Derivatives Go Shariah
They said it would never happen. The Shariah scholars said that derivatives were inherently “unislamic” and had no place in Shariah-Compliant Finance. Well, we guess “the truth changed.” Financial Times has an article explaining how derivatives are creeping their way into Shariah Finance. No doubt, greed played a prominent role in this transformation… The release […]
A few years ago, Dubai World floated an Islamic bond (Sukuk) to acquire the British port company P&O. The results of that acquisition and the methodology became part of the subsequent default and bailout of Dubai World’s sukuk portfolio. What the article linked below alludes to without coming right out and saying it, is the […]
A Shameless, Shallow Advertorial for Shariah Finance from Oxford Analytica and Forbes.com
Malcom Forbes must be spinning in his grave. His namesake publication’s web site has published an article which basically promotes a financial and economic system which by its very nature seeks to replace capitalism and our free enterprise system: http://www.forbes.com/2009/12/10/islamic-finance-after-dubai-business-oxford-analytica-islamic-finance.html?feed=rss_business In fact, the article reads less like journalism and more like a press release from […]
Warren Buffet once called financial derivatives “financial weapons of mass destruction.” He also said he did not invest in them because he never invested in anything he did not understand and he didn’t think that ANYONE fully understood derivatives. Former Fed Chairman Alan Greenspan also admitted that he did not fully understand the derivatives markets. […]
From time to time we have reported on Islamic bonds, properly known as “sukuk.” These are convoluted instruments created by the Shariah finance community to get around prohibitions against interest. They are controversial even in Islamic circles, especially since major Shariah authority Mufti Taqi Usmani issued a fatwa declaring most of them “unislamic” over a […]
Throughout the financial crisis, promoters of Shariah-Compliant Finance insisted that their products were superior because they did not allow the securitization of debt, such as happened with subprime mortgages. What a difference a few months makes. Now that Shariah finance has been shown to be vulnerable to the economic downturn just like everyone else and […]
Shariah-Compliance may create MORE risk
For months now we have been hearing how Shariah-Compliance provides an insulation against the effects of the financial crisis, specifically the subprime mortgage debacle. The argument states that the prohibition against interest and the requirements for asset-based transactions would prevent the securitization of mortgages to begin with and prohibit investments in such instruments. Of course, […]
Credit Derivatives – a powerful investment tool Web posted at: 9/22/2008 0:33:37 Source ::: The Peninsula www.pensionriskmatters.com By Daniel Ashri, Associate Director, Capital Markets, Arqaam Capital Since the second half of 2007, the global business community has been shaken by a series of crises that resulted in many companies suffering negative returns until […]
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