Tuesday July 28, 2009
Five-day Islamic finance course in KL
KUALA LUMPUR: Participants from 25 countries in the Organisation of The Islamic Conference (OIC) as well as Germany and Switzerland are attending the five-day course on the Fundamentals of Islamic Finance here.
The course, which runs till July 31, is jointly organised by Islamic Development Bank and Bank Negara.
In a statement, Bank Negara said this initiative was a capacity building programme that enhanced knowledge and expertise in Islamic finance among OIC member countries.
“The topics covered include Islamic finance operations and institutional capacity, syariah and regulatory framework for the effective implementation of a resilient Islamic financial system,” it said.
The course was officiated by Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, who delivered the opening address yesterday.
Monday, July 27, 2009
IDB anjur kursus kewangan Islam
IDB anjur kursus kewangan Islam
BANK Pembangunan Islam (IDB) dan Bank Negara Malaysia menganjurkan kursus lima hari bermula semalam mengenai asas-asas kewangan Islam.
Kursus itu adalah satu lagi usaha menjayakan program pembangunan kapasiti bagi meningkatkan pengetahuan dan kepakaran dalam kewangan Islam di kalangan negara anggota Pertubuhan Persidangan Islam (OIC), kata Bank Negara dalam kenyataannya.
Dirasmikan Gabenor Bank Negara Tan Sri Dr Zeti Akhtar Aziz, kursus itu dihadiri peserta dari 25 negara anggota OIC selain peserta dari Jerman dan Switzerland.
bank pusat itu menjelaskan, kursus dan sesi perbincangan itu berperanan sebagai platfrom pembelajaran untuk pegawai bank pusat, pegawai Kementerian Kewangan dan pengawal aturan industri sekuriti dalam meningkatkan pengetahuan dan kepakaran mereka mengenai kewangan Islam.
Tajuk dibincangkan termasuk operasi dan kapasiti institusi kewangan Islam, dan kerangka kerja pengawal aturan dan Syariah bagi pelaksanaan berkesan sistem kewangan Islam yang berdaya tahan.
Peserta, katanya berpeluang membincangkan isu kontemporari bersama pengamal industri mengenai perkembangan kewangan Islam global.
"Kursus itu juga menawarkan peluang untuk menjalin rantaian pintar di kalangan pegawai bank pusat dan pembuat dasar untuk bertukar-tukar pandangan dan peranan industri perkhidmatan kewangan Islam dalam persekitaran pasaran kewangan yang sangat mencabar ketika ini,” katanya.
Penceramah dan ahli panel terdiri daripada pegawai institusi seperti Bank Negara, Suruhanjaya Sekuriti, Pusat Antarabangsa bagi Pendidikan Kewangan Islam, Akademi Penyelidikan Syariah Antarabangsa dan Bank Islam dan Institusi Kewangan Malaysia.
BANK Pembangunan Islam (IDB) dan Bank Negara Malaysia menganjurkan kursus lima hari bermula semalam mengenai asas-asas kewangan Islam.
Kursus itu adalah satu lagi usaha menjayakan program pembangunan kapasiti bagi meningkatkan pengetahuan dan kepakaran dalam kewangan Islam di kalangan negara anggota Pertubuhan Persidangan Islam (OIC), kata Bank Negara dalam kenyataannya.
Dirasmikan Gabenor Bank Negara Tan Sri Dr Zeti Akhtar Aziz, kursus itu dihadiri peserta dari 25 negara anggota OIC selain peserta dari Jerman dan Switzerland.
bank pusat itu menjelaskan, kursus dan sesi perbincangan itu berperanan sebagai platfrom pembelajaran untuk pegawai bank pusat, pegawai Kementerian Kewangan dan pengawal aturan industri sekuriti dalam meningkatkan pengetahuan dan kepakaran mereka mengenai kewangan Islam.
Tajuk dibincangkan termasuk operasi dan kapasiti institusi kewangan Islam, dan kerangka kerja pengawal aturan dan Syariah bagi pelaksanaan berkesan sistem kewangan Islam yang berdaya tahan.
Peserta, katanya berpeluang membincangkan isu kontemporari bersama pengamal industri mengenai perkembangan kewangan Islam global.
"Kursus itu juga menawarkan peluang untuk menjalin rantaian pintar di kalangan pegawai bank pusat dan pembuat dasar untuk bertukar-tukar pandangan dan peranan industri perkhidmatan kewangan Islam dalam persekitaran pasaran kewangan yang sangat mencabar ketika ini,” katanya.
Penceramah dan ahli panel terdiri daripada pegawai institusi seperti Bank Negara, Suruhanjaya Sekuriti, Pusat Antarabangsa bagi Pendidikan Kewangan Islam, Akademi Penyelidikan Syariah Antarabangsa dan Bank Islam dan Institusi Kewangan Malaysia.
Monday, July 20, 2009
Exim Bank rancang tambah produk perbankan Islam
Exim Bank rancang tambah produk perbankan Islam
EXPORT-Import Bank of Malaysia Bhd (Exim Bank) akan memperkenalkan beberapa lagi produk perbankan Islam tahun depan sejajar usahanya memenuhi permintaan yang semakin meningkat dari pasaran Pertubuhan Persidangan Islam (OIC).
Pengarah Urusannya Mohd Fauzi Rahmat, berkata antara produk itu ialah berkaitan takaful.
“Kami merancang memperkenalkan produk takaful tahun depan bagi memenuhi permintaan bagi produk sedemikian,” katanya pada satu seminar di Kuala Lumpur, minggu lalu.
Seminar dihadiri 500 peserta terdiri daripada usahawan tempatan itu dianjurkan untuk memperkenalkan kepada peng-eksport mengenai pelbagai skim pembiayaan untuk mempromosikan produk Malaysia ke pasaran OIC.
Seminar yang dianjurkannya dengan Perbadanan Pembiayaan Perdagangan Islam Antarabangsa (ITFC), anak syarikat Bank Pembangunan Islam (IDB) itu dirasmikan Timbalan Gabenor, Datuk Zamani Abdul Ghani.
Mohd Fauzi berkata, dalam suku pertama tahun ini, Exim Bank sudah memperkenalkan beberapa produk perbankan Islam bagi memenuhi permintaan yang semakin meningkat dari pasaran OIC menerusi inisiatif bersama ITFC.
Katanya, ini termasuk IDB-Co Financing, iaitu skim yang menyediakan jaminan pembayaran dengan kedua-dua institusi pembiayaan itu berkongsi risiko jika pengimport atau peminjam tidak membuat bayaran.
Skim itu, katanya cuba menangani kebimbangan bank komersial dan pengeksport jika tidak mendapat bayaran daripada bank yang beroperasi di negara OIC yang merangkumi 81 negara dari di lima benua.
EXPORT-Import Bank of Malaysia Bhd (Exim Bank) akan memperkenalkan beberapa lagi produk perbankan Islam tahun depan sejajar usahanya memenuhi permintaan yang semakin meningkat dari pasaran Pertubuhan Persidangan Islam (OIC).
Pengarah Urusannya Mohd Fauzi Rahmat, berkata antara produk itu ialah berkaitan takaful.
“Kami merancang memperkenalkan produk takaful tahun depan bagi memenuhi permintaan bagi produk sedemikian,” katanya pada satu seminar di Kuala Lumpur, minggu lalu.
Seminar dihadiri 500 peserta terdiri daripada usahawan tempatan itu dianjurkan untuk memperkenalkan kepada peng-eksport mengenai pelbagai skim pembiayaan untuk mempromosikan produk Malaysia ke pasaran OIC.
Seminar yang dianjurkannya dengan Perbadanan Pembiayaan Perdagangan Islam Antarabangsa (ITFC), anak syarikat Bank Pembangunan Islam (IDB) itu dirasmikan Timbalan Gabenor, Datuk Zamani Abdul Ghani.
Mohd Fauzi berkata, dalam suku pertama tahun ini, Exim Bank sudah memperkenalkan beberapa produk perbankan Islam bagi memenuhi permintaan yang semakin meningkat dari pasaran OIC menerusi inisiatif bersama ITFC.
Katanya, ini termasuk IDB-Co Financing, iaitu skim yang menyediakan jaminan pembayaran dengan kedua-dua institusi pembiayaan itu berkongsi risiko jika pengimport atau peminjam tidak membuat bayaran.
Skim itu, katanya cuba menangani kebimbangan bank komersial dan pengeksport jika tidak mendapat bayaran daripada bank yang beroperasi di negara OIC yang merangkumi 81 negara dari di lima benua.
Thursday, July 16, 2009
Maybank S’pore to unveil first Islamic term deposit
Friday July 17, 2009
Maybank S’pore to unveil first Islamic term deposit
SINGAPORE: Maybank Singapore will launch the first Islamic term deposit, Term Deposit-i, targeted at retail clients today.
This will make it the first bank in the island republic to offer the Islamic banking product to that market segment.
As the first mover in the market, Term Deposit-i would pay profits upfront, bucking the local trend of Islamic term deposits for high net-worth customers, the bank said in a statement.
A similar product, Profit Now Account-i, was launched by Maybank Islamic Bhd in Malaysia last May and it was well-received with more than RM1.3bil total deposits to date.
The bank said Islamic banking products were sought after by local customers scouting for alternative investment avenues with the current change in investment landscape.
The bank is offering, for a limited period, promotional rates of 0.6%, 1% and 1.4% for a tenure of three, six and 12 months respectively.
The minimum placement is S$10,000 for a 12-month tenure or a minimum of S$25,000 for three- and six-month tenures.
The bank said Term Deposit-i was based on the commodity murabahah principle, which was on a cost-plus-profit sale concept.
Under this concept, a specific syariah-compliant commodity will be identified and used as the underlying asset for the sale and purchase transaction between the customer and the bank.
The bank said since the introduction of the Islamic deposit products in 2005, it had seen an average year-on-year increase of over 40% in Islamic deposits.
This increase aligned with the global expected growth of over 40% to US$1 trillion by 2012, Maybank said.
Maybank Singapore Islamic banking head Mohd Ismail Hussein said the current market presented an opportune time to take on a back-to-basic approach.
“Consumers are on the lookout for an alternative to conventional products and this term deposit, being syariah-compliant, may well match their needs,” he said in the statement.
Ismail said Islamic banking was a fairly new concept in Singapore but was gaining momentum, including among the bank’s non-Muslim Islamic banking customers.
“With Maybank being the market leader in Islamic banking in Malaysia, the operations in Singapore is in good stead to ‘break the ice’ between Islamic banking and the local retail market,” he said. — Bernama
SINGAPORE: Maybank Singapore will launch the first Islamic term deposit, Term Deposit-i, targeted at retail clients today.
This will make it the first bank in the island republic to offer the Islamic banking product to that market segment.
As the first mover in the market, Term Deposit-i would pay profits upfront, bucking the local trend of Islamic term deposits for high net-worth customers, the bank said in a statement.
A similar product, Profit Now Account-i, was launched by Maybank Islamic Bhd in Malaysia last May and it was well-received with more than RM1.3bil total deposits to date.
The bank said Islamic banking products were sought after by local customers scouting for alternative investment avenues with the current change in investment landscape.
The bank is offering, for a limited period, promotional rates of 0.6%, 1% and 1.4% for a tenure of three, six and 12 months respectively.
The minimum placement is S$10,000 for a 12-month tenure or a minimum of S$25,000 for three- and six-month tenures.
The bank said Term Deposit-i was based on the commodity murabahah principle, which was on a cost-plus-profit sale concept.
Under this concept, a specific syariah-compliant commodity will be identified and used as the underlying asset for the sale and purchase transaction between the customer and the bank.
The bank said since the introduction of the Islamic deposit products in 2005, it had seen an average year-on-year increase of over 40% in Islamic deposits.
This increase aligned with the global expected growth of over 40% to US$1 trillion by 2012, Maybank said.
Maybank Singapore Islamic banking head Mohd Ismail Hussein said the current market presented an opportune time to take on a back-to-basic approach.
“Consumers are on the lookout for an alternative to conventional products and this term deposit, being syariah-compliant, may well match their needs,” he said in the statement.
Ismail said Islamic banking was a fairly new concept in Singapore but was gaining momentum, including among the bank’s non-Muslim Islamic banking customers.
“With Maybank being the market leader in Islamic banking in Malaysia, the operations in Singapore is in good stead to ‘break the ice’ between Islamic banking and the local retail market,” he said. — Bernama
Maybank S’pore to unveil first Islamic term deposit
SINGAPORE: Maybank Singapore will launch the first Islamic term deposit, Term Deposit-i, targeted at retail clients today.
This will make it the first bank in the island republic to offer the Islamic banking product to that market segment.
As the first mover in the market, Term Deposit-i would pay profits upfront, bucking the local trend of Islamic term deposits for high net-worth customers, the bank said in a statement.
A similar product, Profit Now Account-i, was launched by Maybank Islamic Bhd in Malaysia last May and it was well-received with more than RM1.3bil total deposits to date.
The bank said Islamic banking products were sought after by local customers scouting for alternative investment avenues with the current change in investment landscape.
The bank is offering, for a limited period, promotional rates of 0.6%, 1% and 1.4% for a tenure of three, six and 12 months respectively.
The minimum placement is S$10,000 for a 12-month tenure or a minimum of S$25,000 for three- and six-month tenures.
The bank said Term Deposit-i was based on the commodity murabahah principle, which was on a cost-plus-profit sale concept.
Under this concept, a specific syariah-compliant commodity will be identified and used as the underlying asset for the sale and purchase transaction between the customer and the bank.
The bank said since the introduction of the Islamic deposit products in 2005, it had seen an average year-on-year increase of over 40% in Islamic deposits.
This increase aligned with the global expected growth of over 40% to US$1 trillion by 2012, Maybank said.
Maybank Singapore Islamic banking head Mohd Ismail Hussein said the current market presented an opportune time to take on a back-to-basic approach.
“Consumers are on the lookout for an alternative to conventional products and this term deposit, being syariah-compliant, may well match their needs,” he said in the statement.
Ismail said Islamic banking was a fairly new concept in Singapore but was gaining momentum, including among the bank’s non-Muslim Islamic banking customers.
“With Maybank being the market leader in Islamic banking in Malaysia, the operations in Singapore is in good stead to ‘break the ice’ between Islamic banking and the local retail market,” he said. — Bernama
SINGAPORE: Maybank Singapore will launch the first Islamic term deposit, Term Deposit-i, targeted at retail clients today.
This will make it the first bank in the island republic to offer the Islamic banking product to that market segment.
As the first mover in the market, Term Deposit-i would pay profits upfront, bucking the local trend of Islamic term deposits for high net-worth customers, the bank said in a statement.
A similar product, Profit Now Account-i, was launched by Maybank Islamic Bhd in Malaysia last May and it was well-received with more than RM1.3bil total deposits to date.
The bank said Islamic banking products were sought after by local customers scouting for alternative investment avenues with the current change in investment landscape.
The bank is offering, for a limited period, promotional rates of 0.6%, 1% and 1.4% for a tenure of three, six and 12 months respectively.
The minimum placement is S$10,000 for a 12-month tenure or a minimum of S$25,000 for three- and six-month tenures.
The bank said Term Deposit-i was based on the commodity murabahah principle, which was on a cost-plus-profit sale concept.
Under this concept, a specific syariah-compliant commodity will be identified and used as the underlying asset for the sale and purchase transaction between the customer and the bank.
The bank said since the introduction of the Islamic deposit products in 2005, it had seen an average year-on-year increase of over 40% in Islamic deposits.
This increase aligned with the global expected growth of over 40% to US$1 trillion by 2012, Maybank said.
Maybank Singapore Islamic banking head Mohd Ismail Hussein said the current market presented an opportune time to take on a back-to-basic approach.
“Consumers are on the lookout for an alternative to conventional products and this term deposit, being syariah-compliant, may well match their needs,” he said in the statement.
Ismail said Islamic banking was a fairly new concept in Singapore but was gaining momentum, including among the bank’s non-Muslim Islamic banking customers.
“With Maybank being the market leader in Islamic banking in Malaysia, the operations in Singapore is in good stead to ‘break the ice’ between Islamic banking and the local retail market,” he said. — Bernama
Sunday, July 12, 2009
Gold Dinar vs US Dollar
Gold Dinar vs US Dollar
Wednesday, March 10 2004 @ 05:38 PM EST
James Sinclair - 'Monetary Jihad' will backfire IF Americans wise up
Gold Dinar" is the term for a fairly new development in international finance. It is a second prong to planned Muslim terrorist attacks on the United States, and is intended to annihilate US economic power in a world of rising gold prices and a persistently declining Dollar. With the US government making war on US citizens' liberty instead of terrorists by means of the USA Patriot Acts (versions I and II), by allowing illegal immigrants to overrun our borders unchecked while imposing ever more draconian restrictions on our people at home, by tolerating Mexican military personnel shooting at US Border Patrol agents on US soil, by doing everything to thwart US airline pilots from actually arming themselves after technically permitting them to do so, and by blowing away the US official gold and silver reserves in the name of “supporting” the US dollar, it is doubtful that our elected leaders will come up with a common-sense plan to counter the most serious threat yet to be launched by militant Muslim Jihad warriors against the United States.
Muslim nations, with Malaysia leading the pack, are quietly working on developing a banking and financial infrastructure based on a purely “Islamic” currency, the gold dinar. This system will operate in competition with the current, exclusively fiat-based, world monetary and financial system. This new pan-Islamic currency will be based on gold as the primary medium of exchange and store of value. The emergence of the gold Dinar is a dark omen for the current way in which the US is (and has been) maintaining its predominance in the world fianncial system. However, it can - much to the certain consternation of its Muslim proponents - turn into a massively backfiring gun, leaving the “Jihadis” black in the face and looking mighty stupid.
It all depends on how individual Americans respond - not on how President Bush responds, not on how Congress responds - but on the American people themselves. Let me explain. There are certain aspects of what commonly goes as “modern” economics that only few, if any, outside of the precious metals investment world are aware of, and if they are aware of it they are largely oblivious of the dire and unavoidable consequences of the world's current economic, banking, and financial system. Modern “money” is a pure legal fiction based not on what we commonly perceive as “value,” but rather on its exact opposite: it is based on nothing but debt.
A dollar bill is technically a “note.” If you look on the front of any dollar bill, you will see there printed the words “Federal Reserve Note.” In the old days, the bill said “silver certificate” or Gold certificate.” In legal terms, a note is an instrument evidencing a legal debt. So, what is a dollar “bank note” then? A piece of paper saying that the bank (issuer of the note) owes the bearer (you, if you have it in your pocket) a stated amount of “money.” In the days of the by-gone gold standard, dollar bills were convertible at will to gold or silver. A bank note of those days simply said that you, the bearer, could go to the issuing bank and demand your dollar’s worth in gold, if you so chose. The bank accordingly “owed” the gold to the bearer, and the “note” was redeemable in something generally recognized the world over as a store of value, as well as a medium of exchange - gold.
Compare that to today’s system: Your federal reserve “note” is still an instrument evidencing a debt, but because of our current, world-wide “fiat”(government decree) system of finance, the bank note itself is legislatively declared to be “legal tender.” That means everyone who has a “note” and wants to “redeem” it can do so, but all you will get in return is another note of the same type! In practical reality, this means that the note is backed by nothing but the “full faith and credit” of the United States government. Yes, you can use your note to buy stuff, and you can accept it when you sell stuff, but only because the government forces everyone in the US to accept the “note” (i.e., the evidence of money) as money itself. The problem with this system comes in from several angles:
Angle No. 1:
Internationally, your wealth is in danger under such a monetary regime when all of the debt- based fiat currency exchange rates in the world are allowed to “float” freely in the international monetary system (i.e., the exchange rate is determined by the relative demand and supply of the particular currency). Now it can happen that your government’s “money” (debt instruments) are no longer perceived as such a great credit risk by foreigners, and they sell dollars for other currencies. So your dollar drops in value relative to the other currencies of the world. That means your dollar now buys less foreign goods or services than before, i.e., imports become more expensive.
Angle No. 2:
Domestically, a pure fiat system puts your wealth in danger in either of two ways:
1) When your government decides to “just print” more money whenever its expenditures are too high. So more money goes into circulation, and your dollar buys less (because there now are more dollars “chasing” - or bidding for - the same amount of goods and services in the economy, driving up their price), and
2) When “the Fed” (your friendly federal reserve bank) decides to lower the interest rates regular banks pay for borrowing money from the Fed. That lowers their borrowing costs, which they can now pass on to their customers (you) in the form of lower interest rates. So, individuals and businesses can now afford to borrow more money, because it’s cheaper.
The way “fractional reserve banking” works in a fiat currency system is this: when banks “loan” you money, they don’t really give up anything of value. When you borrow your neighbor’s lawnmower, he foregoes the use of his lawnmower until you return it. When your grandpa borrowed gold from a bank, the bank coughed up the gold, and he had to return it, usually with interest (or the bank parted with cold, hard paper notes that represented an equal claim to gold). In our modern system, your local bank parts with precisely nothing when it loans you money. It creates a bookkeeping entry in your account that says “credit” while at the same time recording that you owe it that same amount of money in its receivables column. You can now use that money to write checks, etc., but you in contrast to the bank, you have to WORK for that money to pay it back to the bank. You give up something of value, and the bank doesn’t, but now you owe the bank interest on top of that. Thus, whenever the bank makes a loan, the domectic money supply is increased in the same amount - out of nothing. Fair deal?
Anyway, this situation (piles of debt piled onto further piles of even more debt) has created an untenable situation for the powers of international finance. The dollar, which is based on debt, was declared the international “reserve currency.” That means that dollar-denominated assets (usually Treasury bonds, another form of debt instruments) are what other countries’ central banks hold “in reserve” to back up the value of their respective (also debt-based) currencies. Debt piled on debt, piled on debt, used to “back up” even more debt. Since 1971, no country in the entire world has been allowed (under current IMF rules) to back its currency with anything other than what essentially amounts to debt. This nightmarish system has become so entrenched in our way of thinking that nobody thinks of it anymore at all - except for pro-American gold bugs ... and certain anti-American Muslims.
These Islamist Muslims have recognized that such a system is inherently vulnerable to attack, and they have figured out the best, most sure-fire means of attacking it. Their plan is to create the gold dinar as an Islamic competitor to this debt based system; a competitor that is based on real value: Gold. It is not hard to see how they could succeed with their plans. Imagine that only about half of all the Islamic countries in the world join together and form this new gold dinar system. Gold is a commodity that rich (and even poor) Muslims have hoarded for generations. They know that gold is ALWAYS accepted as a store of value and a medium of exchange, especially during emergencies when the non- Islamic world is in turmoil and undergoes heavy financial crises.
The gold dinar's primary target is the US dollar, that ultimate symbol of American wealth and economic prowess. The US dollar is already suffering internationally from the consequences of a Bill Clinton/Alan Greenspan-induced credit binge that powered the incredible economic expansion of the mid-to-late nineties through lower interest rates. But credit-induced economic expansions are always relatively short-lived, and always lead to inflation and mal-investment. A series of successive interest rate cuts in the mid-nineties caused more borrowing. In the process of borrowing, more “money” is created out of nothing and loaned into circulation. This new money normally floats around in the domestic economy, driving up prices. However, in the recent credit boom the excess money did not end up in the regular economy, driving up prices there, but served almost exclusively to further balloon an already burgeoning stock market. People loved it, because their stocks went up while prices for other “stuff” stayed low. The 1990s’ inflation happened in the stock markets, not in the goods and services sector. So everybody got high on this credit binge and people even hocked their homes to invest more money in stocks. And foreigners got in on it, sending their money to the US to participate in it all.
But now, everyone is tapped out. Stocks have been dropping for three years in a row, and the economy is teetering. Foreigners stopped sending their money to us, and the dollar’s value keeps dropping as foreigners perceive us to be “not so sterling” a credit risk any longer. Now, with the dollar being the reserve currency of the world’s central banks, if a significant number of these foreign central banks (say, half of the Islamic countries) should find a more secure, more valuable “reserve asset”, they will dump their treasury bonds and buy whatever else they think is more worthy. And the Muslims have correctly recognized that gold is worth more than debt - which is all that the US dollar is based upon. The gold Dinar 'monetary Jihad' would not be so dangerous had the US government not been so foolish as to surrepticiously agree with certain powerful bullion banks to squash the dollar-price of gold whenever it looked like it was going to go up. This was done to 'assure' Americans that it was still safe to spend like crazy and throw more money at the stock market in order to keep the artificial expansion going. In order to control the price of gold, the US Treasury, through the secretive 'Exchange Stabilization Fund' (operated entirely under the president’s executive power, wholly outside congressional oversight) backed the bullion banks’ continuous efforts to sell gold “short”, flooding the market with borrowed gold, lowering its price, and thus scaring skittish little gold investors our of their pants, causing them to sell as well.
This now has almost totally deprived the US Treasury and the Fed of the American citizens’ official gold reserves, making this country even more vulnerable to the Islamists gold dinar attack. For most of US gold has been loaned or “swapped” out. Nobody really knows how much is left - if any. So far, it all looks pretty bad for the good old USA. The official gold is (largely) gone, silver stockpiles are completely gone, the US government is hocked up to the hilt, the stock market is tanking, and the economy is lackluster due to corporate scandals and war fears. Are the "Jihadis" going to win this war against US economic supremacy? Not if Americans wake up for just a little while and pay attention. (I know, it’s hard.) While our stupid government under selfish Bill Clinton (and now under George Bush's failure to expose Clinton’s policies) blew away our official gold holdings, Americans individually now have the chance of a lifetime. If every individual American with any sense at all now goes and privately invests in gold in the same fashion in which we earlier threw money at the stock market, Americans can accomplish two things that will turn out to be the Islamists' undoing:
- They exchange something essentially worthless (paper dollars) into something of absolute value (gold), and
- they make sure that (despite foolish government policies) the US is not left out in the cold in a future world financial system where commerce is based on gold and neither the US government nor individual Americans themselves own any.
For, the great miscalculation of the Jihad-freaks lies in thinking that by giving birth to the gold Dinar, they will topple America itself. Instead, they will help cut out a cancer that has been eating away at not only America, but the entire world of the last three decades; and that cancer is a purely fiat-money, debt-based, financial system. The real question is not: will the gold dinar or the US dollar prevail? The real question is: Which of these two monetary systems will prevail: honest gold, or lying paper? What the Islamists do not understand is that the private ownership of gold, and a financial system based on gold convertibility, is the greatest guarantee of individual Liberty that has ever existed, and individual Liberty is what extremist Muslims are essentially attacking when they attack America, for their own system abhors individual liberty - especially of the religious kind.
Gold cannot be manipulated like paper can. Gold cannot be “printed” at will, and it cannot be loaned into existence, so a gold-based money supply cannot be artificially inflated. That means tHt under a gold standard, governments cannot enrich themselves by imposing the hidden tax of inflation on the people. As a result, governments lose power to the same degree in which Gold re-assumes its role as the foundation of the world financial system. And even with the few true freedoms that still exist in this country (despite the decades-long, relentless onslaught by our political and financial elites), especially when compared to the Islamic world, American industriousness, innovation, and and ingenuity will outperform the Muslim countries any day - as they have, even under a pure fiat system. That is the irony of it all. Instead of bringing America to its knees, the gold Dinar will help Americans cure their country from the fiat-currency cancer, and in the process make America stronger than ever - but this is only true IF individual Americans act now!
The fate of your country is literally in your hands
Wednesday, March 10 2004 @ 05:38 PM EST
James Sinclair - 'Monetary Jihad' will backfire IF Americans wise up
Gold Dinar" is the term for a fairly new development in international finance. It is a second prong to planned Muslim terrorist attacks on the United States, and is intended to annihilate US economic power in a world of rising gold prices and a persistently declining Dollar. With the US government making war on US citizens' liberty instead of terrorists by means of the USA Patriot Acts (versions I and II), by allowing illegal immigrants to overrun our borders unchecked while imposing ever more draconian restrictions on our people at home, by tolerating Mexican military personnel shooting at US Border Patrol agents on US soil, by doing everything to thwart US airline pilots from actually arming themselves after technically permitting them to do so, and by blowing away the US official gold and silver reserves in the name of “supporting” the US dollar, it is doubtful that our elected leaders will come up with a common-sense plan to counter the most serious threat yet to be launched by militant Muslim Jihad warriors against the United States.
Muslim nations, with Malaysia leading the pack, are quietly working on developing a banking and financial infrastructure based on a purely “Islamic” currency, the gold dinar. This system will operate in competition with the current, exclusively fiat-based, world monetary and financial system. This new pan-Islamic currency will be based on gold as the primary medium of exchange and store of value. The emergence of the gold Dinar is a dark omen for the current way in which the US is (and has been) maintaining its predominance in the world fianncial system. However, it can - much to the certain consternation of its Muslim proponents - turn into a massively backfiring gun, leaving the “Jihadis” black in the face and looking mighty stupid.
It all depends on how individual Americans respond - not on how President Bush responds, not on how Congress responds - but on the American people themselves. Let me explain. There are certain aspects of what commonly goes as “modern” economics that only few, if any, outside of the precious metals investment world are aware of, and if they are aware of it they are largely oblivious of the dire and unavoidable consequences of the world's current economic, banking, and financial system. Modern “money” is a pure legal fiction based not on what we commonly perceive as “value,” but rather on its exact opposite: it is based on nothing but debt.
A dollar bill is technically a “note.” If you look on the front of any dollar bill, you will see there printed the words “Federal Reserve Note.” In the old days, the bill said “silver certificate” or Gold certificate.” In legal terms, a note is an instrument evidencing a legal debt. So, what is a dollar “bank note” then? A piece of paper saying that the bank (issuer of the note) owes the bearer (you, if you have it in your pocket) a stated amount of “money.” In the days of the by-gone gold standard, dollar bills were convertible at will to gold or silver. A bank note of those days simply said that you, the bearer, could go to the issuing bank and demand your dollar’s worth in gold, if you so chose. The bank accordingly “owed” the gold to the bearer, and the “note” was redeemable in something generally recognized the world over as a store of value, as well as a medium of exchange - gold.
Compare that to today’s system: Your federal reserve “note” is still an instrument evidencing a debt, but because of our current, world-wide “fiat”(government decree) system of finance, the bank note itself is legislatively declared to be “legal tender.” That means everyone who has a “note” and wants to “redeem” it can do so, but all you will get in return is another note of the same type! In practical reality, this means that the note is backed by nothing but the “full faith and credit” of the United States government. Yes, you can use your note to buy stuff, and you can accept it when you sell stuff, but only because the government forces everyone in the US to accept the “note” (i.e., the evidence of money) as money itself. The problem with this system comes in from several angles:
Angle No. 1:
Internationally, your wealth is in danger under such a monetary regime when all of the debt- based fiat currency exchange rates in the world are allowed to “float” freely in the international monetary system (i.e., the exchange rate is determined by the relative demand and supply of the particular currency). Now it can happen that your government’s “money” (debt instruments) are no longer perceived as such a great credit risk by foreigners, and they sell dollars for other currencies. So your dollar drops in value relative to the other currencies of the world. That means your dollar now buys less foreign goods or services than before, i.e., imports become more expensive.
Angle No. 2:
Domestically, a pure fiat system puts your wealth in danger in either of two ways:
1) When your government decides to “just print” more money whenever its expenditures are too high. So more money goes into circulation, and your dollar buys less (because there now are more dollars “chasing” - or bidding for - the same amount of goods and services in the economy, driving up their price), and
2) When “the Fed” (your friendly federal reserve bank) decides to lower the interest rates regular banks pay for borrowing money from the Fed. That lowers their borrowing costs, which they can now pass on to their customers (you) in the form of lower interest rates. So, individuals and businesses can now afford to borrow more money, because it’s cheaper.
The way “fractional reserve banking” works in a fiat currency system is this: when banks “loan” you money, they don’t really give up anything of value. When you borrow your neighbor’s lawnmower, he foregoes the use of his lawnmower until you return it. When your grandpa borrowed gold from a bank, the bank coughed up the gold, and he had to return it, usually with interest (or the bank parted with cold, hard paper notes that represented an equal claim to gold). In our modern system, your local bank parts with precisely nothing when it loans you money. It creates a bookkeeping entry in your account that says “credit” while at the same time recording that you owe it that same amount of money in its receivables column. You can now use that money to write checks, etc., but you in contrast to the bank, you have to WORK for that money to pay it back to the bank. You give up something of value, and the bank doesn’t, but now you owe the bank interest on top of that. Thus, whenever the bank makes a loan, the domectic money supply is increased in the same amount - out of nothing. Fair deal?
Anyway, this situation (piles of debt piled onto further piles of even more debt) has created an untenable situation for the powers of international finance. The dollar, which is based on debt, was declared the international “reserve currency.” That means that dollar-denominated assets (usually Treasury bonds, another form of debt instruments) are what other countries’ central banks hold “in reserve” to back up the value of their respective (also debt-based) currencies. Debt piled on debt, piled on debt, used to “back up” even more debt. Since 1971, no country in the entire world has been allowed (under current IMF rules) to back its currency with anything other than what essentially amounts to debt. This nightmarish system has become so entrenched in our way of thinking that nobody thinks of it anymore at all - except for pro-American gold bugs ... and certain anti-American Muslims.
These Islamist Muslims have recognized that such a system is inherently vulnerable to attack, and they have figured out the best, most sure-fire means of attacking it. Their plan is to create the gold dinar as an Islamic competitor to this debt based system; a competitor that is based on real value: Gold. It is not hard to see how they could succeed with their plans. Imagine that only about half of all the Islamic countries in the world join together and form this new gold dinar system. Gold is a commodity that rich (and even poor) Muslims have hoarded for generations. They know that gold is ALWAYS accepted as a store of value and a medium of exchange, especially during emergencies when the non- Islamic world is in turmoil and undergoes heavy financial crises.
The gold dinar's primary target is the US dollar, that ultimate symbol of American wealth and economic prowess. The US dollar is already suffering internationally from the consequences of a Bill Clinton/Alan Greenspan-induced credit binge that powered the incredible economic expansion of the mid-to-late nineties through lower interest rates. But credit-induced economic expansions are always relatively short-lived, and always lead to inflation and mal-investment. A series of successive interest rate cuts in the mid-nineties caused more borrowing. In the process of borrowing, more “money” is created out of nothing and loaned into circulation. This new money normally floats around in the domestic economy, driving up prices. However, in the recent credit boom the excess money did not end up in the regular economy, driving up prices there, but served almost exclusively to further balloon an already burgeoning stock market. People loved it, because their stocks went up while prices for other “stuff” stayed low. The 1990s’ inflation happened in the stock markets, not in the goods and services sector. So everybody got high on this credit binge and people even hocked their homes to invest more money in stocks. And foreigners got in on it, sending their money to the US to participate in it all.
But now, everyone is tapped out. Stocks have been dropping for three years in a row, and the economy is teetering. Foreigners stopped sending their money to us, and the dollar’s value keeps dropping as foreigners perceive us to be “not so sterling” a credit risk any longer. Now, with the dollar being the reserve currency of the world’s central banks, if a significant number of these foreign central banks (say, half of the Islamic countries) should find a more secure, more valuable “reserve asset”, they will dump their treasury bonds and buy whatever else they think is more worthy. And the Muslims have correctly recognized that gold is worth more than debt - which is all that the US dollar is based upon. The gold Dinar 'monetary Jihad' would not be so dangerous had the US government not been so foolish as to surrepticiously agree with certain powerful bullion banks to squash the dollar-price of gold whenever it looked like it was going to go up. This was done to 'assure' Americans that it was still safe to spend like crazy and throw more money at the stock market in order to keep the artificial expansion going. In order to control the price of gold, the US Treasury, through the secretive 'Exchange Stabilization Fund' (operated entirely under the president’s executive power, wholly outside congressional oversight) backed the bullion banks’ continuous efforts to sell gold “short”, flooding the market with borrowed gold, lowering its price, and thus scaring skittish little gold investors our of their pants, causing them to sell as well.
This now has almost totally deprived the US Treasury and the Fed of the American citizens’ official gold reserves, making this country even more vulnerable to the Islamists gold dinar attack. For most of US gold has been loaned or “swapped” out. Nobody really knows how much is left - if any. So far, it all looks pretty bad for the good old USA. The official gold is (largely) gone, silver stockpiles are completely gone, the US government is hocked up to the hilt, the stock market is tanking, and the economy is lackluster due to corporate scandals and war fears. Are the "Jihadis" going to win this war against US economic supremacy? Not if Americans wake up for just a little while and pay attention. (I know, it’s hard.) While our stupid government under selfish Bill Clinton (and now under George Bush's failure to expose Clinton’s policies) blew away our official gold holdings, Americans individually now have the chance of a lifetime. If every individual American with any sense at all now goes and privately invests in gold in the same fashion in which we earlier threw money at the stock market, Americans can accomplish two things that will turn out to be the Islamists' undoing:
- They exchange something essentially worthless (paper dollars) into something of absolute value (gold), and
- they make sure that (despite foolish government policies) the US is not left out in the cold in a future world financial system where commerce is based on gold and neither the US government nor individual Americans themselves own any.
For, the great miscalculation of the Jihad-freaks lies in thinking that by giving birth to the gold Dinar, they will topple America itself. Instead, they will help cut out a cancer that has been eating away at not only America, but the entire world of the last three decades; and that cancer is a purely fiat-money, debt-based, financial system. The real question is not: will the gold dinar or the US dollar prevail? The real question is: Which of these two monetary systems will prevail: honest gold, or lying paper? What the Islamists do not understand is that the private ownership of gold, and a financial system based on gold convertibility, is the greatest guarantee of individual Liberty that has ever existed, and individual Liberty is what extremist Muslims are essentially attacking when they attack America, for their own system abhors individual liberty - especially of the religious kind.
Gold cannot be manipulated like paper can. Gold cannot be “printed” at will, and it cannot be loaned into existence, so a gold-based money supply cannot be artificially inflated. That means tHt under a gold standard, governments cannot enrich themselves by imposing the hidden tax of inflation on the people. As a result, governments lose power to the same degree in which Gold re-assumes its role as the foundation of the world financial system. And even with the few true freedoms that still exist in this country (despite the decades-long, relentless onslaught by our political and financial elites), especially when compared to the Islamic world, American industriousness, innovation, and and ingenuity will outperform the Muslim countries any day - as they have, even under a pure fiat system. That is the irony of it all. Instead of bringing America to its knees, the gold Dinar will help Americans cure their country from the fiat-currency cancer, and in the process make America stronger than ever - but this is only true IF individual Americans act now!
The fate of your country is literally in your hands
Thursday, July 9, 2009
Jakim ambil alih proses sijil halal
Jakim ambil alih proses sijil halal
Oleh Syuhada Choo Abdullah
choo@bharian.com.my
Kabinet lulus memorandum ganti HDC berkuat kuasa serta-merta
KUALA LUMPUR: Jabatan Kemajuan Islam Malaysia (Jakim) mengambil alih semula peranan daripada Perbadanan Pembangunan Industri Halal (HDC) untuk mengendalikan urusan pengeluaran sijil halal, berkuat kuasa serta-merta.
Menteri di Jabatan Perdana Menteri, Datuk Jamil Khir Baharom, berkata Kabinet meluluskan memorandum mengenai perkara itu yang dikemukakan oleh pihaknya dalam mesyuarat, kelmarin.
Katanya, langkah itu bertujuan memperkasa kewibawaan HDC yang terbabit dalam usaha pembangunan hab halal, supaya semakin berdaya saing dan dapat memberi tumpuan kepada proses pengeluaran produk mereka sehingga ke peringkat global.
Selain itu, beliau berkata, keputusan berkenaan juga diharap meningkatkan keyakinan orang ramai bahawa sijil halal dikeluarkan oleh Jakim sebagai agensi kerajaan yang sudah utuh dalam bidang terbabit.
"Memang tumpuan besar HDC ialah untuk (pengeluaran) produk sebab kita hendak melihat ia (berkembang) bukan hanya pada peringkat serantau, tetapi juga global. Justeru, kita lihat agak kurang sesuai pengeluaran sijil halal diletakkan di bawah tanggungjawab HDC dalam kadar tugasannya yang begitu luas dan besar.
"Malah, permintaan kepada halal begitu tinggi pada peringkat antarabangsa. Justeru, sudah sampai masanya dipisahkan tanggungjawab pengeluaran produk dan tugas mengeluarkan sijil halal dikembalikan kepada Jakim," katanya pada sidang akhbar di lobi Bangunan Parlimen di sini, semalam.
Berikutan itu, Jamil Khir berkata, perjawatan yang dipinjamkan kepada HDC, termasuk dari Kementerian Kesihatan, dikembalikan kepada pihak Jakim untuk membantu memperkukuh pensijilan halal.
"Logo halal yang sama akan digunakan, manakala sijil halal sedia ada (yang sudah dikeluarkan oleh HDC sebelum ini) berjalan seperti biasa kerana ia mematuhi audit kepatuhan," katanya.
Selain itu untuk memperkasa industri halal negara, beliau berkata, beberapa langkah sedang diteliti, termasuk dari segi perundangan dan kaji selidik, bagi memastikan produk dikeluarkan bukan saja diperakui melalui sijil, tetapi juga lebih berdaya saing serta berkualiti.
Bagi tujuan itu, katanya, kerajaan merancang untuk menyediakan sebuah institut halal di bawah pengurusan Jakim, di samping meneliti beberapa akta berkaitan yang perlu diperkukuhkan.
"Kita juga akan melihat ke arah mempercepatkan proses permohonan. Saya berharap dengan penyerahan kembali peranan mengeluarkan sijil halal ini, Jakim akan membuat pengukuhan dari segi kaedah pengeluaran, proses yang cekap dan tidak mengambil tempoh panjang.
"Kita faham produk ini perlu berdaya saing tinggi dalam pasaran. Maka jika produk lambat keluar, menyebabkan mungkin persaingan itu akan menjadi lambat dan sebagainya," katanya.
Selain itu, Jamil Khir berkata, kerjasama rapat akan dijalinkan dengan Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan ke arah memastikan penguatkuasaan pensijilan untuk membanteras gejala sijil halal palsu.
Oleh Syuhada Choo Abdullah
choo@bharian.com.my
Kabinet lulus memorandum ganti HDC berkuat kuasa serta-merta
KUALA LUMPUR: Jabatan Kemajuan Islam Malaysia (Jakim) mengambil alih semula peranan daripada Perbadanan Pembangunan Industri Halal (HDC) untuk mengendalikan urusan pengeluaran sijil halal, berkuat kuasa serta-merta.
Menteri di Jabatan Perdana Menteri, Datuk Jamil Khir Baharom, berkata Kabinet meluluskan memorandum mengenai perkara itu yang dikemukakan oleh pihaknya dalam mesyuarat, kelmarin.
Katanya, langkah itu bertujuan memperkasa kewibawaan HDC yang terbabit dalam usaha pembangunan hab halal, supaya semakin berdaya saing dan dapat memberi tumpuan kepada proses pengeluaran produk mereka sehingga ke peringkat global.
Selain itu, beliau berkata, keputusan berkenaan juga diharap meningkatkan keyakinan orang ramai bahawa sijil halal dikeluarkan oleh Jakim sebagai agensi kerajaan yang sudah utuh dalam bidang terbabit.
"Memang tumpuan besar HDC ialah untuk (pengeluaran) produk sebab kita hendak melihat ia (berkembang) bukan hanya pada peringkat serantau, tetapi juga global. Justeru, kita lihat agak kurang sesuai pengeluaran sijil halal diletakkan di bawah tanggungjawab HDC dalam kadar tugasannya yang begitu luas dan besar.
"Malah, permintaan kepada halal begitu tinggi pada peringkat antarabangsa. Justeru, sudah sampai masanya dipisahkan tanggungjawab pengeluaran produk dan tugas mengeluarkan sijil halal dikembalikan kepada Jakim," katanya pada sidang akhbar di lobi Bangunan Parlimen di sini, semalam.
Berikutan itu, Jamil Khir berkata, perjawatan yang dipinjamkan kepada HDC, termasuk dari Kementerian Kesihatan, dikembalikan kepada pihak Jakim untuk membantu memperkukuh pensijilan halal.
"Logo halal yang sama akan digunakan, manakala sijil halal sedia ada (yang sudah dikeluarkan oleh HDC sebelum ini) berjalan seperti biasa kerana ia mematuhi audit kepatuhan," katanya.
Selain itu untuk memperkasa industri halal negara, beliau berkata, beberapa langkah sedang diteliti, termasuk dari segi perundangan dan kaji selidik, bagi memastikan produk dikeluarkan bukan saja diperakui melalui sijil, tetapi juga lebih berdaya saing serta berkualiti.
Bagi tujuan itu, katanya, kerajaan merancang untuk menyediakan sebuah institut halal di bawah pengurusan Jakim, di samping meneliti beberapa akta berkaitan yang perlu diperkukuhkan.
"Kita juga akan melihat ke arah mempercepatkan proses permohonan. Saya berharap dengan penyerahan kembali peranan mengeluarkan sijil halal ini, Jakim akan membuat pengukuhan dari segi kaedah pengeluaran, proses yang cekap dan tidak mengambil tempoh panjang.
"Kita faham produk ini perlu berdaya saing tinggi dalam pasaran. Maka jika produk lambat keluar, menyebabkan mungkin persaingan itu akan menjadi lambat dan sebagainya," katanya.
Selain itu, Jamil Khir berkata, kerjasama rapat akan dijalinkan dengan Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan ke arah memastikan penguatkuasaan pensijilan untuk membanteras gejala sijil halal palsu.
Takaful market in Malaysia
SYARIKAT Takaful Malaysia Bhd aims to capture more than half of the takaful industry's total asset market share within the next two years amid the current economic slowdown.
Group managing director, Datuk Mohamad Hassan Kamil, said the industry''s total assets amounted to between RM11 billion and RM12 billion while the company''s share currently was RM4.05 billion.
"We will grow slightly above the current takaful market rate, which is between 20 and 25 per cent per annum," he told a media briefing after signing an agreement with Standard Financial Planner Sdn Bhd (SFP) in Kuala Lumpur today.
SFP, which was set up in 1999, is one of only ten licensed financial advisors in Malaysia.
It is a member of the Australian-based Professional Investment Group of Companies that operates across seven countries.
Hassan said under the agreement, SFP would market Takaful Malaysia's products through its nationwide network of more than 300 representatives, of which 75 per cent were licensed financial advisors with Bank Negara Malaysia.
He said the addition of SFP to its existing portfolio of distribution channels would boost the company's revenue by 10 per cent.
"This will enhance the penetration rate of our family and general products into the middle-upper Malaysian market as well as making them more accessible wider customer base.
"We will work closely with SFP's financial advisors to offer comprehensive insurance, investment and saving options to satisfy the holistic demand from customers," he said.
Takaful Malaysia posted a pre-tax loss of RM11.461 million for the third quarter ended March 31, 2009 compared to a pre-tax profit of RM11.07 million in the same quarter last year.
Revenue declined to RM187.667 million from RM280.678 million previously.
Hassan said Takaful Malaysia planned to undertake a rebranding exercise to reflect its fresh characteristics in conjunction with its 25th year anniversary in December. - Bernama
Group managing director, Datuk Mohamad Hassan Kamil, said the industry''s total assets amounted to between RM11 billion and RM12 billion while the company''s share currently was RM4.05 billion.
"We will grow slightly above the current takaful market rate, which is between 20 and 25 per cent per annum," he told a media briefing after signing an agreement with Standard Financial Planner Sdn Bhd (SFP) in Kuala Lumpur today.
SFP, which was set up in 1999, is one of only ten licensed financial advisors in Malaysia.
It is a member of the Australian-based Professional Investment Group of Companies that operates across seven countries.
Hassan said under the agreement, SFP would market Takaful Malaysia's products through its nationwide network of more than 300 representatives, of which 75 per cent were licensed financial advisors with Bank Negara Malaysia.
He said the addition of SFP to its existing portfolio of distribution channels would boost the company's revenue by 10 per cent.
"This will enhance the penetration rate of our family and general products into the middle-upper Malaysian market as well as making them more accessible wider customer base.
"We will work closely with SFP's financial advisors to offer comprehensive insurance, investment and saving options to satisfy the holistic demand from customers," he said.
Takaful Malaysia posted a pre-tax loss of RM11.461 million for the third quarter ended March 31, 2009 compared to a pre-tax profit of RM11.07 million in the same quarter last year.
Revenue declined to RM187.667 million from RM280.678 million previously.
Hassan said Takaful Malaysia planned to undertake a rebranding exercise to reflect its fresh characteristics in conjunction with its 25th year anniversary in December. - Bernama
Wednesday, July 8, 2009
Islamic funds growth stalls but investable assets grow
Islamic funds growth stalls but investable assets grow, says Ernst and Young
The 3rd annual Ernst and Young Islamic Funds and Investments Report (IFIR 2009), released today at the World Islamic Funds and Capital Markets Conference states that Shari'a sensitive investable assets in 2008 in the GCC and Asia touched $736bn as compared to $267bn in 2007.
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Mergers and acquisitions activity in the MENA region down by 66% in Q1 2009 compared to Q1 2008, Ernst and Young
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Middle East IPOs raise $83.6m in first quarter of 2009, says Ernst and Young
Global Takaful market could touch $7.7bn in 2012, reports Ernst and Young
Sobhi Batterjee vies for Ernst and Young's World Entrepreneur of the Year Award
World's largest oil companies to deliver over $375bn of investment this year despite oil demand concerns
The rules of the game have permanently changed - Ernst and Young
Ernst and Young awarded 'Best Takaful Advisory Firm'
» more Ernst & Young news
In computing the total asset size this year, the report included Awqaf and Endowments, Takaful operators in Malaysia, SWFs in the MENA region and Asia, and it also includes the markets of Pakistan and South East Asia - all of which where not included in last year's figures.
This translates into a potential annual revenue pool of $3.86bn for the Islamic asset management industry. Fund sizes however, remain small, with over 50% having assets under management of $20m or less.
25 Islamic funds were liquidated in 2008 and Q1 2009. 18 were liquidated in all of 2006 and 2007 combined. The number of new funds launched has dropped from 271 in the years 2006 and 2007 to only 89 in the year 2008 and first quarter of 2009. This mirrors the severe market correction shown by a 50% decline in the MSCI Index for the period of November 2007 to March 2009 compared to a 40% return in the period May 2005 to November 2007.
Key geographic markets
The largest concentration of Islamic funds remains in the Middle East and equity funds lead the field for choice of asset type. 19% and 23% of Islamic funds are domiciled in Saudi Arabia and Malaysia respectively. Saudi Arabia holds $19.28bn in total assets under management for Islamic funds.
Malaysia holds $4.579bn in assets. The untapped markets in Asia and MENA are a source of growth for the Islamic funds industry due to their inherently large Muslim populations. These markets, where Islamic finance is still in its infancy, include Indonesia (207 million), Pakistan (161 million), India (150 million), Bangladesh (132 million), Turkey (71 million) and Iran and Nigeria (both at 64 million).
Returns from Islamic funds
Islamic indices have performed poorly worldwide - we see the average return from Islamic equity funds fall to minus 39% in 2008 as compared to a 23% return in 2007. In the first quarter of 2009, the average return stood at minus 3.7%. Average Islamic fixed income fund return dropped from 3% in 2007 to 1% in 2008 and Q1 2009.
Commodity prices declined during the second half of 2008, but signs of recovery in this asset class are emerging and in Q1 2009, average return of commodity funds stood at 10%, a substantial increase from the minus 20.01% experienced in 2008. Islamic cash funds remained constant, providing an average return of 3.9% in 2008 as compared to 3.4% in 2007. In Q1 2009, average returns are at 0.7%. Average returns from real estate funds dropped from 8% in 2007 to minus 11% in 2008 and minus 5% in Q1 2009.
Sukuks and Takaful
Sukuk issuance has slowed as spreads widen - sukuks worth $15.5bn were issued in 2008 as compared to $47.1bn in 2007. Ernst & Young's IFIR 2009 report estimates that sukuks around the value of $27.5bn will be issued in 2009.
Guidance and risks facing Islamic funds
According to Sameer Abdi, Head of Ernst & Young's Islamic Finance Services Group, 'Last year, we highlighted the phenomenal rate of growth experienced in the Islamic asset management industry. The landscape has changed significantly now, yet the fundamentals of the Islamic fund industry remain strong. With almost $50bn in fund assets under management and a large, expanding and untapped Muslim population, there are likely to be considerable opportunities in the future. This is a time when strategic choices have to be made and market participants have to adapt to survive.'
Touching upon the risks faced by Islamic asset managers as outlined in IFIR 2009, Omar Bitar, Managing Partner, Middle East Advisory Services at Ernst & Young Middle East said, 'Two-thirds of all players manage less than $100m each in Islamic assets - the global competitive landscape is fragmented and a shakeout appears likely. Firms will need to select a product and distribution platform that is aligned with its strategy and position themselves as alpha-seekers or asset gatherers to set their fee structure. Pressure on fund managers to consider a lean and efficient corporate structure through the outsourcing of non-core business activities is now more than ever.'
Commenting on the key risks facing the Islamic funds industry, Sameer, said:
'The business risks landscape for Islamic asset management has changed substantially since 2008. Revisions of expected returns have caused some investors to withdraw capital and previously robust business models have struggled to cope with extreme market events. The economic downturn, a reduction in investor risk appetite and unclear valuations will be the most pressing business risks in 2009.'
While IFIR 2008 explored ways in which a burgeoning Islamic asset management industry exploited opportunities and met challenges in a growth market, the 2009 edition reflects on measures that leading industry players are taking as they seek to strengthen their market positions and renew growth strategies in the backdrop of the global economic downturn.
Notwithstanding the present situation of international financial markets, opportunities continue to exist for Islamic investments and the Shari'a-compliant funds industry can catalyze the next phase of growth. It provides industry leaders with new insights as they seek to renew their business strategies in a challenging global economic climate.
The 3rd annual Ernst and Young Islamic Funds and Investments Report (IFIR 2009), released today at the World Islamic Funds and Capital Markets Conference states that Shari'a sensitive investable assets in 2008 in the GCC and Asia touched $736bn as compared to $267bn in 2007.
Ernst & Young RSS feed
Mergers and acquisitions activity in the MENA region down by 66% in Q1 2009 compared to Q1 2008, Ernst and Young
Uncertainty and impact of the credit crunch top risks facing real estate companies
Ernst and Young introduces region's first monthly spa benchmark report
Middle East IPOs raise $83.6m in first quarter of 2009, says Ernst and Young
Global Takaful market could touch $7.7bn in 2012, reports Ernst and Young
Sobhi Batterjee vies for Ernst and Young's World Entrepreneur of the Year Award
World's largest oil companies to deliver over $375bn of investment this year despite oil demand concerns
The rules of the game have permanently changed - Ernst and Young
Ernst and Young awarded 'Best Takaful Advisory Firm'
» more Ernst & Young news
In computing the total asset size this year, the report included Awqaf and Endowments, Takaful operators in Malaysia, SWFs in the MENA region and Asia, and it also includes the markets of Pakistan and South East Asia - all of which where not included in last year's figures.
This translates into a potential annual revenue pool of $3.86bn for the Islamic asset management industry. Fund sizes however, remain small, with over 50% having assets under management of $20m or less.
25 Islamic funds were liquidated in 2008 and Q1 2009. 18 were liquidated in all of 2006 and 2007 combined. The number of new funds launched has dropped from 271 in the years 2006 and 2007 to only 89 in the year 2008 and first quarter of 2009. This mirrors the severe market correction shown by a 50% decline in the MSCI Index for the period of November 2007 to March 2009 compared to a 40% return in the period May 2005 to November 2007.
Key geographic markets
The largest concentration of Islamic funds remains in the Middle East and equity funds lead the field for choice of asset type. 19% and 23% of Islamic funds are domiciled in Saudi Arabia and Malaysia respectively. Saudi Arabia holds $19.28bn in total assets under management for Islamic funds.
Malaysia holds $4.579bn in assets. The untapped markets in Asia and MENA are a source of growth for the Islamic funds industry due to their inherently large Muslim populations. These markets, where Islamic finance is still in its infancy, include Indonesia (207 million), Pakistan (161 million), India (150 million), Bangladesh (132 million), Turkey (71 million) and Iran and Nigeria (both at 64 million).
Returns from Islamic funds
Islamic indices have performed poorly worldwide - we see the average return from Islamic equity funds fall to minus 39% in 2008 as compared to a 23% return in 2007. In the first quarter of 2009, the average return stood at minus 3.7%. Average Islamic fixed income fund return dropped from 3% in 2007 to 1% in 2008 and Q1 2009.
Commodity prices declined during the second half of 2008, but signs of recovery in this asset class are emerging and in Q1 2009, average return of commodity funds stood at 10%, a substantial increase from the minus 20.01% experienced in 2008. Islamic cash funds remained constant, providing an average return of 3.9% in 2008 as compared to 3.4% in 2007. In Q1 2009, average returns are at 0.7%. Average returns from real estate funds dropped from 8% in 2007 to minus 11% in 2008 and minus 5% in Q1 2009.
Sukuks and Takaful
Sukuk issuance has slowed as spreads widen - sukuks worth $15.5bn were issued in 2008 as compared to $47.1bn in 2007. Ernst & Young's IFIR 2009 report estimates that sukuks around the value of $27.5bn will be issued in 2009.
Guidance and risks facing Islamic funds
According to Sameer Abdi, Head of Ernst & Young's Islamic Finance Services Group, 'Last year, we highlighted the phenomenal rate of growth experienced in the Islamic asset management industry. The landscape has changed significantly now, yet the fundamentals of the Islamic fund industry remain strong. With almost $50bn in fund assets under management and a large, expanding and untapped Muslim population, there are likely to be considerable opportunities in the future. This is a time when strategic choices have to be made and market participants have to adapt to survive.'
Touching upon the risks faced by Islamic asset managers as outlined in IFIR 2009, Omar Bitar, Managing Partner, Middle East Advisory Services at Ernst & Young Middle East said, 'Two-thirds of all players manage less than $100m each in Islamic assets - the global competitive landscape is fragmented and a shakeout appears likely. Firms will need to select a product and distribution platform that is aligned with its strategy and position themselves as alpha-seekers or asset gatherers to set their fee structure. Pressure on fund managers to consider a lean and efficient corporate structure through the outsourcing of non-core business activities is now more than ever.'
Commenting on the key risks facing the Islamic funds industry, Sameer, said:
'The business risks landscape for Islamic asset management has changed substantially since 2008. Revisions of expected returns have caused some investors to withdraw capital and previously robust business models have struggled to cope with extreme market events. The economic downturn, a reduction in investor risk appetite and unclear valuations will be the most pressing business risks in 2009.'
While IFIR 2008 explored ways in which a burgeoning Islamic asset management industry exploited opportunities and met challenges in a growth market, the 2009 edition reflects on measures that leading industry players are taking as they seek to strengthen their market positions and renew growth strategies in the backdrop of the global economic downturn.
Notwithstanding the present situation of international financial markets, opportunities continue to exist for Islamic investments and the Shari'a-compliant funds industry can catalyze the next phase of growth. It provides industry leaders with new insights as they seek to renew their business strategies in a challenging global economic climate.
Credit card disputes may be referred to FMB
Credit card disputes may be referred to FMB
Thursday, 09 July 2009 07:50am
©The Sun (Used by permission)
by Giam Say Khoon
KUALA LUMPUR (July 8, 2009) : Credit cardholders not happy with bank investigations into disputes over fraudulent transactions, may refer their cases to the Financial Mediation Bureau (FMB), Deputy Finance Minister Datuk Chor Chee Heung said today.
In replying to a question from Senator Datuk Daljit Singh Dalliwal, Chor said whenever there is a dispute over unauthorised transactions, the credit card issuers will conduct a thorough investigation to ensure that the complaint is real.
“However, if the cardholders are not happy with the results of the banks’ investigations, they can refer to the FMB, which was established by Bank Negara in 2005 as an independent body to help resolve disputes between consumers and financial service providers.
“If cardholders are still unsatisfied with the decision of the FMB, they may choose to take legal action to resolve the dispute. However, banks issuing the credit cards will need to accept the decision of the body,” he said.
Daljit had in his question accused Bank Negara of not enforcing the guidelines for fradulent credit card transactions.
He also posed a supplementary question as to why authorities did not order banks to stop a transaction when they knew that it was a fraudulent one.
In reply, Chor said the banks cannot be blamed for all credit card fraud because cardholders’ negligence contributed to the number of cases.
“Therefore, Bank Negara has a set of guidelines and a system that allows for investigations to be carried out. If the cardholders are not happy with that, they can go to the FMB,” he said.
Chor added that of the 11 million credit cards issued in Malaysia, only 541 cases of fraudulent transactions were reported.
On second supplementary question by Senator Datuk Rizuan Abd Hamid, Chor said the Bank Negara cannot stop a financial institution from issuing credit cards. However, credit cards would only be issued to applicants who meet the three major requirements, namely a minimum monthly salary, as well as good credit standing and payment record.
He added that Bank Negara monitors credit card issuers to ensure that the guidelines are followed and that the central bank has the power to act against the financial institutions that fail to do so under the Payment Systems Act 2004.
Thursday, 09 July 2009 07:50am
©The Sun (Used by permission)
by Giam Say Khoon
KUALA LUMPUR (July 8, 2009) : Credit cardholders not happy with bank investigations into disputes over fraudulent transactions, may refer their cases to the Financial Mediation Bureau (FMB), Deputy Finance Minister Datuk Chor Chee Heung said today.
In replying to a question from Senator Datuk Daljit Singh Dalliwal, Chor said whenever there is a dispute over unauthorised transactions, the credit card issuers will conduct a thorough investigation to ensure that the complaint is real.
“However, if the cardholders are not happy with the results of the banks’ investigations, they can refer to the FMB, which was established by Bank Negara in 2005 as an independent body to help resolve disputes between consumers and financial service providers.
“If cardholders are still unsatisfied with the decision of the FMB, they may choose to take legal action to resolve the dispute. However, banks issuing the credit cards will need to accept the decision of the body,” he said.
Daljit had in his question accused Bank Negara of not enforcing the guidelines for fradulent credit card transactions.
He also posed a supplementary question as to why authorities did not order banks to stop a transaction when they knew that it was a fraudulent one.
In reply, Chor said the banks cannot be blamed for all credit card fraud because cardholders’ negligence contributed to the number of cases.
“Therefore, Bank Negara has a set of guidelines and a system that allows for investigations to be carried out. If the cardholders are not happy with that, they can go to the FMB,” he said.
Chor added that of the 11 million credit cards issued in Malaysia, only 541 cases of fraudulent transactions were reported.
On second supplementary question by Senator Datuk Rizuan Abd Hamid, Chor said the Bank Negara cannot stop a financial institution from issuing credit cards. However, credit cards would only be issued to applicants who meet the three major requirements, namely a minimum monthly salary, as well as good credit standing and payment record.
He added that Bank Negara monitors credit card issuers to ensure that the guidelines are followed and that the central bank has the power to act against the financial institutions that fail to do so under the Payment Systems Act 2004.
Monday, July 6, 2009
CIMB Standard To Manage US$500 Million ln ADB-IDB Fund
July 05, 2009 23:05 PM
CIMB Standard To Manage US$500 Million ln ADB-IDB Fund
DUBAI, July 5 (Bernama) -- CIMB Standard, Asian private equity and infrastructure fund specialists, have been appointed manager and advisor to a new US$500 million (US$1 = RM3.52) Islamic Infrastructure Fund (IIF).
The IIF would receive an initial commitment of US$250 million from its joint sponsors, Asian Development Bank (ADB) and Islamic Development Bank (IDB), according to a statement issued by key players of the initiative.
CIMB Standard is a joint venture between Standard Bank and Malaysia's CIMB Group.
Standard Bank is a leading African financial services group and its Middle East operations are based at the Dubai International Financial Centre.
The statement said the IIF, billed as Asia's first major multi-country Islamic infrastructure fund, would make syariah-compliant equity investments in emerging countries in Asia with significant infrastructure opportunities to meet their developmental needs.
Among such countries are Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Malaysia, Pakistan and other member countries common to both ADB and IDB.
The IIF will also help bridge the gap between Islamic investors who require syariah-compliant products and project sponsors who need capital to build crucial infrastructure.
CIMB Group chief executive Datuk Seri Nazir Razak said, as Asia sought to claim a greater share of the world economic pie, heavy emphasis would be placed on its infrastructure development to facilitate sustainable economic growth.
"With demand for such investments estimated to exceed US$8 trillion in the coming decade, we are very confident about the appetite for this new fund," he said.
IDB's director of country operations department (Asia) Dr Walid Abdelwahab said IDB expected the IIF to attract capital from the Islamic world, notably the Middle East.
"There's still a substantial amount of wealth in that region and investors there are increasingly interested in putting their money to work in a way that complies with their faith," he said.
-- BERNAMA
CIMB Standard To Manage US$500 Million ln ADB-IDB Fund
DUBAI, July 5 (Bernama) -- CIMB Standard, Asian private equity and infrastructure fund specialists, have been appointed manager and advisor to a new US$500 million (US$1 = RM3.52) Islamic Infrastructure Fund (IIF).
The IIF would receive an initial commitment of US$250 million from its joint sponsors, Asian Development Bank (ADB) and Islamic Development Bank (IDB), according to a statement issued by key players of the initiative.
CIMB Standard is a joint venture between Standard Bank and Malaysia's CIMB Group.
Standard Bank is a leading African financial services group and its Middle East operations are based at the Dubai International Financial Centre.
The statement said the IIF, billed as Asia's first major multi-country Islamic infrastructure fund, would make syariah-compliant equity investments in emerging countries in Asia with significant infrastructure opportunities to meet their developmental needs.
Among such countries are Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Malaysia, Pakistan and other member countries common to both ADB and IDB.
The IIF will also help bridge the gap between Islamic investors who require syariah-compliant products and project sponsors who need capital to build crucial infrastructure.
CIMB Group chief executive Datuk Seri Nazir Razak said, as Asia sought to claim a greater share of the world economic pie, heavy emphasis would be placed on its infrastructure development to facilitate sustainable economic growth.
"With demand for such investments estimated to exceed US$8 trillion in the coming decade, we are very confident about the appetite for this new fund," he said.
IDB's director of country operations department (Asia) Dr Walid Abdelwahab said IDB expected the IIF to attract capital from the Islamic world, notably the Middle East.
"There's still a substantial amount of wealth in that region and investors there are increasingly interested in putting their money to work in a way that complies with their faith," he said.
-- BERNAMA
Thursday, July 2, 2009
Reality check on economic models
Saturday June 27, 2009
Reality check on economic models
What Are We To Do
By TAN SRI LIN SEE-YAN
SINCE the 1970s, mainstream research on major macroeconomic issues (growth and inflation, booms and busts, etc) were grounded in individual behaviour. The best and brightest in the field became Nobel laureates (for example, Robert Lucas and George Akerlof).
The results were rigorous indeed, the macroeconomic models are certainly that. Their roots date back to Professor Irving Fisher (Keynes’ contemporary), who determined behaviour of the market in rational, mathematical terms.
But policy makers and the public want them to be illuminating and useful – that is, realistic. What we got was anything but that. To begin with, the idea of finding a single theory encompassing all of human behaviour was not realistic.
What emerged was based on the “efficient market” hypothesis – that everyone acts rationally and have perfect information so that the market accurately prices the real value of “goods” transacted. Concepts like equity, ethics and values are regarded as sloppy sociological constructs.
In the real world, however, much of what brings about business opportunities and causes instability in the global economy, results from the failure of assumptions such as these. Indeed, herd behaviour, panic, asset mispricing, imperfect information and irrational exuberance have resulted in the mess we now witness.
The arrogance of it all is that these models claim to have solved the problem of instability. Admittedly, there could be periodic recessions, but no gigantic collapse. Whatever happens is predictable and can be handled; indeed, precautionary steps can be taken to prevent them.
How wrong they were! Sure enough, the intellectual edifice fell into disrepute in the summer of ‘08. What’s unsettling is that the current crisis has not fitted into any of the standard models about business cycles. Nor has it submitted to textbook solutions.
Mostly, they failed to point out fundamental weaknesses of financial markets. They could not foresee such a major crisis. Now, they quarrel on appropriate policies, and on the likely course of future events.
What’s stark is the contrast between the real economy that produces goods and services, and the financial intermediation markets in securities, banking, mutual funds and other services.
The causal relationship between them still remains a mystery, as is the solution. The puzzle remains because this crisis originated in very frightened financial markets with their toxic products.
Minsky’s challenge
Looking back, it was Hyman Minsky (a mid-20th century economist) who confronted conventional theory and argued that the financial system played a big role in exaggerating the business cycle.
This is so because (i) investors, banks, consumers extrapolate the future as though it is like the recent past; and (ii) after a period of stable growth, they develop a misguided confidence that such benign conditions will continue.
This led them to borrow more (and banks to lend more in the face of accommodating easy money), thus raising the riskiness of the system’s collapse.
At this stage, it doesn’t take much change in the fundamentals on investor attitudes to cause the system to unravel. Once prices start to drop, the downward cycle rapidly collapses.
Minsky’s challenge to blind faith in free markets offers an important lesson: If markets are not always right, then Wall Street’s vested interest needs to be vigorously challenged, however loudly they may complain. One thing is clear: I do not believe in the market’s self-healing ability.
Markets don’t have all the answers
Even before the crises, there were already strong hints that a hands-off approach by government was not the only way to manage an economy. Sure, Russia’s past was not a good example. But China’s government-managed capitalism appears to be doing fine.
The modern financial system as we know it from history originated from a series of innovations in 17th century Netherlands. Dutch finance and ideas eventually crossed the English Channel and built the stock market, financed global trade and established the Bank of England, the nucleus of Anglo-Saxon capitalism.
When the British system failed, the centre crossed the seas once again. New York and Washington replaced London and Amsterdam. Its modern version runs the world today. The Dutch introduced version 1.0 around 1620; the British, 2.0 in about 1700; and the US set up version 3.0 in 1945.
As an operating system, it did work pretty well most of the time. Not everyone shared the benefits and there are environmental and social costs to rapid progress.
But the system has a built-in tendency to crash. Since the Dutch tulip bubbles in 1637, the system was prey to excesses. Now, we have the great unravelling – easily one of the worst.
Liberal capitalism has proved to be risky, unequal and destabilising. When things go wrong, the less powerful often pay a high price. Ask the Russians or the Argentinos.
No question, the system as we know it now needs to be de-bugged. We are in the midst of its current evolution. We are, in a sense, still in unknown territory, facing new situations and taking measures not tried before.
As I see it, now more than ever, version 4.0 in 2009 has to be one in which the needs of the many come before the greed of the few.
Even in crisis, some form of capitalism remains favoured. Private enterprise, competition and consumer choice will need to continue as the key drivers.
That’s still the best way to allocate and price goods and services. But there should also be a better way to regulate, monitor and police the orderly conduct of financial services. We know only too well the market no longer has all the answers.
Risk and morals
In economics, technology has become king with an impact not unlike that of the benevolent Prometheus. Morality adapted to its demands.
Faith in the market – the midwife of technological innovation – was a result of this.
Debt became a factor to be leveraged (a metaphor from engineering), thus turning “getting into debt” (by being highly leveraged) into something desirable. In contrast, the virtuous Chinese savers are being castigated for failing in their “duty” to spend more, and not less.
According to Lord Skidelsky, Keynes’ noted biographer, the key in the transition to a debt-fuelled economy was the re-definition of uncertainty as risk. Whereas managing uncertainty was traditionally a moral matter, hedging against risk became regarded as just a legitimate technical issue.
This in practice abolished the need for moral concerns. Hence, the active deployment of quants (mathematical whiz kids) to develop new risk-free instruments (getting the sting out of debt) that confronted the barriers of prudence and self-restraint.
These “merchants of debt” (as Minsky called them) offered a full range of risk preferences. Because growing competition steadily drove down the cost of risk, the future became (theoretically at least) virtually risk-free!
As we know it now, this brought the world onto the edge of complete disaster. It is now up to the evolving reformed regulatory framework to re-establish moral responsibility back to where it belongs, without the comfort of moral-hazard-rescue by governments.
Darwin’s offer: Be a beetle
A hundred and fifty years ago, Darwin’s The Origin of Species for the first time detailed how evolutionary selection operated through the survival of the fittest.
The lesson for us lies in Darwin’s recognition that extinction is an integral part of evolution. Similarly, adverse macroeconomic conditions reduce the survival chances of enterprises in the same way that bad weather limits biodiversity.
Viewed positively, the demise of weak ventures can – and do – lead to creative destruction (a la Schumpeter), with capital being re-allocated to more productive areas.
For Darwin, the species that are most responsive to change will survive.
This precludes us from selecting the more macho eagles and bears as worthy exemplars. Though noble and smart, they are collectively endangered. In reality, there is only one evolutionary superstar left on offer – the ever adaptable humble crawler, the beetle!
·A former banker, Dr Lin is a Harvard-educated economist and a chartered scientist (London) who now spends time promoting the public interest. Feedback is most welcome at email:
starbizweek@thestar.com.my.
Reality check on economic models
What Are We To Do
By TAN SRI LIN SEE-YAN
SINCE the 1970s, mainstream research on major macroeconomic issues (growth and inflation, booms and busts, etc) were grounded in individual behaviour. The best and brightest in the field became Nobel laureates (for example, Robert Lucas and George Akerlof).
The results were rigorous indeed, the macroeconomic models are certainly that. Their roots date back to Professor Irving Fisher (Keynes’ contemporary), who determined behaviour of the market in rational, mathematical terms.
But policy makers and the public want them to be illuminating and useful – that is, realistic. What we got was anything but that. To begin with, the idea of finding a single theory encompassing all of human behaviour was not realistic.
What emerged was based on the “efficient market” hypothesis – that everyone acts rationally and have perfect information so that the market accurately prices the real value of “goods” transacted. Concepts like equity, ethics and values are regarded as sloppy sociological constructs.
In the real world, however, much of what brings about business opportunities and causes instability in the global economy, results from the failure of assumptions such as these. Indeed, herd behaviour, panic, asset mispricing, imperfect information and irrational exuberance have resulted in the mess we now witness.
The arrogance of it all is that these models claim to have solved the problem of instability. Admittedly, there could be periodic recessions, but no gigantic collapse. Whatever happens is predictable and can be handled; indeed, precautionary steps can be taken to prevent them.
How wrong they were! Sure enough, the intellectual edifice fell into disrepute in the summer of ‘08. What’s unsettling is that the current crisis has not fitted into any of the standard models about business cycles. Nor has it submitted to textbook solutions.
Mostly, they failed to point out fundamental weaknesses of financial markets. They could not foresee such a major crisis. Now, they quarrel on appropriate policies, and on the likely course of future events.
What’s stark is the contrast between the real economy that produces goods and services, and the financial intermediation markets in securities, banking, mutual funds and other services.
The causal relationship between them still remains a mystery, as is the solution. The puzzle remains because this crisis originated in very frightened financial markets with their toxic products.
Minsky’s challenge
Looking back, it was Hyman Minsky (a mid-20th century economist) who confronted conventional theory and argued that the financial system played a big role in exaggerating the business cycle.
This is so because (i) investors, banks, consumers extrapolate the future as though it is like the recent past; and (ii) after a period of stable growth, they develop a misguided confidence that such benign conditions will continue.
This led them to borrow more (and banks to lend more in the face of accommodating easy money), thus raising the riskiness of the system’s collapse.
At this stage, it doesn’t take much change in the fundamentals on investor attitudes to cause the system to unravel. Once prices start to drop, the downward cycle rapidly collapses.
Minsky’s challenge to blind faith in free markets offers an important lesson: If markets are not always right, then Wall Street’s vested interest needs to be vigorously challenged, however loudly they may complain. One thing is clear: I do not believe in the market’s self-healing ability.
Markets don’t have all the answers
Even before the crises, there were already strong hints that a hands-off approach by government was not the only way to manage an economy. Sure, Russia’s past was not a good example. But China’s government-managed capitalism appears to be doing fine.
The modern financial system as we know it from history originated from a series of innovations in 17th century Netherlands. Dutch finance and ideas eventually crossed the English Channel and built the stock market, financed global trade and established the Bank of England, the nucleus of Anglo-Saxon capitalism.
When the British system failed, the centre crossed the seas once again. New York and Washington replaced London and Amsterdam. Its modern version runs the world today. The Dutch introduced version 1.0 around 1620; the British, 2.0 in about 1700; and the US set up version 3.0 in 1945.
As an operating system, it did work pretty well most of the time. Not everyone shared the benefits and there are environmental and social costs to rapid progress.
But the system has a built-in tendency to crash. Since the Dutch tulip bubbles in 1637, the system was prey to excesses. Now, we have the great unravelling – easily one of the worst.
Liberal capitalism has proved to be risky, unequal and destabilising. When things go wrong, the less powerful often pay a high price. Ask the Russians or the Argentinos.
No question, the system as we know it now needs to be de-bugged. We are in the midst of its current evolution. We are, in a sense, still in unknown territory, facing new situations and taking measures not tried before.
As I see it, now more than ever, version 4.0 in 2009 has to be one in which the needs of the many come before the greed of the few.
Even in crisis, some form of capitalism remains favoured. Private enterprise, competition and consumer choice will need to continue as the key drivers.
That’s still the best way to allocate and price goods and services. But there should also be a better way to regulate, monitor and police the orderly conduct of financial services. We know only too well the market no longer has all the answers.
Risk and morals
In economics, technology has become king with an impact not unlike that of the benevolent Prometheus. Morality adapted to its demands.
Faith in the market – the midwife of technological innovation – was a result of this.
Debt became a factor to be leveraged (a metaphor from engineering), thus turning “getting into debt” (by being highly leveraged) into something desirable. In contrast, the virtuous Chinese savers are being castigated for failing in their “duty” to spend more, and not less.
According to Lord Skidelsky, Keynes’ noted biographer, the key in the transition to a debt-fuelled economy was the re-definition of uncertainty as risk. Whereas managing uncertainty was traditionally a moral matter, hedging against risk became regarded as just a legitimate technical issue.
This in practice abolished the need for moral concerns. Hence, the active deployment of quants (mathematical whiz kids) to develop new risk-free instruments (getting the sting out of debt) that confronted the barriers of prudence and self-restraint.
These “merchants of debt” (as Minsky called them) offered a full range of risk preferences. Because growing competition steadily drove down the cost of risk, the future became (theoretically at least) virtually risk-free!
As we know it now, this brought the world onto the edge of complete disaster. It is now up to the evolving reformed regulatory framework to re-establish moral responsibility back to where it belongs, without the comfort of moral-hazard-rescue by governments.
Darwin’s offer: Be a beetle
A hundred and fifty years ago, Darwin’s The Origin of Species for the first time detailed how evolutionary selection operated through the survival of the fittest.
The lesson for us lies in Darwin’s recognition that extinction is an integral part of evolution. Similarly, adverse macroeconomic conditions reduce the survival chances of enterprises in the same way that bad weather limits biodiversity.
Viewed positively, the demise of weak ventures can – and do – lead to creative destruction (a la Schumpeter), with capital being re-allocated to more productive areas.
For Darwin, the species that are most responsive to change will survive.
This precludes us from selecting the more macho eagles and bears as worthy exemplars. Though noble and smart, they are collectively endangered. In reality, there is only one evolutionary superstar left on offer – the ever adaptable humble crawler, the beetle!
·A former banker, Dr Lin is a Harvard-educated economist and a chartered scientist (London) who now spends time promoting the public interest. Feedback is most welcome at email:
starbizweek@thestar.com.my.
Merdekakan ekonomi negara
Khamis 2 Julai 2009 | 9 Rajab 1430 Hijrah
Merdekakan ekonomi negara
Nyza Ayob
Thu | Jul 02, 09 | 7:04:26 am MYT
KUALA LUMPUR, 2 Julai (Hrkh) - Dato' Seri Tuan Guru Abdul Hadi Awang (PAS- Marang) berpandangan ekonomi negara ini perlu dimerdekakan dan tidak lagi bergantung kepada Dolar Amerika.
Beliau berkata demikian apabila sebelumnya menyarankan agar untuk menghapuskan sistem riba, pakar ekonomi khususnya disarankan mengkaji lebih mendalam alternatif yang lebih baik dan berakhlak dalam pelaksanaan sistem perbankan Islam dan tidak hanya sekadar bergantung kepada konsep Al-Bai Bithaman Ajil.
Sewaktu membahaskan Rang Undang-Undang Bank Negara Malaysia 2009 di Dewan rakyat semalam katanya, antara muamalat Islam yang perlu dilaksanakan ialah Al-Qardhul Hassan iaitu pinjaman tanpa faedah.
Jelasnya sistem Al-Qardhul Hassan menggalakkan produktiviti yang mana mempunyai barakah untuk menggalakkan rakyat bekerja dengan amanah dan ikhlas.
Dalam ucapannya Abdul Hadi turut menekankan, muamalat Islam juga perlu diperluaskan di peringkat antarabangsa.
Jelasnya, sistem perbankan Islam kini telah mendapat perhatian masyarakat di beberapa negara Barat seperti England dan Perancis yang telah melihat kegagalan sistem liberal dan kapitalis yang mana mereka melihat amalan perbankan Islam tidak banyak terjejas dengan krisis ekonomi yang berlaku.
"Kita tahu banyak negara-negara Islam yang kaya membuat pelaburan di negara Barat. 99 peratus mereka membuat pelaburan di sana. Sedangkan di kalangan kita sendiri dalam keadaan yang merempat dan menyalahguna kekayaan.
"Dalam pertukaran wang asing, kenapa kita bergantung kepada dolar Amerika? Kita seharusnya memerdekakan ekonomi kita,"katanya.
Sehubungan itu beliau turut menyarankan agar dinar emas digunakan bagi menggantikan dolar sehingga peringkat antarabangsa khususnya dalam menjalin kerjasama dengan negara-negara Islam bagi meningkatkan ekonomi negara. - mks. _
Merdekakan ekonomi negara
Nyza Ayob
Thu | Jul 02, 09 | 7:04:26 am MYT
KUALA LUMPUR, 2 Julai (Hrkh) - Dato' Seri Tuan Guru Abdul Hadi Awang (PAS- Marang) berpandangan ekonomi negara ini perlu dimerdekakan dan tidak lagi bergantung kepada Dolar Amerika.
Beliau berkata demikian apabila sebelumnya menyarankan agar untuk menghapuskan sistem riba, pakar ekonomi khususnya disarankan mengkaji lebih mendalam alternatif yang lebih baik dan berakhlak dalam pelaksanaan sistem perbankan Islam dan tidak hanya sekadar bergantung kepada konsep Al-Bai Bithaman Ajil.
Sewaktu membahaskan Rang Undang-Undang Bank Negara Malaysia 2009 di Dewan rakyat semalam katanya, antara muamalat Islam yang perlu dilaksanakan ialah Al-Qardhul Hassan iaitu pinjaman tanpa faedah.
Jelasnya sistem Al-Qardhul Hassan menggalakkan produktiviti yang mana mempunyai barakah untuk menggalakkan rakyat bekerja dengan amanah dan ikhlas.
Dalam ucapannya Abdul Hadi turut menekankan, muamalat Islam juga perlu diperluaskan di peringkat antarabangsa.
Jelasnya, sistem perbankan Islam kini telah mendapat perhatian masyarakat di beberapa negara Barat seperti England dan Perancis yang telah melihat kegagalan sistem liberal dan kapitalis yang mana mereka melihat amalan perbankan Islam tidak banyak terjejas dengan krisis ekonomi yang berlaku.
"Kita tahu banyak negara-negara Islam yang kaya membuat pelaburan di negara Barat. 99 peratus mereka membuat pelaburan di sana. Sedangkan di kalangan kita sendiri dalam keadaan yang merempat dan menyalahguna kekayaan.
"Dalam pertukaran wang asing, kenapa kita bergantung kepada dolar Amerika? Kita seharusnya memerdekakan ekonomi kita,"katanya.
Sehubungan itu beliau turut menyarankan agar dinar emas digunakan bagi menggantikan dolar sehingga peringkat antarabangsa khususnya dalam menjalin kerjasama dengan negara-negara Islam bagi meningkatkan ekonomi negara. - mks. _
Wednesday, July 1, 2009
Syiling peringatan ulang tahun ke-50 Parlimen dilancar
Syiling peringatan ulang tahun ke-50 Parlimen dilancar
KUALA LUMPUR: Tiga jenis syiling peringatan sempena sambutan Ulang Tahun Ke-50 Parlimen Malaysia dikeluarkan oleh Bank Negara Malaysia, hari ini.
Syiling itu dilancarkan Yang Dipertua Dewan Negara, Tan Sri Dr Abdul Hamid Pawanteh di bangunan Parlimen, di sini.
Tiga jenis syiling berkenaan yang terdiri daripada Syiling Peringatan Emas (pruf), Perak (pruf) dan Emas Nordic masing-masing akan dijual dengan harga RM1,200, RM150 dan RM10 sekeping.
Syiling emas dengan nilai muka RM100 diperbuat daripada logam emas dengan ketulenan 999.9 dan berat setiap keping ialah 7.96 gram. Sebanyak 100 keping syiling sahaja ditempa.
Syiling perak dengan nilai muka RM10, diperbuat daripada perak Sterling dengan ketulenan 92.5, seberat 21.00 gram sekeping. Ia ditempa pada kuantiti sebanyak 300 keping sahaja.
Syiling emas Nordic pula bernilai muka RM1 dan sebanyak 10,000 keping ditempa.
Bahagian hadapan syiling itu memaparkan bangunan Parlimen dengan tahun "1959-2009" tertera di bawahnya. Pada sisi syiling tersebut, terdapat lambang anak bulan dengan perkataan "Ulang Tahun Ke-50 Parlimen Malaysia" tertera di dalamnya.
Pada bahagian atas kanan syiling itu pula tertera bintang pecah 14 yang melambangkan 14 negeri di Malaysia termasuk Wilayah Persekutuan.
Bahagian belakang syiling pula memaparkan jata negara Malaysia serta cokmar-cokmar Dewan Rakyat dan Dewan Negara. Perkataan "Bank Negara Malaysia" dan nilai muka syiling masing-masing tertera pada bahagian atas dan bawahnya.
Syiling itu akan dijual mulai esok di ibu pejabat Bank Negara Malaysia dan cawangannya di Pulau Pinang, Johor Baharu, Kuala Terengganu, Kota Kinabalu dan Kuching.
Pada sidang media selepas itu, Abdul Hamid berkata pelancaran syiling peringatan itu merupakan salah satu daripada acara sambutan Ulang Tahun ke-50 Parlimen yang berlangsung sepanjang tahun ini.
"Acara kemuncak sambutan ini ialah jamuan malam bagi meraikan kira-kira 1,000 anggota Parlimen termasuk bekas anggotanya pada Disember depan. Sebuah filem dokumentari dan dua buku mengenai sejarah Parlimen akan turut diterbitkan tidak lama lagi," katanya. - Bernama
KUALA LUMPUR: Tiga jenis syiling peringatan sempena sambutan Ulang Tahun Ke-50 Parlimen Malaysia dikeluarkan oleh Bank Negara Malaysia, hari ini.
Syiling itu dilancarkan Yang Dipertua Dewan Negara, Tan Sri Dr Abdul Hamid Pawanteh di bangunan Parlimen, di sini.
Tiga jenis syiling berkenaan yang terdiri daripada Syiling Peringatan Emas (pruf), Perak (pruf) dan Emas Nordic masing-masing akan dijual dengan harga RM1,200, RM150 dan RM10 sekeping.
Syiling emas dengan nilai muka RM100 diperbuat daripada logam emas dengan ketulenan 999.9 dan berat setiap keping ialah 7.96 gram. Sebanyak 100 keping syiling sahaja ditempa.
Syiling perak dengan nilai muka RM10, diperbuat daripada perak Sterling dengan ketulenan 92.5, seberat 21.00 gram sekeping. Ia ditempa pada kuantiti sebanyak 300 keping sahaja.
Syiling emas Nordic pula bernilai muka RM1 dan sebanyak 10,000 keping ditempa.
Bahagian hadapan syiling itu memaparkan bangunan Parlimen dengan tahun "1959-2009" tertera di bawahnya. Pada sisi syiling tersebut, terdapat lambang anak bulan dengan perkataan "Ulang Tahun Ke-50 Parlimen Malaysia" tertera di dalamnya.
Pada bahagian atas kanan syiling itu pula tertera bintang pecah 14 yang melambangkan 14 negeri di Malaysia termasuk Wilayah Persekutuan.
Bahagian belakang syiling pula memaparkan jata negara Malaysia serta cokmar-cokmar Dewan Rakyat dan Dewan Negara. Perkataan "Bank Negara Malaysia" dan nilai muka syiling masing-masing tertera pada bahagian atas dan bawahnya.
Syiling itu akan dijual mulai esok di ibu pejabat Bank Negara Malaysia dan cawangannya di Pulau Pinang, Johor Baharu, Kuala Terengganu, Kota Kinabalu dan Kuching.
Pada sidang media selepas itu, Abdul Hamid berkata pelancaran syiling peringatan itu merupakan salah satu daripada acara sambutan Ulang Tahun ke-50 Parlimen yang berlangsung sepanjang tahun ini.
"Acara kemuncak sambutan ini ialah jamuan malam bagi meraikan kira-kira 1,000 anggota Parlimen termasuk bekas anggotanya pada Disember depan. Sebuah filem dokumentari dan dua buku mengenai sejarah Parlimen akan turut diterbitkan tidak lama lagi," katanya. - Bernama
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