Is Islamic finance the answer?

From The BBC: Experts in Islamic finance believe their way of doing business has shielded them from the global credit crisis.

But how does it differ from conventional Western finance?

A former executive director of the International Monetary Fund, Dr Abbas Mirakhor, says wider Islamic economics relies on God’s guidance, handed down almost 1,400 years ago.

There is a “consciousness of a supreme creator and a system that he has provided”, he says.

What we know as the conventional Western way does not have that, which is “really the major difference between the two”, he adds.

In practical terms, the most significant difference is that charging interest is not allowed in Islamic finance.

FEATURES OF ISLAMIC ECONOMY
Dealing in interest, liquor, pork, gambling or pornography are prohibited under Sharia law
Islam forbids all forms of economic activity which it deems morally or socially harmful
Individuals must spend their wealth judiciously and not hoard it, keep it idle or squander it
Muslims have a duty to contribute a percentage of their wealth to deprived and poor sections of Muslim society

Neither are most forms of speculative investment permitted, such as hedging or derivatives trading. See full story HERE

Bankers Home Attacked

Here comes the summer of rage?

A warning of more attacks on UK bankers was made on Wednesday after the home of former Royal Bank of Scotland boss Fred Goodwin was vandalized.

Windows were smashed in Goodwin’s house in the Scottish capital Edinburgh and those of a Mercedes-Benz limousine parked outside.

It is not known if anyone was at home at the time. Goodwin — dubbed “Fred the Shred” by the media for his ruthless cost-cutting — and his family have not been living in the house since it was revealed that the 50-year-old Goodwin was receiving an annual pension of $1 million (£700,000) for life.

A statement issued to media organizations including the Press Association after the attack said: “We are angry that rich people, like him, are paying themselves a huge amount of money and living in luxury, while ordinary people are made unemployed, destitute and homeless.

“Bank bosses should be jailed. This is just the beginning.”

No group was named in the message and it did not explicitly claim responsibility for the attack.

Goodwin took early retirement after RBS nearly collapsed amid the economic crisis and was later part-nationalized.

On the same day as the size of his pension was revealed RBS announced a UK record loss of $34.6 billion (£24.1 billion) for 2008.

Politicians and commentators have expressed fury about the deal and excessive bonuses being given by bailed-out banks. See more from CNN HERE

The FDIC did not collect insurance from US baks for the LAST 10 YEARS!

I really don’t know how much more of this I can take.

The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006.

The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized – and that bank failures were so infrequent – that there was no need to collect the premiums for a decade, according to banking officials and analysts. See story from BOSTON.COM HERE

Bomb Explodes at Citibank Branch in Greece

How long before we see more of these kinds of actions worldwide?

A bomb exploded outside a Citibank branch in Athens early Monday causing damage but no injury.

A police statement said the bomb went off at 3 a.m. local time (0100 GMT) Monday in the Nea Ionia district of the capital. The device had been planted behind the two-story bank building, which suffered moderate damage.

There was no claim of responsibility for the attack, and police said they had received no warning call.

Police said the bomb was detonated from very close to the blast site, with the use of electric cables. A police spokeswoman said the attackers used “a medium-sized improvised device,” and the damage to the building was not severe. She was speaking on customary condition of anonymity.

The target of the attack pointed to Greek far-left militant groups, which have become increasingly aggressive following the police shooting of a 15-year-old boy in December — an incident that sparked the country’s worst riots in decades. See full article HERE

Morgan Stanley predicts downturn will be worse than the Depression.

worse than the Depression.
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Some bleak predictions from Morgan Stanley this morning including the forecast that UK profits could fall by 60% in the current downturn – a worse performance than the great depression of the 1930s. See full article from The Guardian HERE

Ukraine facing a run on the banks?

Is the Ukraine about to face a run on the Banks? From the Financial Times:

Olexander Pavlenko, a young computer programmer, is one of tens of thousands of Ukrainians who cannot get their money out of the bank.

He stood in line in Kiev at Nadra Bank and Ukrprombank, two big troubled banks, planning to withdraw more than $10,000 (€7,950, £7,125). But like many others, he was told the cash was not available.

“I stood in line a couple times with other bank clients who were protesting, crying and screaming. But the bank told me: ‘Sorry, we simply don’t have the money now and can’t help you.’”

With about nine banks now under the central bank’s special control, Ukrainians are increasingly worried.
See story HERE

‘There will be blood’

Harvard economic historian Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession’ ends. See interview at The Globe and Mail HERE

European Banks may need 16.3 TRILLION bailout !!!

Over at The Daily Kos a diary on what may be impending doom for Europe. If a 16.3 TRILLION bailout is needed, they will get that money by printing it and you know what that means: See full story HERE

The Banks just can’t stop stealing your money

For hundreds of thousands of workers losing their jobs during the recession, there’s a new twist to their financial pain: Even as they’re collecting unemployment benefits, they’re paying bank fees just to get access to their money.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what’s on the card.

“It’s a racket. It’s a scam,” said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals. See story from Foxnews HERE

Will CITIBANK and BANK OF AMERICA die within a few months?

From Charting Stocks:

If there’s one thing our readers know, it’s that ChartingStocks.net has made some bold calls in the past which seemed controversial and highly unlikely at the time. Our January 2007 post warned of the coming stock market crash at a time when the market was making new all time highs. In February 2007 we warned about the breakdown of the brokerage stocks and singled out Bear Stearns (Trading at $160), Merrill Lynch (Trading at $87), and Morgan Stanley (Trading at 78). In September 2007, we warned of a selloff in the coming weeks. The market peak and decline began 4 weeks later.

We’re going to make another bold prediction. Bank of America and Citigroup won’t live to see May. The two banks will be nationalized in the coming weeks, and we think that the announcement can come as soon as tomorrow evening (Friday evenings are when major bank announcements and failures occur).See story HERE

Failure to save East Europe will lead to worldwide meltdown

From Ambrose Evans-Pritchard at The Telegragh:

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria’s finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria’s GDP.

“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a “monetary Stalingrad” in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany’s Peer Steinbrück. Not our problem, he said. We’ll see about that.

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut. See the rest of the story HERE

Are US, UK, Eurozone Banks Insolvent?

US, UK, Eurozone Banks Face Collapse: Global Banking System Insolvent. Will Eastern Europe drag the rest of down into the abyss? See HERE

Large U.S. banks on brink of insolvency, experts say

From The Herald Tribune: Some of the large banks in the United States, according to economists and other finance experts, are like dead men walking.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent.

Let banks fail, says Nobel economist Joseph Stiglitz

If you somehow think that the governments of the world can somehow continue give the banks money, your money, and things will one day be ok again, then you are wrong. The only way to “fix” the crisis is to stop trying to fix it and let the criminal, aka the banks, go down.

“The Government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist.

Professor Stiglitz, the former chair of the White House Council of Economic Advisers, told The Daily Telegraph that Britain should let the banks default on their vast foreign operations and start afresh with new set of healthy banks.

“The UK has been hit hard because the banks took on enormously large liabilities in foreign currencies. Should the British taxpayers have to lower their standard of living for 20 years to pay off mistakes that benefited a small elite?” he said.

“There is an argument for letting the banks go bust. It may cause turmoil but it will be a cheaper way to deal with this in the end. The British Parliament never offered a blanket guarantee for all liabilities and derivative positions of these banks,” he said. See more HERE

Why The Bank Bailouts are doomed. PLUS banks sought Foreign workers AND more banks failed last week

Will the banking bailouts fail? Of course they will. I believe that If you give money to someone who has just robbed you, chances are they will not “stop” being and thief, and will probably just continue to steal from you over and over again until you got nothing left to give him.

‘It’s tempting to believe that more money will fix the messes of our financial institutions. But simple math tells us the system is insolvent, and the solutions are unpalatable.” See WHY THE BANK BAILOUT WILL FAIL

And their is investigation into why the Banks in the USA, while in the start of the crisis and sky-rocketing unemployment, hired workers from overseas for jobs that could have easily been filled by American workers. See

And more banks in the US have failed this past week, the busiest week in bank closures since 2006, in Maryland, Florida and Utah. See HEREHERE

Britain is Facing a 3 Day Work Week

With word this past week that according to some economist, Britain is in a depression NOT a recession, comes the news that back in back in October last year there was an almost run on the banks and complets collapse of the banking system after ‘major depositors’ attempted to withdraw their money en masse.

Then we have news this week that Britain is facing a scale back to the 3 day work week. Yes, things are so bad that
a 3 day work week would be the better option over the massive unemployment that is expected as the crisis worsens by the day.

“Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat. But as the country comes to terms with the reality of a recession, it emerged that the Government is looking at compensating employees, through their firms – thereby drawing comparisons with the shutdowns of the 1970s.

While the move would safeguard jobs, it would mean that the financial crisis is on a much larger scale, further undermining confidence in the economy with the suggestion of Britain grinding to a halt” See HERE

Big Problems in Spain, Australia and well, just about everywhere….

SPAIN: On Monday Spain lost its triple A sovereign credit rating from Standard & Poor’s when the rating agency downgraded the country’s long-term debt because of its deteriorating public finances. S&P lowered its rating to double A plus from triple A, arguing that the global economic crisis had highlighted “structural weaknesses” in the Spanish economy. Also Unemployment, buy some estimates was forecast to rise to 20 or perhaps 25%. And Thousands of people demonstrated in Zaragoza on Sunday against unemployment. Some 35,000 took part in the city which has been hit by the crisis in companies such as General Motors. The slogan of the marchers was ‘Facing the Crisis, Employment and Social Protection’.

AUSTRALIA: Australia’s budget is “buggered”, the nation’s economic boom will “unwind scarily fast” and the outlook for the next year is “ugly”, a leading economic forecaster has warned. See story HERE

Also, major problems in Brazil, Germany and Canada. SeeHERE

I think this week will be one to remember….

The Bank Of Scotland lost 69% today and almost turns the UK into Iceland

Yes its going to be a BAD week. Today RBS went down 69%.
The bank failed again, and the taxpayers will have to pay for it AGAIN. And do you know what will happen next? RBS will fail again, just like many other banks, and you will have to bail them out AGAIN. And in 5 years, if you are lucky enough to HAVE a job, you will be working 60 or 70 hours a week, while having a MUCH lower standard of living.

More on the RBS near collapse HERE

You didn’t think that Madoff was the only thief now did you?

Jan. 2 (Bloomberg) — U.S. regulators working to untangle Bernard Madoff’s alleged $50 billion Ponzi scheme are probing other money managers suspected of using similar tactics, two people with knowledge of the inquiries said. Madoff just the tip of the Iceberg

Savers facing accounts with no interest

Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history. Savers facing accounts with no interest

2nd Bailout for British Banks is Needed

The 37 Billion of taxpayers money hasn’t done anything to help the banking crisis, and so they want more money, more money and more money. And more money. And also another base rate cut. On brink of second bailout for banks

US Man tried to blow 4 banks

A man in Aspen Colorado killed himself after attempting to rob and blow-up 4 banks. According to a letter that he wrote, it seems that a combination of the economic crisis, George Bush and his foreign policy and his dissatisfaction with urban progress in Aspen area led to his plans. And yes we will see more of this in 2009. Bank Bomber

US Bank Robberies up 50% in some cities

Some cities such as Los Angeles have reported a 50% increase in bank robberies in 2008, All other cities have seen sharp increase as well, and the economy is the likely reason according to Bank Of America analysts. I suspect that you will see those numbers double or worse in 2009. Bank Robberies Up

List of banks that are in trouble

A list the bankers don’t want you to see: a list of banks that may fail. Go here…Failing Banks