Islamic finance: Redundant, costly, but emotional, religious appeal

http://blogs.hindustantimes.com/they-call-me-muslim/2012/06/17/islamic-finance-neo-con-madness-again/

 

Likes of Swamy, including me, are trying to defend principled Indian liberalism.  We have all seen what  “principled liberalism” means in a country where muslims are in a majority.  Turkey might be an exception out of 50+ such nations, but we are not prepared to take such a risk.  Being very honest here.  You should be honest too.

Next comes Islamic finance jurisprudence of a market estimated at $300-$500 billion.  Let me tell you that the cash flows are almost the same, just a little higher, as in “normal” market economic jurisprudence.  It is structured differently to cater to the sentiments of muslims worldwide.  It is actually just a little more costly because a little higher risk is associated to the cash flows.  

The current economic jurisprudence is much simpler and cheaper than Islamic jurisprudence simply because it has further evolved over one more thousand years, which is an underestimate because last 50 years has been like last 950 years alone.  Islamic finance is that far behind, but who can make muslims understand, so industry happily makes a little bit more money.

The providers in Islamic finance market are obviously banks of developed world, but subscribers are all religiously devout muslims, who unfortunately do have a biased agenda.  In fact that is why they want Islamic finance!  

Finally, when you do agree that there exists principled Indian liberalism, which includes existing financial system that is cheaper and better, and when we all realize that money has no religion as such then why do we need Islamic finance?

The last abode: Mammalian optimism and perseverence

The most pessimistic viewpoint on global economy, but not a bit unfounded.  Logic leads us there, only a mammalian optimism can hold it back.  Look at the presentation in the end. The real issue is that for 99% of population it will be a shock.  They may be pessimistic, but are unaware of the gravity of the situation.

http://www.zerohedge.com/news/big-reset-2012-and-2013-will-usher-end-scariest-presentation-ever

 

This one is equally pessimistic.

http://gainspainscapital.com/?p=1777

 

A retiring World Bank president doesn’t think differently either.

http://www.dailymail.co.uk/news/article-2153324/Markets-facing-rerun-Great-Panic-2008-Head-World-Bank-warns-Europe-heading-danger-zone-bleakest-day-global-economy-year.html

 

Look at the below article.  From last year’s report, things have deteriorated on the similar lines as predicted by most experts in the financial markets.  There has been a mini bank run in France, a significant one in Greece and a full fledged bank run is perhaps just a rumor or a jolt away in some countries in Europe.

http://www.marketwatch.com/story/sovereign-debt-spiral-seen-imperiling-europe-2011-09-23?pagenumber=1

 

And governments are helpless also (apart from the fact that they are out of ammunition) because political changes this year are many and all point to decreased global co-operation, international trade and widespread resentment.  Nothing is unrelated.  The world is silently going through a severe political turmoil at the worst time in our lifetime.

http://www.economist.com/blogs/dailychart/2012/01/leadership-elections-2012

 

After all, what some have been harping with the idea that there is indeed a limit to growth.  That is what history teaches us.  All predictions so far of the “limits to growth” have been true over last 40 years!  2011-2012 was predicted 40 years ago to be a period of severe economic decline.  From here on, if they are right, which I believe except that it might not happen as predicted, a few years here or there, we are staring at an eventful 30-40 years ahead.

https://www.commondreams.org/headline/2012/04/06-2

 

But it is our desire to survive, a mammalian optimism and human race’s perseverance, which has proved every proponent of “This time is different” wrong, is the last abode.  Hopefully we will get through this as well and flourish as we have in the known history.

http://public.wsu.edu/~taflinge/biology.html

Your performance: In response to Kaushik Basu ji’s interview

http://www.moneycontrol.com/news/economy/unrealistic-to-expect-rupee-to-touch-48-4936-kaushik-basu_708278-0.html

Kaushik Ji, A number of ideas make sense economically, but do not unfold in the expected manner.  Situations change and different variables operate, so an economist needs to unlearn, study the situation again, develop his plan and then execute.  This is a big reason that study of Economics has been an evolving science since eternity.  I can’t tell you better that a number of steps, which were considered good 50 years ago are considered bad economic practices today.  The same will be true 50 years later as well!

Your evaluation of your government lacks honesty.  Your government’s transfer schemes have become “schemes” with no “real” skill development and no infrastructure development. Your government has failed to develop any new sector for exports.  Even today we rely on textile, gems & jewelry and software services for exports.  Your government has failed to balance both current and capital accounts.  Singh Ji’s government had inherited a current account surplus but is now staring at a huge deficit.  You can blame it on people like us who burn gasoline, but wasn’t your government dreaming when it expected that times can’t change?

When your government first presented Retail FDI, it argued with “FDI needed to develop back-end infrastructure”, which we all know is a lame argument.  The back-end consists of things where an average Indian entrepreneur can invest if your policies are conducive.  For example: if electricity is available, if roads are in good shape, etc.  Moreover, there is no space technology that Walmart brings.  Today, however, you present an argument of “farmers will benefit” and “exports will have a boost”.  Can you please cite an empirical evidence where small farmers have benefitted from organized retail?  As a matter of fact, small farmers are the biggest victims of big retailers in their search for margins.  As far as exports boost is considered, why can you not explain that existing Indian retailers have failed to export anything?  Most likely, only textile will be exported, which happens even today, and everything else will be imported and “dumped” by foreign retailers.  Why?  Because we are inefficient producers due to tens of reasons that we all are aware.  And that will not change simply because Walmarts grace India with their auspicious presence.  I may not oppose FDI in retail but your reasoning unfortunately has no logical basis.

While I wish to write much, I must say that your government and its advisers, including you, have disappointed us thoroughly.  It is time that you should realize your pathetic performance yourself.  Politically you may not leave us before 2014, but please bring in some “outside” help to augment.

Hope you and your government will not disappoint any further.