovations, his son says.

New things

He blames his father's "sheer madness" for the family's poverty.

He too sells honey in the state capital.

However, Mr Saidullah's bitter past experience has not stopped him from moving on to new things.

After the amphibious bicycle, he developed a key-operated table fan which can run non-stop for two hours, a mini-water pump that needs no fuel and a mini-tractor which can run for two hours on just five litres of diesel.

Now, he claims he's making a helicopter which would cost the equivalent of $62,500 and a car that would be powered by air energy.

His dark, dingy workshop is crammed with a hand-made lathe machines and countless corroded nut-bolts littered on long rusty iron racks.

But it's his favourite place. "I love to be here all the time," he says.

Where would he go once his house and land is sold off?

"I'll make a three-storey moving car with folding cots, pack my family in and park it on an open government land by the roadside anywhere," he says.The maverick innovator says he draws inspiration for his innovations from his everyday experiences. He has named all his creations after his loving wife, Noor Jahan.

"Noor means light and Inshallah a day would come when there would be light in our life too," says Saidullah.
I took this story from here. Thank you BBC!
And see video of his amphibious cycle, click here.
And to read a detailed profile of him, click here.
And read : A poem, a girl and a success story!

The cat is out of the bag!!!

Pragya Singh Thakur, third from left with MP chief minister Shivraj Singh Chauhan left
and BJP chief Rajnath Singh, foreground.

Manoj Joshi, veteran Journalist based in New Delhi has dwelled in detail about the emerging truths, shady deals, holy alliances - everything concerned with the bomb blasts in India. It can be claimed that finally the cat is out of the bag. But, still what really matters is that who is to bell the cat? And that is the trillion dollar question. Excerpts from his article:

The arrival of Hindutva terrorism in India — via the Malegaon and Modasa blasts arrests — has been anticipated for some time now.
Between 2003 and 2006, there have been several unexplained and unsolved bombings targeting Muslims in many small towns of Maharashtra.

A blast took place at Parbhani’s Mohammadiya Mosque on Friday November 21, 2003, a blast at the Meraj-ul-uloom madarsa at Purna took place again on a Friday, August 27, 2004. On the same day, the Qadiriya mosque at Jalna was also the target of a bomb blast.

On September 8, 2006, again a Friday, a bomb was planted near a graveyard in Malegaon on the day of Shab-e-Barat, when Muslims congregate to commemorate their departed. There were bigger strikes, too, which were not of the normal pattern because they targeted Muslims — the May 2007 blast at Mecca Masjid in Hyderabad, the twin blasts at New Delhi’s Jama Masjid in April 2006, the blast at the Ajmer Sharif shrine in October 2007 and the Samjhauta Express attack of February 2007.

The Kanpur blasts were more recent. Two men, Rajiv Mishra and Bhupinder Singh, were killed in what was an accidental blast at the Kalyanpur area of the city in August this year. Apparently they had been making bombs and had been associated with the Bajrang Dal, Vishwa Hindu Parishad and the Rashtriya Swayamsevak Sangh. The police recovered some hand grenades, explosives and timers that the two were using.

To read the complete story, click here.

Also Read : The Hindutva virus can have all manner of consequences for the Indian armed forces
Also Read : The Fiery And Fanatical Sadhvi

Coke, Pepsi and Obama!!

Obama!
The world is obsessed with Obama!
But, my contention and strong belief is that there will not be any change in the policies of US.
Obama will not and could not change anything. He will never deliver anything.

I can say from the top of the roof that Obama and McCain are not poles apart. Selecting one among them is just like choosing one of the two colas: Pepsi or Coke?
And both the colas are injurious to health. Both are not health drinks. They could be used to clean toilets.
But, one cannot deny the fact that Obama is a great orator. He mesmerises you with his choice of words, script and voice modulation.
I heard his victory speech. He was simply exceptional. Excerpts from his speech:

This election had many firsts and many stories that will be told for generations. But one that’s on my mind tonight is about a woman who cast her ballot in Atlanta. She’s a lot like the millions of others who stood in line to make their voice heard in this election except for one thing - Ann Nixon Cooper is 106 years old.

She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn’t vote for two reasons - because she was a woman and because of the colour of her skin.

And tonight, I think about all that she’s seen throughout her century in America - the heartache and the hope; the struggle and the progress; the times we were told that we can’t, and the people who pressed on with that American creed: Yes, we can.

At a time when women’s voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes, we can.

When there was despair in the dust bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs and a new sense of common purpose. Yes, we can.

When the bombs fell on our harbour and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes, we can.

She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma, and a preacher from Atlanta who told a people that “we shall overcome”. Yes, we can…

Note : Another important point to be noted in the Obama case is that he SPENT more money than his competitor. He spent the 570 million dollars! Mind boggling figure!
This is the evil of democracy. If you want to win you should spend more.

To read the full text of his speech, click here.

Also Read : Deve Gowda is greater than Obama!

Also Read : Obama, racism and America!

Also Read : The Indian Obama & the American Mayawati

Injustice is Terror! Justice is Peace!

Jamaat demands white paper on bomb blasts!

Chandrashekhars Swamiji, Abdullah Javeed and others

HUBLI: Jamaat-e-Islami Hind organised a procession and held a public meeting here on Tuesday as part of its “Caravan for Peace and Justice”.

Procession

Apart from members of Jamaat-e-Islami Hind, several school and college students took part in the procession from Fateh-Shavali Dargah in Old Hubli.

After the procession a public meeting was held at the Islamic Centre at Bhandivad Base.

Chandrashekhars Swamiji of Hosa Math inaugurated the procession earlier.

Several girls from the Muslim community took part in the procession holding placards and banners condemning violence and activities that posed threat to peace and harmony.

White Paper

Speakers at the meeting urged the Union Government to come out with a White Paper on the situation in the country owing to increasing communal violence, regional and linguistic chauvinism, caste conflicts and terror attacks which had affected the socio-economic and cultural fabric of the country.

The speakers demanded that any effort aimed at breaking the unity and integrity of the country be investigated properly, followed by stringent action.

The Union Government should appoint a high-powered commission to inquire into these acts at the earliest, the speakers said.

The speakers included the office-bearers of Jamaat-e-Islami Hind and a few religious heads, who urged the participants to contribute towards peace and harmony and nation building.

To read the full article, click here.

Abhinav, Godse and bombs!!!

Photo: Bhonsala Military School

Abhinav!!!
Until now it was the most charming name of the most eligible bachelor of our great country.
Abhinav!! Abhinav!! Who is Abhinav? Everybody knew him. He was the first Indian to win Gold in Olympics. His name instantly evoked mixed feelings of happiness, pride and joy.
But, of late the name has lost its sheen. Abhinav now evokes revulsion, pity and sorrow. All because of Abhinav Bharat.
What is the Abhinav Bharat? What is its aim? Who are its members? The hardcore Hindu outfit with its ideological links to Veer Savarkar and Gopal Godse now has links, allegedly, with the army and this sets a dangerous precedent in its fight against terror writes Saikat Datta in Outlook.

The organisation’s activities clearly reveal its virulent character. In one pamphlet, it even exhorts members to seek revenge for the "killing of millions of Hindus over several centuries". It has also organised several "conventions" in Bhopal, Raisen and Vidisha districts of MP, where it is particularly active. At these conventions, it has described Muslims as "dharma shatrus (enemies of the faith)". More in tune with its militant character, one of the outfit’s slogans reads, "Kshama yachna nahin, ab to ran hoga, sangharsh bada bhishan hoga (No mercy or apology, now it will be war; the battle will be extremely intense)." Major (retd) Ramesh Upadhyay, arrested in connection with the Malegaon blasts, is the outfit’s working president.

What is Bhonsala Military School?
Spread over 160 acres, the Bhonsala Military School (See photo at the top) is different from other institutions of its ilk in that the curriculum stresses on religious instruction too. It seeks to instil "Bharatiya values" and the virtues of Lord Ram among its students. The school campus has been named Rambhoomi and its students Ramdandees. The symbolism blends the religious and the martial: they pray to an idol of Ram sculpted out of used cartridges. Kulkarni explains: "We created it out of the spent bullets fired by our students at the firing ranges."

To read the full article, click here.
Also read, 'If We Can Have Bullet For Bullet, Why Not Blast For Blast?'

Malegaon, Mecca Masjid and Justice

Asghar Ali Engineer is a Mumbai based Peace activist. He is in the field for the past thirty years. He has been awarded Right livelihood award alongwith Swami Agniwesh in 2004 "...for promoting over many years in South Asia the values of religious and communal co-existence, tolerance and mutual understanding." He has been running centre for study of society and secularism (CSSS) which strives with the of spreadling the spirit of Secularism and communal harmony and social peace.

Now that the latest revelations of Malegaun blasts has hit the nation, Mr. Asghar Ali Engineer has expressed his thoughts in his own way. The following is the excerpts from his thought provoking article "And now Hindu Terrorists?":

I had investigated Malegaon blasts of 2006 and had met all political leaders across party lines and common people and intellectuals and no one was convinced that those arrested after the blasts in 2006 in which more than 50 persons were killed could have been carried out by those arrested by the police. It was important festival and Friday and the bombs went off just when the Friday prayers ended. No Muslim would go for blasting bombs at such a place on such an occasion.

Yet the police was determined to blame it only on some ex-SIMI members and would listen to no arguments.

The 2006 blasts should be reinvestigated and I am sure something else would be revealed. I have seen the charge sheets filed by ATS in 2006 Malegaon blasts. It totally depends on confessions obtained in police custody and is bound to fail in any court of law. The real culprits would certainly escape.

The Nanded blasts in which two Bajrang Dal activists were killed had taken place just before Malegaon blasts of 2006 and there was every possibility of involvement of some of those persons in Malegaon blasts. Similarly the Mecca Masjid blasts of Hyderabad should also be thoroughly reinvestigated as it also took place on Friday just at the end of Friday prayers when thousands of Muslims were coming out of the Mosque.

And all those arrested in Mecca Masjid blasts were also mostly innocent persons. I have heard them in a public hearing in Hyderabad and human rights activists and civil rights group worked hard to get them released on bail as there was nothing by way of credible evidence against them. The courts had to give them bail. The Hyderabad police could not, or did not want to lay its hands on real culprits.

The involvement of some army officers even of the rank of major should not be surprising as many RSS sympathizers are regularly employed and after retirement they become active in Hindutva organizations. The army usually claims to be quite secular, and probably it is, but it should be much more careful while recruiting soldiers and officers. No one with communal background should be recruited. This principle is not being rigorously observed at the time of recruitment. Many people who come out of RSS controlled schools and colleges are recruited in army.

I think it will be better if all terror blast cases be investigated by the police of credible conduct under the supervision of retired high court justices. This will reduce possibility of biased investigation though may not all together eliminate it. It is in the interests of the internal security of the country. It appears communal riots are fast being replaced by bomb blasts and some people suspect, it is new strategy of the communal forces. Major communal riots are becoming increasingly difficult to organize.

The civil society should also become vigilant against all terrorists of whatever religion or group. As communal riots were major danger in twentieth century, terrorist attacks are for 21st century.

To read the full article, click here.

THIS IS NOT CREDIT CRISIS!

Nowadays everybody is talking abour credit crisis and the financial catastrophe facing the world. The situation is alarming, they warn. The future is bleak, they assert. Amidst this gloomy scenario, As a Muslim, what Iam supposed to do? is the question that haunts every responsible Muslim Youth.
Mansoor Durrani is one of them. But he is different. Rather, I would say he is more competent and well versed in the subject. His field of operation is commerce and finance. He is the youngest student to get doctorate in Banking in UK. His academic background is impressive. I have meet him a couple of times. I found him energetic, vibrant and dynamic youth full of passion and insight. I have translated his speech on debt terrorism into Tamil. It was published in Samarasam Tamil Fortnightly and later became a part of the book on "Globalisation and Muslim Youth" by Syed Sadathullah Husseini. It was published by Islamic Foundation Trust, Chennai. Another interesting bit of information about him is that he belongs to Bhopal and one of the grandsons of Moulana Inamur Rahman Khan. Moulana is the legendery Islamic Movement leader and revered as the father figure of Jamaat-e-Islami Hind Madhya pradesh.
He is now working somewhere in the Middle East. He is Head of Project Finance at Saudi Arabia’s largest bank – The National Commercial Bank.
But off and on he shares his thougts and insights. I want to share an article written by him on credit crisis. It is one ot top ten articles in the subject. You would love read it.Its pdf version could be downloaded here! I got the full article from Br. mohd umair siddiqui Jazakallah! Umair bhai!. I am very happy. After a long gap, I got a chance to read the stuff of Mansoor Sahib. I do not know you. I have not met you. I have not seen your face. I don't know how you got my email address. But, you have done me a favour by sending a good article. Once again, Jazakallah!

THIS IS NOT CREDIT CRISIS!

Mansoor Durrani

Past: When Mr Warren Buffet, the richest man in the world, called some financial instruments like the Derivates and Credit Default Swaps (CDS) ‘financial weapons of mass destruction’ over three years back, few of us took notice. The world economy was on the roll. European realty and financial markets were booming. US was ‘winning the war on terror’. And rest of the world was blindly aping this mirage called ‘American Dream’.

Some high level articles on alternate perspectives of the present crisis have recently been published. For a commoner to understand this mess, we need to go back to basics. Derivatives can be described as like putting a mirror in front of another mirror, allowing a physical object to be reflected into infinity. Australian Prime Minister Kevin Rudd has identified ‘comprehensive failure of extreme capitalism’ as a cause of this economic crisis. He attributed greed and fear as the ‘twin evils’ at the root of the financial sector collapse. Interest and speculation based capitalism has been around for a long time, but the seeds of this ‘extreme capitalism’ were sowed by the US when neo-cons made their debut in White House under Ronald Reagan. Their objective was to accelerate the theft of global resources at a much faster pace than they did over the previous seven decades.
This ‘richest nation’ in the world has ‘borrowed’ trillions of dollars from external and internal lenders to fund, among others, research and development of weapons of mass destruction and wars. The Republican Presidential candidate said he would be content to continue the war for 100 years. With what resources? The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that

'the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.'

The GAO report further pointed out that the accrued liabilities of the federal government 'totaled approximately $53 trillion as of September 30, 2007.' No funds have been set aside against this mind boggling liability. Why? Because there is no intention to repay! Just so the reader understands, $53 trillion is $53,000 billion. Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office. Such a precarious state of US economy is reflected in dollar’s declining value against other currencies.

As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.

In 2007 alone US borrowed $739 billion – majority of it to completely destroy Iraq on the pretext of searching weapons of mass destruction which it never found and Afghanistan on the excuse of hunting one single individual who again it failed to find. It
did succeed though in killing hundreds of thousands of their citizens. Other ‘rich’ crusaders that have joined this global bully in its ‘war against terror’ also borrowed heavily in 2007. For instance, Spain borrowed $146 billion, UK $136 billion Australia $56 billion and Italy $47 billion. America’s 2008 borrowing has already crossed one trillion dollar. Although these insane amounts are theoretically ‘borrowed’, lenders will not be able to recover their exposure from this ‘borrower’ for at least two reasons (a) the borrower is not honest as it has not built any reserve to repay and (b) for now, it is militarily too powerful. At least ‘third world’ lenders, except China, will find it hard to retrieve their ‘investments’.

Successive neo-con presidents aggressively ‘de-regulated’ financial markets and left them at the mercy of greedy speculators. Let us take the recent example of surge in oil prices which triggered worldwide inflation and made hundreds of million human beings poorer. US regulatory body Commodity Futures Trading Commission (CFTC) recently reported that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on New York Mercantile Exchange – the world’s biggest commodity exchange. Using swap dealers as middlemen, investment funds have poured into the commodity markets, raising their holdings to $600 billion this year from $13 billion in 2003. During that same period, the price of crude oil rose unabated every year. This reality throws Mr Bush’s argument to the wind that oil price rose due to China’s economic growth and food prices increased because Indians are eating more!
While these speculators called ‘bulls’ or ‘bears’ played havoc in equity and commodity markets by buying without money in their pocket (bulls) and selling what they did not posses (bears), their commercial and investment banking cousins began lending aggressively to buy cars, homes, clothes, TVs, refrigerators and even holidays to those who did not have means to repay. Because of their low ability (which later became no ability) to pay back debt, they were classified as ‘sub-prime’ customers and therefore were charged much higher interest rates. Even after making such reckless and greedy lending decisions, banks were not prepared to take any risk. So they insured these risky loans through CDS. Thus widening the scope of potential destruction and putting even insurers’ money at risk. With slight increase in interest rates, these sub-prime customers began defaulting. This led to large-scale defaults. Banks having big exposure to such customers panicked. They tried to sell collateralized properties to recover their money. But there were no takers. This turned out to be the final nail in the coffin of dangerous game that was being played under this ‘extreme capitalism’.

Present: The 2007 annual report of top British bank Barclay’s shows total customer loans - their core business - at Great Britain Pound (GBP) 345 billion. However, trade portfolio and derivatives together stood at GBP 541 billion. Such a high investment in speculative non-core business is bizarre and inexplicable. Greed and recklessness appear to be the only answer! At the most basic level, interest based financial instruments attract a fixed return on the original amount provided for business or consumption. The capital provider (banks and other financial institutions) under this system care less if the recipient is economically benefiting out of their money. Even if recipients incur losses, they are legally required to pay back more money than they took. Islam views this as gross injustice and even ‘an act of war against Allah and His prophet’. Therefore, the destruction of interest based system was predestined. And this is what is happening.

Plilip Stephens aptly illustrates in the Financial Times of 10th October this year, ‘for more than two centuries, the US and Europe have exercised an effortless economic, political and cultural hegemony. That era is ending.’ Big books and articles are being written on why and how this crises set in. Thousands of jobs are on the block. Depression and suicides are on the rise. Hundreds of billions of tax-payers dollars are being thrown in to save the developers and marketers of financial weapons of mass destruction. These steps by free market champions are leading us to believe that this system privatizes profits and socializes losses. This is in stark contrast to what these ‘rich’ proponents have been preaching to the ‘third world’.
Commentators predict that the sun will shine again. Sure it will; but never with the same brightness. And it shouldn’t. For extreme ‘brightness’ was making life difficult for billions of inhabitants on this planet. This capitalism has created two sections in our societies: super rich and super poor. In this system, a UK based Indian industrialist buys GBP 300 million (SAR 2.4 billion or Indian rupees 2,400 crore) house for his wife while more than 300 million Indians survive on less than half a Pound a day! Moreover, thousands of Asians, Africans and who knows even Americans and Europeans (as media owned by the same greedy business houses may not report) are starving to death. Economic disparity is not confined to industrialists alone. The gap in income inequality is also widening between top executives and the average employee, with the CEOs of the 15 largest companies in the United States, for example, earning 520 times more than the average worker in 2007, up from 360 times more in 2003. Therefore, I refuse to call it an economic or financial crisis. In my view, this is a catastrophe of human values.

Future: There is no ‘financial economy’ in Islam; only real economy. Islam does not permit debt to be traded, discounted or securitized. About Islamic banks, Chris Wright wrote in September 2008 Asiamoney ‘these institutions have come out of the sub-prime credit crunch crises in better shape than many of their conventional counterparts.’ Life is simple. We have made it tough by breaching our commitment with our Creator. When Qur’an declares ‘Allah destroys interest and increases charity’ in verse 276 of chapter 2, it essentially encourages Muslims with surplus capital to share both risk and reward with capital deficient entrepreneurs and businessmen; and at the same time support their ‘sub-prime’ brothers and sisters - both Muslims and non-Muslims - to lead a humane life. Former (business objectives) must be attained through equity based investments like various structures of private equity, venture capital, leasing etc. and later (social objectives) must be achieved by institutionalizing zakah (obligatory annual charity) and encouraging even additional charity. This was the practice of Prophet Muhammad (peace and blessings of Allah be upon him).
Similarly, Islam does not permit its followers to sell something that they do not possess. This is speculation. And enormously risky. Future is unpredictable. We never know we will surely possess what we are selling in advance! Over the last several years, I have expressed deep concern about the availability of even ‘Islamic equity funds’. I do not challenge the concept of equity. It is perfectly Islamic if invested in permitted sectors and I am a strong supporter of this method of investment. My concern is excessive volatility experienced by equity markets. This volatility is not accidental. It is well planned and executed by bulls or bears. Their heavy buying (without money) and heavy selling (without possession of stocks) puts even Islamic equity funds at great risk.

For this reason, on top of whether stock itself is shari’ah-compliant, we need to think whether current rules of stock trading in global capital markets are shari’ah-compliant. Trust me, they are not!

There are no bull and bears in Islamic financial architecture. We have only investors, preferably medium to long term. This is aimed at providing financial and economic stability which results in political and social calm. Obviously neo-cons were not saints. They wanted to capture all the global wealth, if possible without wars. At the same time they wanted to destroy social and political systems of those societies (whom they viewed as mere markets) that did not agree with their values.

I see silver lining – for only those who have no greed and fear – in this catastrophe. Qur’an expects its followers to be free of these two characteristics. Financial system based on justice and fairness (free of interest and speculation) will survive now and thrive in future. But I would like to warn Islamic bankers and scholars who crave for ‘innovation’ and ‘sophistication’ in Islamic finance. While not harmful per se, the present crisis teaches us to avoid uncalled-for ‘innovation’ or ‘sophistication’. The color of money is same. So is its function. And value. Whether money comes in the form of equity, debt, preferred stock, leasing, commercial paper or bond, it serves the same purpose. In other words, 100 dollars of equity will buy the same amount of plant, machinery or land as 100 dollars of commercial paper or complex bonds. In terms of economic value-addition, it will make little difference. Therefore, I always believe in simple structures which are understandable by all. Or at least many. This, together with selfless and fearless life, will help us avert similar crises in future, insha’Allah

Also read : CURRENT FINANCIAL CRISIS AND ISLAMIC ECONOMICS by Dr Najathullah Siddiqui

Siva kumar and Holy Quran

>Look at this photograph.
What do you see?
He is Siva Kumar, a famous cine actor.
Do you see anything extra ordinary?
Now, come on. Take a look once again.
Could you see it?
Hmmm. Come on yaar.
... ... ... ...
... ... ... ...
... ... ... ...
... ... ... ...
... ... ... ...
... ... ... ...
Have a closer look.
What do you see there?
Do you see the shelf?
Yeaah! You got it. In that shelf amidst the rows of books... the first book in the row is... a copy of the Tamil Translation of the Holy Quran published by Islamic Foundation Trust.
This photograph was published in the popular English Daily The Hindu. To be specific, in the friday supplement of The Hindu.
Br. L. M. Naser Sahib of Alankar Silk House, Aminjikarai informed this news. Jazakallah Naser Bhai!!

Note: It is pleasing to note that the Tamil Translation of the Holy Quran published by Islamic Foundation Trust has reached there. Has he read it? What are his feelings? It would be useful to gather it.
But, the question is who would do it?

Here is an interesting article on Islamic Economics. It is written by Dr. Muhammad Najathullah Siddiqui. He is a member of Jamaat-e-Islami Hind and has written number of books on the subject. He has been awarded with Shah Waliullah Award. He could be said as the authority in the subject. His other articles could be read here.

CURRENT FINANCIAL CRISIS AND ISLAMIC ECONOMICS

mnsiddiqi@hotmail.com

[31 October 2008]

The current crisis emanating from US financial markets and spreading to other developed and fast developing countries like China, India and Brazil, is threatening a global meltdown leaving the entire world poorer and full of forebodings regarding future .It started as a credit crunch due to highly over-stretched leverage, was aggravated by the complexity of the products and reached its zenith due to moral failure generating conflicts of interest and mismatch between incentives of the various groups and individuals involved in the saga.

Islamic economics stands for abolition of riba and maysir in financial dealings as well as on a regard for the interest of others in one’s pursuit of material gains.

The purpose of this brief note is to examine the relevance of Islamic economics today. Does it have a message for humanity insofar as its current financial problems are concerned?

In what follows we first outline the broad features of the crisis under the four headings noted above, trying to establish the thesis that most of them are rooted in a moral failure that leads to exploitation and corruption. This would be followed up by an explanation of riba and mysir that equates them to bank interest and gambling-like speculation based on risk shifting as distinct from risk sharing.

It will be argued that debt-finance coupled with speculative products whose intricacies defy understanding provide ample opportunities to greedy profit-maximizing agents to exploit the aspirations of ordinary investors and for goading home owners and consumers into living beyond their means and chasing untenable dreams.

Even the calls for more and more deregulation, and the philosophy of non interference with financial markets have [im]moral dimensions. There is a hidden agenda behind this call [Joseph Stiglitz and Bruce Greenwald, Towards a New Paradigm in Monetary Economics (2003), p. 206].

Though they swear by the name of efficiency and innovation, the champions of deregulation and laissez faire have their self interest in view, not the social weal.

In conclusion a world of banking and finance without riba and maysir will be suggested as the best alternative to the current scenario. In this new environment risk sharing will replace risk shifting and morality, advising people to be moderate in their material pursuits and considerate about public good in their private decisions, coupled with realism, will serve as the corrective to self- destructive outgrowths of current financial capitalism.

It will be noted that for this alternative model to be robust and resilient, morality has to be rooted in spirituality. This will provide a basis for willing acceptance of social norms, state supervision, regulation and intervention in the market based on values rather than interests.

THE ECONOMICS OF CURRENT CRISIS

We begin with the fourth element of the crisis noted above, i.e. moral failure and a mismatch between the incentives of various players in the financial arena.

The reason: some of the other elements of the situation described above are partly a product of this factor.

Currently, financial institutions include banks, investment companies, insurance companies etc., managed by hired professionals. Those who govern financial conglomerates by virtue of owning enough shares have motives different from ordinary shareholders. Almost the entire population in developed countries is involved in supplying capital through purchase of stocks, bonds, insurance policies, pension funds, etc. While these ‘principals’ are interested in profits they care about many other things too, among them stability, jobs, social justice, and anxiety free communities. Not so the hired managers who consider profit maximization to be their mission as it earns them maximum bonus and continued employment.

There are those amongst middlemen who earn fees. They earn more when transactions multiply. In an environment where no one cares about others, focused as everyone is on his or her own interest, public interest is supposedly guarded by regulators. How can the same self-focused assembly of individuals throw up regulators who would work to protect and promote public good remains a moot question for neo-classical economics. An answer to this question is, however, provided by the public choice school: public servants too, elected as well as appointed, seek to maximize private gain!

Without committing myself to this rather bleak view of man in society, I suggest that we embark upon a discussion of the first three factors from the vantage point provided by this very view. It means I regard maysir- infested financial products[ like CDS, Credit Default Swaps], the inverted pyramid of debts[with a slender base of real assets] and the dearth of liquidity…,all the remaining three features of the current situation, to be rooted in the moral failure briefly described above. It could have been different. The reason it is what it is can be found in the denudation of economics from morality after the secularization of society in the wake of enlightenment. Islamic civilization has the instruments to pre-commit man in society to certain values leading to rules [abolition of interest and gambling, for example] that guard the society from falling prey to shortsighted predators. I proceed to elaborate taking the above-mentioned elements of the crisis one by one.

CASINO ECONOMICS AND HUMAN WELFARE

What is wrong with gambling? Firstly, gambling does not create additional wealth. Games of chance only transfer wealth from its (losing) owners to new (winning) ones. Considering the human resources consumed in the process, wealth transfers through games of chance cannot be considered to be efficient. They do not serve any social purpose. The satisfaction and thrill they provide to the players do not justify the opportunity cost involved. Other exonerating circumstances like the revenue to state in form of taxes or employment generated by casinos, lotteries, etc. cannot be considered as ‘advantages’ until the acceptability of gambling itself is established.

I argue that risk shifting is gambling. One who buys risk exchanges a definite amount of money (the price) for an uncertain amount of money, whose delivery itself is not certain. Credit Default Swaps are an appropriate example. The millions of loans made by a bank are each subject to the risk of default (credit risk) in various degrees. As Joseph Stiglitz and Bruce Greenwald have rightly pointed out credit is not homogenous like money [Towards a New Paradigm in Monetary Economics (2003), page 271]. The risks attached to each loan are unique. The institution undertaking to pay for all defaulters among, say a million borrowers has no scientific basis for measuring the risk it is taking. There is no long history to fall back on. The law of large numbers does not apply. It is just taking chances, gambling. The banks that so protect themselves against credit risks are emboldened to give more and more loans. That is how aggressive lending policy gained an impetus. The sub-prime mortgage crisis would not have occurred without the speculative deals like CDS. Aggressive lenders offered to refinance mortgages on the basis of rising home prices, virtually converting owned homes into ATM machines, sending people on a buying spree, some of it on installment purchase basis, encouraging an expansion that had little basis in the fundamentals: earning powers, disposable incomes and savings and investments.

The Islamic approach to risk is realistic but cautious. It does not allow deals involving excessive uncertainty (gharar kathir). It encourages sharing arrangements for facing risks. The additional wealth created with the use of existing wealth through risky ventures should be shared between fund users and fund owners while both bear the risks involved and the resulting losses. Differences in the participants’ perception of risks involved will be decisive in determining the terms of bargain between those sharing risk. Even though the motive of each party is making profits, it is very different from taking chances in gambling. There is real wealth to be created, real gain to be reaped. It is different in case of risk shifting [as in CDS]. Neither the buyer nor the seller of risk has any stakes in real wealth creation. As in gambling only one party actually gains, either the seller of risk or the buyer. It is different in risk sharing in which both parties gain (or lose). Like gambling, risk shifting is a zero sum game.

Risk sharing fits in with a system that integrates risk management with value creation. The Islamic institutions of musharakah, and mudarabah, for example target value creation and are good ways of managing risk. In a healthy venture fear of loss works to counter-balance hope for gain. When a system allows shifting the risk (at a cost) the fear factor becomes inoperative insofar as the seller of risk is concerned. It is worse when the government takes over the risk (as in case of Fannie Mae and Freddie Mac in USA). Such a system is heavily tilted towards the rich and leads to greater inequality as it protects the lenders but leaves the borrowers to fend for them selves. This is the feature of the current system that lead to an almost universal cry that it amounted to privatizing gain and socializing pain---profits go to the corporations, losses are borne by the taxpayers.

As an aside take a minute to ponder over the Islamic approach as encapsulated in verse 278-281 of the second chapter of Quran:

Believers! Have fear of Allah and give up all outstanding interest if you do truly believe. But if you fail to do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of return of your capital; neither will you do wrong nor will you be wronged. But if the debtor is in straitened circumstances, let him have respite until the time of ease; and whatever you remit by way of charity is better for you, if only you know.[2:278-81]

In effect the above is advising how to handle a crisis caused by default. A crisis like the sub-prime crisis in US (if it ever occurred in an Islamic interest free system based on risk sharing) would be handled not by extending credit to lenders but by giving more time to borrowers and writing off some of the debts.

CREDIT WITHOUT CREDIBILITY

Over extended leverage, outstanding credits amounting to an ever-increasing multiple of existing capitals of the relevant institutions, is a direct result of financing through interest bearing debts. The business of lending to thrive requires continued expansion of credit. After all, the primary concern of the lending institutions is making money that comes in the form of interest on loans outstanding. Every loan recovery kills an existing income stream, every loan extension generates a new income stream. With credit defaults swaps available and insurance companies like AIG supposedly providing cover, sub-prime lending looked attractive. The rest of the story is well known.

Debt financing of productive enterprise amounts to preferring risk shifting to risk sharing. This is immoral as well as counterproductive. The environment in which productive enterprise takes place does not guarantee creation of additional wealth. It is only a probability. The lender’s demand for a guaranteed positive return to the sum lent is unfair. Actually it cannot be met at the macro [i.e., society’s] level in the long run. Some enterprises do fail. Some others end up without any positive return to capital invested. Repayment in these cases can come only from old wealth already existing when the debt financed new projects were launched. Repayment of the borrowed sum with interest added, by those whose ventures failed to create wealth, causes a transfer of wealth from the entrepreneurs to the owners of money capital who would not share risk yet want a return. Putting producers/innovators at a disadvantage as compared to those having money to spare does not bode well for society. Easy money for those who have contributes to a life style at the top of the wealth pyramid that creates problems at its bottom. Society can continue meeting its debt obligations as long as there is growth at an accelerated rate. But the planet earth, its ecology, environment and resources are not designed for limitless growth. Deterioration in environment, increase in inequality, and social tensions are direct results of heavy reliance on debt finance.

The problem is aggravated when monetary expansion too takes place in the form of interest bearing debts, as is the case with the current monetary system. In order for new money to come in circulation a loan must be given, a new debt must be created. For every loan to be paid back with interest, borrowers need more money than they have. This additional money leads to additional debts, and so on. As pointed out in the previous paragraph the debt imperative creates a growth imperative that contributes to the destruction of the ecosystem.

Selling Debts

Some debt financing has always been part of the financial markets. Even in hey day of Islamic civilization trade credit, a form of debt financing , thrived. Islam has no problem with that as it fits in with prohibition of exchanging money now with a larger amount of money after a period of time. The problem starts with sale of debt, whether created by a money loan or owed as a price of goods sold on credit. Sale of debt is allowed at par or face value. But there can hardly be a market for exchanging debts at par. You have a market for debt when bond [i.e., debt] prices are determined by supply and demand. Sale of debt implies selling risk [or shifting risk]. A thriving market for debts at prices determined by supply and demand [as in conventional bond markets] is vulnerable to gambling like speculation as there exists no objective basis for measuring risks of default. The changing prices reflect changing subjective perceptions of the risks involved. As is well known these perceptions can sometimes be manipulated through planting stories in the media.

Remarkably, a ban on selling debts would drastically reduce the outstanding volume of debt. In effect it would scale down the volume of outstanding debts to the level of existing real assets. The inverted pyramid of debts, standing on a slender base of real wealth, would be replaced by a rectangular column of debts, owed against an equal amount of real goods and services acquired. The volatility in the bond market is directly related to the total volume of bonds. The larger the volume of debts, the weaker its connection with real wealth, and the more the scope for gambling-like speculation.

Derivatives

Derivatives also involve excessive uncertainty. They facilitate managing certain market risks (related to prices, rates of exchange, etc.). Chance remains the basic element in the situation, however, expectations being based on pure speculation. Derivatives too are a zero sum game: you lose what I gain, unlike the win-win situations in trade or risk sharing. The claim that they increase liquidity and improve operational market efficiency in financial markets remains unsubstantiated. What can be empirically established is that, whatever the initial benefits for a certain class of investors, availability of derivatives invites speculative activity. This is evidenced by the fact that currently the volume of derivatives being traded stands at many times the world GDP. The market for derivatives literally becomes a casino.

THE NATURE AND ROLE OF LIQUIDITY

The demand for liquidity increases with expansion of credit. The current liquidity shortage is rooted in over extended leverage. Unbridled risk taking as in sub prime mortgage, results in lack of trust in the stability of the current prices as well as in defaults leading to strains on bank liquidity. The situation leads to a decrease in peoples’ confidence in the banks, resulting in widespread withdrawals. Pouring in more cash in the system could be more effective if it were to be given to the ultimate debtors---consumers, small businesses, poor home owners, etc.--- who would then use it to meet their financial obligations or engage in new purchases. As it works in the current system it is given to the banks and insurance companies. It enters the market as loans, creating another chain of debt obligations. This amounts to solving a crisis by methods that sow seeds for another crisis.

CONCLUSION

I wish I could go on. But there is already a wealth of material available on the subject. I seek the readers’ response to my central point: All the technical flaws and tactical mistakes leading us to the current crisis are rooted in a moral failure.

Given a society in which individuals care about public good and cooperate with one another to promote it, even though after securing their self-interest in order to ensure survival, we could escape much of the troubles currently facing us. Only such a society of individuals who care for public good can opt for the right mix of state intervention and private initiatives. Such a society is possible. Let us first shed the illusion that we have been living for decades now under the best of all arrangements, social, political, economic and financial. We have not. Let all join the search for an alternative.

Also read : This is not credit crisis! by Mansoor Durrani