It is very strange to find Khan Arif accepting authority of Quran and Hadith but denying that bank interest is Haram only in the eyes of ORTHODOX ULAMA. I have Master's degree from Tokyo University in Economics and, not in that category of ORTHODOX ULAMA, affirm that the ORTHODOX ULAMA are right in their interpretation of Bank interest as Haram.

 

It is because of this universal view of all Muslim economists (except Khan Arif) that now Islamic banking is being adopted by all major banks of America and Europe including hundreds of banks in Muslim countries including in almost all Arab countries, Bangladesh, Pakistan, Malaysia etc.  The concept of Islamic banking is in other words INTERESTLESS BANKING.  Your views, Mr. Arif  about banking, Interest and Islam are all out of date.

 

That thousnads of banks in the world are based on Interest does not prove that bank interest is something beneficial for a capitalist or any other kind of economy.

Mismanagement is of course one of the causes for Bear Stearns collapse. But it is not the only cause.  The major cause is its heavy exposure to subprime mortgage loans. These loans are all interest-based. The interest was very small in the beginning to lure American householders.  As soon as they started increasing the interest rates, after a certain period of time, according to the complicated terms of their loan contracts, which were not well-understood by the home buyers, they started to become bankrupt.  Now Bush government is taking measures to teach them to be aware of such hidden dangers for future loan applicants.  The number of bankrupcies were so huge that almost all big banks in Europe, America, and Japan had to undergo big losses, which may amount to over 400 billion dollars, according to recent authentic estimates. Sovereign funds from China, Singapore and Arab countries came to the rescue of Citigroup and ond other big-name banks. UBS and other Swiss banks also suffered huge losses.  All these banks did not suddenly started suffering from mismangement.  They all do not ascribe their losses to mismanagement, as you are trying to tell us.  Rather the suffering banks admit, openly and frankly, without any doubt or hesitation, the primary cause being the interest or riba-based subprime mortgage housing loans of American householders. Not only Bear Stearns but all these banks in the world are now suffering from the riba-based housing loans. Bin Waleed is right in pointing out one of those financial institutions that has gone under. I will point you out many more or you can daily read in the newspapers a long list of banks and financial institutions declaring their huge losses in billions of dollars at the end of their financial year due to their exposure to interest-based or riba-based housing loans.

 

My friend, BW has pointed  out only one financial institution or bank.  As a matter of fact, whole American economy is now facing unprecedented economic downturn and possible recession.  The US may no more remain a Super Power after this debacle. Noble Prize winner economist, Stiglitz has RECENTLY CALCULATED and published a book that American economy has to undergo a total of 3 trillion dollar burden due to Iraq war.  Rumsfeld, ex-Defence Secretary, had estimated it only 50 billion dollar before starting this war.  Stiglitz has also pointed out in detail in an article in the New York Times that one of the cause of the current subprime mortgage housing crisis is the huge, 3-trillion dollar, burden on the economy that emanated due to its Iraq war aggression. 

 

The cause of Fed cutting Interest rates suddenly in a very short term from 5.25% to 3% and may even cut further in a few days and for providing billions of dollars to financials institutions is all the same riba-based capitalism showoing its collape through housing mortgages. The cause of dollar falling against all world currencies and even the cause of prices of Oil, Gold, Wheat, Corn and other commodities going up constantly are all related to this riba-based capitalism.

 

How they are related to each other, or to speak the truth, how it all started due to riba-based housing loans?  The simple mechanism is as follows: Riba-based housing loans have caused immense losses to all big finanancial institutions of the world. It generated a CREDIT CRUNCH in the market.  Congress passed a 160 billion dollar package to rescue and boost the falling American economy recently.  American government is going to start giving back cash checks of $600 to singles and $1200 to married couples of small tax payers and other poor Americans.  To ease this CREDIT CRUNCH Fed had to suddenly reduce Interest rates to 3% and may reduce it even more in near future.  The Fed was reducing it little by little constantly every time a meeting of Federal Reserve Board was held since last September.  Due to constant reduction of interest rates of dollar and the prospects of further reductions in future, the charm of keeping assets in dollars started to constantly evaporate  Therefore investors started to sell their dollar bonds, other assets and stock investments in dollars, as the future prospects showed that the value of dollar will go further down and down.  So, a flight from dollar started for other currencies as Interest rates are much better in Britain, Europe, Australia and New Zealand etc. Assets in dollars were further converted and exchanged to every other thing of value available in the world markets.  Dollars were converted to other assets.  They started pouring in to buy Gold, Oil futures, Wheat, Corn and other commodity futures as well. ( In case of Corn, a little was diverted for ethanol too).  This mechanism is sufficient to explain how riba-based subprime mortage loan bankruptcies are the basic cause of all these economic upheavals not only for America but for all other parts of the world as well. Higher prices of commodities are affecting the entire world.  Japan's exports are also falling due to higher Yen and lower dollar. Same is the fate of all countries who are exporting their goods to America.

 

 

Regards,
Hussain Khan.