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2007-09-20 Britain

Bank of England makes dramatic U turn in effort to rescue credit markets

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Posted by lotp 2007-09-20 00:00|| || Front Page|| [4 views ] Top

#1 The folks over at Samizdata have some thoughts:

The ultimate culprits, as I said the other day, are the central banks and their historically low interest rates. With so much cheap liquidity, the sort of returns investors made on safe investments were peanuts and so they took greater risks for often only a slightly higher reward. We are now moving to a position where risk is more realistically priced. The Northern Rock bailout undermines that move.

As I was considering their statements, I thought of something else. As a preface, IANA economist, a financial analyst, or a CPA. I may also be just a little too focused on Islamic issues, but hear me out.

My question is this: Do shari'a-compliant monetary instruments and policies effect global financial systems? If so, how? The UK in particular (under Chancellor of the Exchequer Gordon Brown) has been working feverishly towards his stated goal of making London the "centre of Islamic Finance".

Other than providing full employment and posh London flats for the graybeard Learned Elders of Islam, what effect does shari'a impose on the global money and credit supplies?

In my unexpert opinion, Big Mo set up an economic system that is deliberately designed to fail, and fail spectacularly, making the only reliable source of income, prestige and power to be that of the spoils of war.

What say you, 'Burgers?

Posted by Seafarious">Seafarious 2007-09-20 00:50|| 2007-09-20 00:50|| Front Page Top

#2 Sea, I think that Mo did not have any concept of economics in modern sense. Although one of his wives was a businesswoman, it really did not rub off on Mo. His concept was rather simple, based on warlord framework. That reflects in the fundamentally parasitical nature of the Islamic system, as Mo is the mandated example to follow . The spoils of war can last only for a certain period, and then the Islamic society is in a decline, despite attempts, like Ottomans' especially in the midle of 19th century, to fuse western concepts with Islamic ones.

Unfortunately, sea of oil was discovered in the Gulf area, and that gave a shot to Islam for temporary revival. Hopefully, Gulf oil deposits won't last for more than 100 years, and hopefully in that time Islam will not be victorious, because that would mean a dark age for at least several centuries, as there won't be anything left to parasite upon.

Posted by twobyfour 2007-09-20 02:10|| http://www.twobyfour.info]">[http://www.twobyfour.info] 2007-09-20 02:10|| Front Page Top

#3 what effect does shari'a impose on the global money and credit supplies

Hard to say, because I don't think they've worked it out beyond the old cash-oriented policies. Modern finance is heavily dependent on things like derivatives that bundle the risk of the risk of various loans etc. Hard to see how they'd fit that in, but who knows?

Posted by lotp 2007-09-20 07:46|| 2007-09-20 07:46|| Front Page Top

#4 Modern economies are completely dependent on credit: taking out & paying back loans on interest. If the process freezes up, economies grind to a halt. Up to about 1907, freeze-ups like that were called "Panics," now they're called "Depressions."

Posted by Anguper Hupomosing9418 2007-09-20 13:06|| 2007-09-20 13:06|| Front Page Top

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