Quote of the week:
'In theory there is no difference between theory and practice. In practice there is.' - Yogi Berra. (Hat-tip to Ms. Imtiaz)
Commentary of the week:
As you know, we presented a seminar on our ideas about Islamic Finance to the community at the TARIC masjid this past weekend. It was well attended by lots of men (alas, the sisters don't want to know about money even though they control most of it), who came armed with excellent questions and strong views on the subject. I have received many feedback forms which are full of praise for my good self (that is the official story and I am sticking with it) but they seem to fall into two camps. This divergence is worth analyzing a bit deeply because I think it speaks volumes about human nature. The respective camps are:
1. The Seminar was great. We loved that it was educational, interactive and had nothing to do with products and sales. It made us think, which God knows we don't do enough of.
2. The Seminar was terrible. We already know all we need to know about the idea of Islamic Finance, we want to know about Halal products that we can use right now. We mean NOW. Did we say NOW?
And there you have it - the community has philosophers and it has practical, action-oriented people (credit to our good Sr. Pappano for this insight). The first camp thrives in the world of ideas. The second flourishes in a structured, predictable action-oriented environment. To me the question is not who is right (obviously only I am right), but which section of the community is more dangerous? This is not as simple a question as it sounds, so let me explain a bit.
Like any other industry, Islamic Finance is subject to the whims of Supply and Demand. There is a growing Muslim population (some people say too quickly growing but we will leave that aside for now) and an even larger population of people interested in Ethical Finance. Voices from section 2 (the practical people) demand that their 'needs' (which somehow are the same as everyone else's commercial needs) be met in an Islamic manner. Then others from section 2 also, decide to do something about it and create products and services to Supply the needs of the people who demanded Islamic solutions. Before you know it, thanks to people from section 2, Muslims across the world are demanding Islamic Financial services and the type 2's are in business big-time. But in their rush to produce a new reality and choices for themselves, what have the type 2's really done?
In my opinion (and lots of people tell me I am wrong J), while we have a huge Islamic Finance industry, we have much less Islamic Finance going on (read this again if you didn't get it). As the problem is being both defined and solved by practical, action-oriented people, Islamic Finance is becoming a field of technical sophistication but philosophic bankruptcy. The whole point of Islam was to help instil justice, fairness and a fairly equitable distribution of wealth in society while protecting the balance of Nature. Instead, we have reduced Islam to a tool with which we solve petty financial issues such as credit cards and collateralised loans with which to buy things we cannot afford on our own. There is something deeply elegant about running an economy without debt. This elegance is being tarnished if we think we can 'do Islamic Finance' by removing references to 'interest' in contracts to make things 'Halal'. Our sense of practicality is leading us into waters charted quite well by other communities who got around usury laws using similar tricks in the medieval past.
So what is the solution (cause you know I am one of the practical types that worries about solutions)? All this while, the people from the first section (the philosopher types), have had nothing really to do. They sit around, call the type 2's disrespectful names and are generally cynical and pessimistic about the problems faced by Muslims and people of Faith these days. As they are frequently confused with academics, they feel they no place in the industry and feel left to one side as matters of great import such as the appropriate benchmark rate is determined by the type 2's. This situation is a mistake. Islamic Finance does not belong to the type 2's of the world that want to solve problems NOW, come what may. It belongs really, if there is such a thing as belonging, to the world and all within it as a rich, textured and fundamentally elegant way in which to manage the problems of an economy.
This should include the Type 1's who are struggling with this marginalization at seminars. Every seminar they go to, people ask them for a cheque at the end. The educational, community service aspect of the information is subsumed by the drive for relationships to be commercial and ratified to be so by the transfer of money. This is injustice of a very deep kind. We must allow people to have access to knowledge about Islamic Finance without asking them for money at the end. For the people who attended the session last Saturday and asked for product details, this is why I didn't answer your pointed questions. This particular seminar series is for people who want to discuss ideas. If you want a financial solution to your particular problem, call me at work and I will try and help. Better yet, come to our investment seminars. Don't complain about more education - even the first word of the Holy Book was 'Read'.
For those who missed the seminar, I hope you will come out to the next one. For those who came, I hope you recognize that both you and I are truly blessed to be involved in some manner with Ittihad and this initiative, where there is the freedom to do things with integrity. I look forward to seeing you all the next seminar. For the record, people loved the samosas and the turnout was humbling in terms of both numbers and the intelligence of the discussion. We are a beautiful community with much to contribute to Canada and the world, and I want to thank the administration at TARIC once again for inviting us and having the courage to allow us to engage the community directly on issues where usually their input is just monetary. I look forward (quite shamelessly) to being invited back.
1. An interesting analysis of short-sellers (A borrows stock from B, sell lots of it to drive down its price and then buys it back at the lower price. A then returns the stock to B - pocketing the money made in the process). Unfortunately, there are issues in Islam about selling stuff you don't own so this is questionable. A very interesting article nevertheless ... read more here
2. The perils of the joint-ownership strategy for inheritance purposes ... read more here
3. Now the Global Banks are casting aspersions and questioning each other's balance sheets ... read more here
4. The Bank of Canada will accept US treasuries as security for loans ... (Might as well accept rolls of toilet paper too) ... read more here
5. People finally make the connection between Socially Responsible Investing and Islam ... read more here
1. The Future of Energy ... read more here
2. The Washington Post uses the R-word for the US economy ... read more here
3. Good analysis of the disagreements between Central Banks ... read more here
Islamic / Middle East / Emerging Markets:
1. N / A
Interesting but not all Finance:
1. US Company asks US court to use Shariah to decide a claim. I believe this is called Shariah Arbitrage ... (major hat-tip to Mansoor Ullah) - read more here
2. If you are chased by the police, you get to pay for their gas also (hat-tip to Siddiq Mohamed) ... read more here