Financial FailuresFinancial Failures
Issue to be discussedIssue to be discussed
Financial Failure a reality
Exploring reasons
Interest
Taxation
Ethics
Es...
Financial failuresFinancial failures
The great depress & stock market
crash
The recent financial meltdown in
Europe & US...
Possible reasons givenPossible reasons given
Cyclical
Market correction & Arbitrage Theory
The ugly beauty of Free mark...
A deeper analysisA deeper analysis
Exploited by greedy capitalist
Geared to the advantage of the capitalist powers
The ...
The choice ?The choice ?
To succeed or fail?
To play with the lives of million on the basis of trail and
error?
Is the ...
Analysing the building block ofAnalysing the building block of
corporate financecorporate finance
Interest is the basis o...
What the Qur’an DECLARES (2:275):What the Qur’an DECLARES (2:275):
Those who eat Ribâ (usury) will not stand (on the Day o...
Soorah Al-Baqarah Ayah # 276:Soorah Al-Baqarah Ayah # 276:
Allâh will destroy Ribâ (usury)
and will give increase for Sada...
Soorah Al-Baqarah Ayah # 277:Soorah Al-Baqarah Ayah # 277:
1. Truly those who believe,
2. and do deeds of righteousness,
3...
Soorah Al-Baqarah Ayah # 278:Soorah Al-Baqarah Ayah # 278:
O you who believe!
Be afraid of Allâh
and give up what remains
...
Soorah Al-Baqarah Ayah # 279:Soorah Al-Baqarah Ayah # 279:
And if you do not do it,
then take a notice of war from
Allâh a...
Soorah Al-Baqarah Ayah # 280:Soorah Al-Baqarah Ayah # 280:
And if the debtor is in straitened
circumstances,
then (let the...
Soorah Al-Baqarah Ayah # 281:Soorah Al-Baqarah Ayah # 281:
And be afraid of the Day when
you shall be brought back to
Allâ...
Ahadeeth on RIBA:Ahadeeth on RIBA:
Jabir (r) narrates that the prophet (s) cursed the
receiver and the payer of riba, the ...
Is RIBA Haram in IslamIs RIBA Haram in Islam
It is a serious kabair; if not left in hell-
fire forever
It is clearly har...
Views on RIBA/INTERESTViews on RIBA/INTEREST
Plato disliked it – “Anti-human”
Aristotle condemned it
Early Roman Empire...
Federal Shariat Court-Contrary to IslamFederal Shariat Court-Contrary to Islam
Government Savings Banks Act 1873
The Int...
Federal Shariat Court-Contrary to IslamFederal Shariat Court-Contrary to Islam
The West Pakistan Money Lenders Ordinance,...
Consequence of RIBA in the HereafterConsequence of RIBA in the Hereafter
Barzakh: drowning in a pool of blood;
being fed ...
Definition of RIBADefinition of RIBA
Is a Arabic word with means “extra”.
Any amount over and above the principle
amount...
RIBA in a controlled environmentRIBA in a controlled environment
Independent in 1948
Very simple life; no complications
...
5 simple people – use barter system5 simple people – use barter system
Sajid Fish
Abid Wood
Nasir Fruits
Furqan Salt
...
Loaned money : solution to problem!Loaned money : solution to problem!
One blessed day, Uncle Yahoodi, arrives with
the a...
Loan taken – is this fair (halal) ?Loan taken – is this fair (halal) ?
Name Principle Interest
Sajid 1000 + 100
Abid 100...
RIBA ExposedRIBA Exposed – impossible to return – does not exist!– impossible to return – does not exist!
Loan taken = 5,...
Returning RIBAReturning RIBA
Trying to do the impossible
Every Haram has its price !
In order to achieve the impossible...
Negative consequence of InterestNegative consequence of Interest
Inflation (in the long term hyper-inflation/sprilling)
...
Our progress after 60 years of Riba!Our progress after 60 years of Riba!
5 simple people sit to think5 simple people sit to think
Uncle Yahoodi came to help us ?
AID should be forgiven !
To hel...
Recent history of bankingRecent history of banking
Jews, were jewelers & goldsmiths
People would keep their valuable, in...
They began to print NOTES!They began to print NOTES!
If they had gold worth € 100, they could
easily print and distribute...
At the national levelAt the national level
They gave their allegiance to the king of the
area.
Promised to finance the “...
Proof of Jewish instigated warsProof of Jewish instigated wars
Napolean Bonaparte:
The Jews provide troops for my campaign...
Proof of Jewish instigated warsProof of Jewish instigated wars
Winston Churchill, UK Prime Minister:
This movement among t...
Proof of Jewish instigated warsProof of Jewish instigated wars
Henry Ford, 20th
Century U$ Tycoon:
Get hold of 50 of the w...
Proof of Jewish instigated warsProof of Jewish instigated wars
The Bank of England was established in
1694 to help King Wi...
Who is authorized to print money ?Who is authorized to print money ?
Another issue of interest!Another issue of interest!
The Prophet (p) said:
“Even if riba is much,
it will end up being a s...
The stock market in practiceThe stock market in practice
The stock market operates very differently in practice!
There are...
Example of RibaExample of Riba
Listing of banks & interest based financial
institution
Solution: Don’t deal with them!
Changes in stock price – more than profit/lossChanges in stock price – more than profit/loss
Expectations & rumors
Futur...
KSE-Controlled by big fish ?KSE-Controlled by big fish ?
The “big fish” (BF) toy with KSE
AKD
Jahangir Sadiqque
Arif Ha...
The stock market gameThe stock market game
Month KSE Siemens Activity
Jan 2006 8,000 1,000 BF begin game
Feb 2006 9,000 1,...
Intention of buyingIntention of buying
Not buying because of the profitability of companies
Only because the market is g...
Big Fish expert planning & controlBig Fish expert planning & control
Month KSE Siemens Activity
August 2006 16,000 2,000 S...
The stock market game PROOF -yearlyThe stock market game PROOF -yearly
The Stock market – daily gameThe Stock market – daily game
Other reasonsOther reasons
Ethics
Tax & tax evasion
Concept of civilization flawed
Ends justify the means
Stuck in th...
Ethics & moralityEthics & morality
It has been narrated in a hadith of the Prophet (s):
Verily, I have been sent to perfec...
Western concept of civilization flawed-Western concept of civilization flawed-
international brotherhood!international bro...
Lasting impact of Ahadeeth, unparalled in historyLasting impact of Ahadeeth, unparalled in history
The Messenger of All h,...
What is the future ofWhat is the future of
interest ?interest ?
Should Interest based loans be usedShould Interest based loans be used
for national development ?for national development ...
Which is a greater sin:Which is a greater sin:
Pig farming or Interest based banking ?Pig farming or Interest based bankin...
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Financial Failures

  1. 1. Financial FailuresFinancial Failures
  2. 2. Issue to be discussedIssue to be discussed Financial Failure a reality Exploring reasons Interest Taxation Ethics Established norms & practices The future
  3. 3. Financial failuresFinancial failures The great depress & stock market crash The recent financial meltdown in Europe & USA WHY ?
  4. 4. Possible reasons givenPossible reasons given Cyclical Market correction & Arbitrage Theory The ugly beauty of Free market Are these acceptable ? Or are there other important factors that are missing!
  5. 5. A deeper analysisA deeper analysis Exploited by greedy capitalist Geared to the advantage of the capitalist powers The bigger fish eats the smaller fish In practice the stock market works quite differently that theorized Ethics are over-stretched Creates a hollow market – the bubble! The underlying fundamentals need evaluation!
  6. 6. The choice ?The choice ? To succeed or fail? To play with the lives of million on the basis of trail and error? Is the current system the outcome of the wisest men, or should the system of the Wisest be acceptable ? To succeed or fail ?
  7. 7. Analysing the building block ofAnalysing the building block of corporate financecorporate finance Interest is the basis of finance Is it justifiable ? Are there problems associate with it ? What is the fundamental problem ? Global warning for interest !
  8. 8. What the Qur’an DECLARES (2:275):What the Qur’an DECLARES (2:275): Those who eat Ribâ (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitân (Satan) leading him to insanity. That is because they say: "Trading is only like Ribâ (usury)," whereas Allâh has permitted trading and forbidden Ribâ. So whosoever receives an admonition from his Lord & stops eating Ribâ (usury) shall not be punished for the past; his case is for Allâh (to judge); but whoever returns (to Ribâ), such are the dwellers of the Fire – they will abide therein forever.
  9. 9. Soorah Al-Baqarah Ayah # 276:Soorah Al-Baqarah Ayah # 276: Allâh will destroy Ribâ (usury) and will give increase for Sadaqât (deeds of charity, alms, etc.) And Allâh likes not the disbelievers, sinners. RIBA will be DESTROYED !!!!!!
  10. 10. Soorah Al-Baqarah Ayah # 277:Soorah Al-Baqarah Ayah # 277: 1. Truly those who believe, 2. and do deeds of righteousness, 3. and perform As-Salât, 4. and give Zakât, they will have their reward with their Lord.  On them shall be no fear,  nor shall they grieve.
  11. 11. Soorah Al-Baqarah Ayah # 278:Soorah Al-Baqarah Ayah # 278: O you who believe! Be afraid of Allâh and give up what remains (due to you) from Ribâ (from now onward), if you are (really) believers. MUST give up riba!
  12. 12. Soorah Al-Baqarah Ayah # 279:Soorah Al-Baqarah Ayah # 279: And if you do not do it, then take a notice of war from Allâh and His Messenger; but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).
  13. 13. Soorah Al-Baqarah Ayah # 280:Soorah Al-Baqarah Ayah # 280: And if the debtor is in straitened circumstances, then (let there be) postponement to (the time of) ease; and that ye remit the debt as almsgiving would be better for you if ye did but know.
  14. 14. Soorah Al-Baqarah Ayah # 281:Soorah Al-Baqarah Ayah # 281: And be afraid of the Day when you shall be brought back to Allâh. Then every person shall be paid what he earned, and they shall not be dealt with unjustly.
  15. 15. Ahadeeth on RIBA:Ahadeeth on RIBA: Jabir (r) narrates that the prophet (s) cursed the receiver and the payer of riba, the one who records it and the 2 witnesses to the transaction and said: “They are all alike” (Tirmidhi) Abu Hurairah (r) narrates that the prophet (s) said: On the night of Ascension I came upon people whose stomachs were like houses with snakes visible from the outside. I asked Gibril who they were. He replied that they were people who had received riba.” (Musnad Ahmed) Abu Hurairah (r) narrates that the prophet (s) said: There will certainly come a time for humanity when everyone will take riba and if he does not do so, its dust will reach him (Abu Dawoud)
  16. 16. Is RIBA Haram in IslamIs RIBA Haram in Islam It is a serious kabair; if not left in hell- fire forever It is clearly haram in Qur’an & hadith There is absolutely no difference amongst the Fuqahah on Riba It is a sin in Judaism & Christianity It is not considered a good practice in Hinduism, Buddhism, or Maoism
  17. 17. Views on RIBA/INTERESTViews on RIBA/INTEREST Plato disliked it – “Anti-human” Aristotle condemned it Early Roman Empire prohibited it ! Lex Genucia of Rome – Illegal (340BC) Federal Shariat Court – Anti Islamic
  18. 18. Federal Shariat Court-Contrary to IslamFederal Shariat Court-Contrary to Islam Government Savings Banks Act 1873 The Interest Act 1839 The Code of Civil Procedure, 1908 The Co-operative Societies Rules, 1927 The Negotiable Instruments Act, 1881 The Land Acquisition Act, 1894 The State Bank of Pakistan Act, 1956 The Insurance Act, 1938 The West Pakistan Money Lenders Rules, 1960 The Co-Operative Societies Act, 1925 (Banking & Finance (For BCom, Part 1), Prof M Amin Khalid, Karachi 2002)
  19. 19. Federal Shariat Court-Contrary to IslamFederal Shariat Court-Contrary to Islam The West Pakistan Money Lenders Ordinance, 1960 The NWFP Money Lenders Ordinance, 1960 The Punjab Money Lenders Ordinance, 1960 The Sindh Money Lenders Ordinance, 1960 The Banking Companies Ordinance, 1962 The Baluhistan Money Lenders Ordinance, 1960 The Banking Companies (Recovery of Loans) Ordinance, 1979 The Agriculture Development Bank Rules, 1961 The Banking Companies Rules, 1962 The Banks (Nationalization) Payment of Compensation Rules, 1974
  20. 20. Consequence of RIBA in the HereafterConsequence of RIBA in the Hereafter Barzakh: drowning in a pool of blood; being fed thrown rock until Qimiyah; Stomaches filled with snakes; In hell-fire forever; The Wrath of Allah & His Prophet forever Cannot stand, beaten by worst enemy – Shaitan; in a state of maddness
  21. 21. Definition of RIBADefinition of RIBA Is a Arabic word with means “extra”. Any amount over and above the principle amount is RIBA. Late/penalty fees is also RIBA. What is the fundamental problem with RIBA ?
  22. 22. RIBA in a controlled environmentRIBA in a controlled environment Independent in 1948 Very simple life; no complications Following a barter system In the case study, all other economic variable have been removed
  23. 23. 5 simple people – use barter system5 simple people – use barter system Sajid Fish Abid Wood Nasir Fruits Furqan Salt Salman Entertainer Not always happy, but cooperate together in barter system. Each feels he is cheated, would like to change the system ?
  24. 24. Loaned money : solution to problem!Loaned money : solution to problem! One blessed day, Uncle Yahoodi, arrives with the answer to their problem. Loaned money, as aid, minimum interest; for the development of the society Uncle Yahoodi ready of help out these people;
  25. 25. Loan taken – is this fair (halal) ?Loan taken – is this fair (halal) ? Name Principle Interest Sajid 1000 + 100 Abid 1000 + 100 Nasir 1000 + 100 Furqan 1000 + 100 Salman 1000 + 100 ========================= Total amount given 5,000 Thus total money supply 5000 ONLY Is there any problem in the above transaction?
  26. 26. RIBA ExposedRIBA Exposed – impossible to return – does not exist!– impossible to return – does not exist! Loan taken = 5,000 Thus, total money supply 5,000 How will they return 5,500! The Riba amount 500 – EXTRA does NOT exist RIBA impossible to return ->ZULM=HARAM
  27. 27. Returning RIBAReturning RIBA Trying to do the impossible Every Haram has its price ! In order to achieve the impossible, the whole society will be affected negatively!
  28. 28. Negative consequence of InterestNegative consequence of Interest Inflation (in the long term hyper-inflation/sprilling) Short money supply Currency devalued Unemployment (stagflation),stressful working conditions Cheating and fraud Deteriorating quality of good & services Organized crime, supported by influential people Foreigners dictating policy Politically divided Foreigners acquiring national assets Foreigner instructing to disable national security Lawlessness, helplessness Rampant corruption Effectively a failed state WAR! Interest + inflation = sprilling inflation => Hyper inflation=ACHEIVED
  29. 29. Our progress after 60 years of Riba!Our progress after 60 years of Riba!
  30. 30. 5 simple people sit to think5 simple people sit to think Uncle Yahoodi came to help us ? AID should be forgiven ! To help us, Uncle Yahoodi gave us 5000. So we should return 5000! Uncle Yahoodi gave us worthless paper, in exchange he took over our country! Why did we accept his money on his terms? Why didn’t we buy gold ? Extremely Profitable Business Transaction
  31. 31. Recent history of bankingRecent history of banking Jews, were jewelers & goldsmiths People would keep their valuable, in their vault, in return for service charge and a promissory note. It was noticed that only 1 in 20 people returned for their valuable. 95% did not return! Their promissory note was been circulated in the whole town, because of the ease of use.
  32. 32. They began to print NOTES!They began to print NOTES! If they had gold worth € 100, they could easily print and distribute € 2000 worth! They gave loans They bought real assets: property, building, farms, horses, gold mines! They began to keep mini armies! In the town they became Lords!
  33. 33. At the national levelAt the national level They gave their allegiance to the king of the area. Promised to finance the “war” In return only they would be allowed to legally print money in the country. Whenever the king needed money, they would freely give, in return for assets of the kingdom. New kings became slaves in their hands!
  34. 34. Proof of Jewish instigated warsProof of Jewish instigated wars Napolean Bonaparte: The Jews provide troops for my campaign in Poland, but they ought to reimburse me…They are a state within the state. The Jews are master robbers of the modern age; they are the carrion birds of humanity … (Speeches before the Council of State May 7th , 1806, Book: “Antizion” by William Grimstard)
  35. 35. Proof of Jewish instigated warsProof of Jewish instigated wars Winston Churchill, UK Prime Minister: This movement among the Jews in not new. This worldwide conspiracy for the overthrow of civilization and for the predominance of Jews is even more astounding. The same evil prominence was obtained in the brief period of terror … (Illustrated Sunday Herald, London, February 8, 1920)
  36. 36. Proof of Jewish instigated warsProof of Jewish instigated wars Henry Ford, 20th Century U$ Tycoon: Get hold of 50 of the wealthiest Jewish financiers, the men who are interested in making wars for their own profit. Control them, and you will put an end to it all. (Cleveland News, September 20, 1923)
  37. 37. Proof of Jewish instigated warsProof of Jewish instigated wars The Bank of England was established in 1694 to help King William III out his government’s financial crisis! (Banking & Finance, Bcom Part 2, Prof Amin Khalid, Karach, 2002) What crisis ?
  38. 38. Who is authorized to print money ?Who is authorized to print money ?
  39. 39. Another issue of interest!Another issue of interest! The Prophet (p) said: “Even if riba is much, it will end up being a small amount.” (Reported by al-Haakim (in Mustradak), # 2/37; see also Saheeh al-Jaami’, # 3542).
  40. 40. The stock market in practiceThe stock market in practice The stock market operates very differently in practice! There are elements of: Gharar (uncertainty) Maisir (gambling), betting, speculation Riba (interest) Qimar (one parties loss is another’s gain) Kazab (lying, and misleading)
  41. 41. Example of RibaExample of Riba Listing of banks & interest based financial institution Solution: Don’t deal with them!
  42. 42. Changes in stock price – more than profit/lossChanges in stock price – more than profit/loss Expectations & rumors Future expectations more important than current realities Big investors have great influence & control News P/E value plays a major role – generally over inflated valuation A company may earn a profit, and the price may go down!  Expectation & speculation
  43. 43. KSE-Controlled by big fish ?KSE-Controlled by big fish ? The “big fish” (BF) toy with KSE AKD Jahangir Sadiqque Arif Habib
  44. 44. The stock market gameThe stock market game Month KSE Siemens Activity Jan 2006 8,000 1,000 BF begin game Feb 2006 9,000 1,100 Buying March 2006 10,000 1,200 Buying April 2006 11,000 1,400 Buying May 2006 12,000 1,500 Buying June 2006 13,000 1,700 Selling July 2006 14,000 1,800 Selling August 2006 16,000 2,000 Selling No more momentum, and the market begin to decline! Now it’s a BEAR market! Price increase is not because of company profitability!
  45. 45. Intention of buyingIntention of buying Not buying because of the profitability of companies Only because the market is going up & up-speculation (bull) The analysts of the Big Fish cautiously create a fervor, & mislead the Small Fish – (Engineering QIMAR!!!) Gambler’s instinct at work! The Big Fish make their money, at the expense of the Smaller Fish – Qimar The Big Fish safely exit the market, at the expense of the Small Fish (bursting of bubble – market crash !) Those trading on margin are wiped out ! Qimar,Maisir, Kazab, Riba & Gharar ALL present in practice!
  46. 46. Big Fish expert planning & controlBig Fish expert planning & control Month KSE Siemens Activity August 2006 16,000 2,000 Selling futures options Sept 2006 14,000 1,800 Selling futures options Oct 2006 12,000 1,600 Selling future options Nov 2006 10,000 1,400 Selling future options Dec 2006 8,000 1,200 Selling future options Jan 2007 7,500 1,100 Buying Feb 2007 7,000 1,000 Buying March 2007 6,500 900 Buying The Big fish eat all the small fish, & are preparing for round 2! Now it’s a BULL market!
  47. 47. The stock market game PROOF -yearlyThe stock market game PROOF -yearly
  48. 48. The Stock market – daily gameThe Stock market – daily game
  49. 49. Other reasonsOther reasons Ethics Tax & tax evasion Concept of civilization flawed Ends justify the means Stuck in the financial web ?
  50. 50. Ethics & moralityEthics & morality It has been narrated in a hadith of the Prophet (s): Verily, I have been sent to perfect morals. He (p) was asked: "What is the religion?" He (p) replied: "The religion is morality." When asked, "What is woe (or affliction)?" He replied, "Real affliction is lack of morality." Nothing that will be weighed on the Day of Judgement will weigh heavier than moral action. [Abu Da’ud and Tirmidhi] The Prophet (s) said: Verily truth will lead to goodness and goodness will lead to heaven. A person who develops a habit of honesty will be accepted by Allah as an honest person. But lying leads to evil, and evil leads to the Hellfire. A person who lies until dishonesty becomes habitual will be written off by Allah as a liar.
  51. 51. Western concept of civilization flawed-Western concept of civilization flawed- international brotherhood!international brotherhood! The Messenger of All h, peace and blessings of All h be on him, saidā ā "A Muslim is the brother of a Muslim; he does him no injustice, nor does he leave him alone (to be the victim of another's injustice); and whoever does the needful for his brother, All h does the needfulā for him; and whoever removes the distress of a Muslim, All h removes from him a distress out of the distresses of the day ofā resurrection; and whoever covers (the fault of) a Muslim, All h will cover his sinsā on the day of resurrection." (Sahih Bukhari, Book 46, Hadith #3)
  52. 52. Lasting impact of Ahadeeth, unparalled in historyLasting impact of Ahadeeth, unparalled in history The Messenger of All h, peace and blessings of All h be on him, said:ā ā "Do not hate one another and do not be jealous of one another and do not boycott one another, and be servants of All h (as) brethren;ā and it is not lawful for a Muslim that he should sever his relations with his brother for more than three days." (Sahih Bukhari, Book 78, nathid #57)
  53. 53. What is the future ofWhat is the future of interest ?interest ?
  54. 54. Should Interest based loans be usedShould Interest based loans be used for national development ?for national development ? Building of Dams ? Building of bridges, roads, infrastructure ? To acquire technology ? For Educational programs ? To promote Pakistan ? To spread Islam ?
  55. 55. Which is a greater sin:Which is a greater sin: Pig farming or Interest based banking ?Pig farming or Interest based banking ? However, there is hardly any pig farm in Pakistan! No export of pig or its products ! Yet, abundant branches of interest based banks scattered throughout the country !

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