The Fundamental approach verses the current vested interest approach
by Jahaberdeen MOhamed Yunoos.
Prologue:- the vested interest groups.
Allow me to briefly clarify what I mean by the “vested interest group”. They consist of the following groups:
1) The ‘experts’ or the ‘gurus” of the current economic ‘system’. They will argue in sophisticated language and use the favourite mesmerizing trick of charts and statistics to beguile the unsuspecting and ignorant public to sustain or to continue supporting the system. They will also present the case to the public that the world has consistently benefited from the current system and explain away major defects as transient anomalies in the system which will be ironed out. They know that we are too busy “living” and too preoccupied with our respective trivia that we leave critically important things in our lives to the gurus or the experts. Believe it or not, our educational system has been designed to make us uncritical and averse to thinking and to turn us into mere worker ants. We seem to forget however, that we are created as human beings and not ants.
2) The economic/financial advisers/ executives – the fanatical disciples of the gurus or experts who have everything to lose if the entire system was revamped or thrown out. You will notice that only those who are agreeable to the axioms, theorems and processes of the economic system will be hailed as “excellent”, “brilliant” and therefore given positions to safeguard the system. Hence, we must be totally gullible fools to expect these very same people to reform the system that they want to safeguard!
3) The politicians in the “democratic-capitalistic” system of governance. The political structure is based on the basis of “vote-buying” in various forms and it has worked well for sustaining the political elites in power. There has to be major inequality between them and the majority of the citizens to enable them to lord over the citizens. It is not accidental. It is deliberate. This is called ensuring that “the playing field is not level”. The masses are forever kept in the position of dependence on their political lords. If we had landlord-peasant relationship in the past, we still have the same relationship but called differently.
With very few exceptions, all over the democratic-capitalistic world, political power has become the inheritance of select elitist families for decades.
Further more, the current political thought in so-called democratic societies accept that funding and lots of them are necessary for anyone who aspires to serve the country. Can you see the contradiction in terms which we seem to have helplessly and ignorantly accepted? The source of such funding can only come from the current economic system. Is this why capitalism, especially financial capitalism and current form of “democracy” go hand in glove with each other? These politicians have a vested interest for the system not to be reformed fundamentally.
4) Further more, the current political thought in so-called democratic societies accept that funding and lots of them are necessary for anyone who aspires to serve the country. To get into the position where you want to contribute, you must first be wealthy! Can you see the contradiction in terms which we seem to have helplessly and ignorantly accepted? The source of such funding can only come from the current economic system. Is this why capitalism, especially financial capitalism and current form of “democracy” go hand in glove with each other? These politicians have a vested interest for the system not to be reformed fundamentally.
The political system with its need for “political funds” necessarily gives rise to the need for cronyism, nepotism and corruption. As long as the current democratic-capitalistic system and current political thought dominates, these can never be eliminated. All over the “democratic world”, you will find that top politicians have their hand deep in some critical and profitable business either directly or indirectly. They depend on the current economic “system” for their power and maintenance of lifestyles.
Have you not realized that no politician has seriously implemented a policy of complete non involvement in business by anyone who is part of the Government?
5) The capitalist lords themselves. All over the world, industries and sectors are controlled by families or select elitist groups. It is always the same people. With the capital that they have, they exert tremendous power over the shaping of opinions in all aspect of life all over the world. They have in their armoury not only capital but through it so-called experts to endorse what they want, diverse institutions (including and especially institutions of “learning” for the purposes of indoctrination), and such. It is a massive network beyond the reach and understanding of the commoner.
The vested groups will never allow for any fundamental change in the current system or thought even though it may benefit the greater majority of the people in a real sense (not cosmetic as it is now). Hence, do not expect any real change, maybe semblance of change but it is still within the same arena with the same players and hence, the same set of problems for the greater majority.
And for those who are hardcore mentally indolent - imagine you being in politics for 15 years and has never held a permanent job or in any real business, is it possible for you to own a bungalow? If you look around, you will find many such folks who not only own bungalows but are able to live lifestyles which even a hardworking lawyer or architect is unable to afford in relative terms! This is the “miracle” of the capitalistic-democratic system for its diehard disciples and worshippers.
In brief, therefore, the vested interest approach will not be interested to reform the system fundamentally. Whatever “reforms” they present will be peripherals that will not hurt the system and hence, them. Can you imagine a banker agreeing that they will now behave like all other businesses ie take business risks as usual without the mind boggling special protection that they now enjoy?
And the consistent problem with the laid back public is this: what they do not understand, they applaud. Heroes are made not because the person is ‘heroic’ but because the rest are turkeys (no offence to the turkey).
NEXT: THE FUNDAMENTAL APPROACH.
Showing posts with label Banking. Show all posts
Showing posts with label Banking. Show all posts
Monday, December 21, 2009
Tuesday, December 15, 2009
The Economy Is Doomed Forever? - Part 1
by Jahaberdeen Mohamed Yunoos
It is almost a truism to say that there will always be problems in life. I would add “in all aspects of life”. Often times, I do not see what occurs as a problem but a hurdle or an event that needs to be addressed. It only mutates into a problem when the event or thing is not addressed or is addressed but inappropriately.
For example, one may see it as a problem that one has to move from point A to point B. But to me, it is simply a life situation that needs to be addressed with several options – walk, use a bullock cart, bicycle, car, train, plane, etc. The choice of the option is critically important – short term measure or long term, expedient or fundamental and so on. Unfortunately, I have seen that Governments (due largely because of the nature of the citizens themselves) often opt for the short term and expedient option. Since it is short term and expedient, the so called ‘solution’ itself raises a host of diverse other problems. I see this happening particularly in developing countries that refuse to learn from the experiences of the developed countries.
Take the economy, for example. Up to the time of writing this article, Laissez faire or free market enterprise is being taught in the universities as if it is being practiced in any part of the world. Adam Smith’s ideas as expounded in his book “The Wealth of Nations” and the magical ‘invisible hand’ that will equitably distribute resources in the economy is a Shangri La that does not exist in real time. Today, one cannot really describe accurately what the nature of the economy of any country is.
The reality appears to be an arbitrary concoction of free market, state controlled and everything else thrown into the boiling economic pot in the spirit of fire fighting which we have been accustomed to since the depressions of the 1930s. Hence, we are crisis managing the economy all the time. The so-called economic experts justify our inability to confront the truth of our refusal to address fundamentals by inventing jargons like “cyclical phenomenon”, “overheating”, “financial meltdown”, and so on. The fact is: we are in a major world economic crisis and it will recur even if we “recover” in the short term. The crisis started long ago when we imported the capitalistic model and then became worse when it silently mutated into financial capitalism.
Fundamentals are never addressed, largely due to the existing vested interests of the very people who are supposed to be the caretakers of the economy and our paid, appointed thinkers. This will be addressed subsequently in this article. Let me move to an issue which is more easily discussed – living with misconceptions or in simple words – believing the lies that are told to us.
Everyone who wakes up wakes up accepting that we live in a free market capitalistic economy. What this implies is that people believe that, basically, demand and supply proceeds unhindered, there is movement of capital towards the creation of good and services (hence employment) and that competitiveness ensures efficiency and quality. The reality however shows this perception to be largely untrue for several reasons. I will discuss three of them here.
Firstly, there are many aspects of our life where the goods and services are not actually desired but they are just put into the market. Your needs are created for you and you do not really have much choice. Houses are built and if you can afford it (economists call this affordability as “demand’), you buy it. Demand has nothing to do with desire. If you want to buy a car, the economy dictates the process through which you can own the car – get a bank loan and service the interest.
The economy dictates that since you live in a terrace house and therefore own no land to grow your food, you have to find a job to buy your food. And to satisfy your other needs (clothing, education, medical, etc), you have to be gainfully employed.
Effectively, to live or survive in this economy, you must be healthy, and able to work until your dying day. In this economy, you will have been converted into a slave of the economy for the purposes of “sustaining” the economy. We have all, through years of indoctrination accepted this as a reality. We do not think of other available options because they will be presented as unavailable by the vested interest groups which you are blissfully ignorant.
Secondly, and I have argued this even when I was a mere student of economics, the so-called free market will mutate naturally mutate into monopolies and oligopolies. This is the natural progression of human caprice and the power of capital when left unregulated by responsible governments.
For example, small banks have systematically been eased out and replaced by a few banks – oligopoly. How much bargaining power do you have with banks? How many contract terms with the banks have you negotiated? You just sign! Everyone seems to have forgotten that commercial banks are businesses like every other business with the aim of maximising profits. However, they enjoy greater advantages and power over the so-called “customers”. Raperas must see that there are increasingly greater oligopolistic tendencies in the financial market and hence greater control over the customers. Those who control the very medium of exchange (money) needed in this economy controls your life. As a reminder, the banks are lending you "credit" - what is that??? (Another area where the public should be educated on)
Raperas should be worried that almost all the essential industries are largely in the hands of oligopolies – food, water, medical, etc. The argument often advanced is that of economies of scale and efficiency but I am certain it is going to and has lead to profiteering and bondage of the ordinary people. This will lead (if it has not already) to the phenomenon of “corporatism” – where corporations controls our lives in every aspect. Almost everyone today is getting caught up with the hype of "food biotechnology" without having thought out the longer term repercussions.
Thirdly, the rise of financial capitalism disguising as free market capitalism. Malaysians have an apt description for this phenomenon – “rise of the alongs and gamblers”. Finance capitalism has nothing to do with developing the real economy. It is characterized by the pursuit of profit from the purchase and sale of financial products such as bonds, stocks, futures and other derivatives.
It also includes the lending of capital at interest and trading in currencies. Financial capitalism destroys the philosophy behind free market. Financial capitalism puts income into the hands of those who do not produce any real goods and services – they have the “demand”. In simple language, these groups can and do price out goods and services beyond the reach of ordinary people. Some economists explain this away as "inflationary tendencies". What I am saying is this: the majority WILL get poorer sooner or later!
NEXT: The Fundamental approach verses the current vested interest approach. God Willing.
Peace.
It is almost a truism to say that there will always be problems in life. I would add “in all aspects of life”. Often times, I do not see what occurs as a problem but a hurdle or an event that needs to be addressed. It only mutates into a problem when the event or thing is not addressed or is addressed but inappropriately.
For example, one may see it as a problem that one has to move from point A to point B. But to me, it is simply a life situation that needs to be addressed with several options – walk, use a bullock cart, bicycle, car, train, plane, etc. The choice of the option is critically important – short term measure or long term, expedient or fundamental and so on. Unfortunately, I have seen that Governments (due largely because of the nature of the citizens themselves) often opt for the short term and expedient option. Since it is short term and expedient, the so called ‘solution’ itself raises a host of diverse other problems. I see this happening particularly in developing countries that refuse to learn from the experiences of the developed countries.
Take the economy, for example. Up to the time of writing this article, Laissez faire or free market enterprise is being taught in the universities as if it is being practiced in any part of the world. Adam Smith’s ideas as expounded in his book “The Wealth of Nations” and the magical ‘invisible hand’ that will equitably distribute resources in the economy is a Shangri La that does not exist in real time. Today, one cannot really describe accurately what the nature of the economy of any country is.
The reality appears to be an arbitrary concoction of free market, state controlled and everything else thrown into the boiling economic pot in the spirit of fire fighting which we have been accustomed to since the depressions of the 1930s. Hence, we are crisis managing the economy all the time. The so-called economic experts justify our inability to confront the truth of our refusal to address fundamentals by inventing jargons like “cyclical phenomenon”, “overheating”, “financial meltdown”, and so on. The fact is: we are in a major world economic crisis and it will recur even if we “recover” in the short term. The crisis started long ago when we imported the capitalistic model and then became worse when it silently mutated into financial capitalism.
Fundamentals are never addressed, largely due to the existing vested interests of the very people who are supposed to be the caretakers of the economy and our paid, appointed thinkers. This will be addressed subsequently in this article. Let me move to an issue which is more easily discussed – living with misconceptions or in simple words – believing the lies that are told to us.
Everyone who wakes up wakes up accepting that we live in a free market capitalistic economy. What this implies is that people believe that, basically, demand and supply proceeds unhindered, there is movement of capital towards the creation of good and services (hence employment) and that competitiveness ensures efficiency and quality. The reality however shows this perception to be largely untrue for several reasons. I will discuss three of them here.
Firstly, there are many aspects of our life where the goods and services are not actually desired but they are just put into the market. Your needs are created for you and you do not really have much choice. Houses are built and if you can afford it (economists call this affordability as “demand’), you buy it. Demand has nothing to do with desire. If you want to buy a car, the economy dictates the process through which you can own the car – get a bank loan and service the interest.
The economy dictates that since you live in a terrace house and therefore own no land to grow your food, you have to find a job to buy your food. And to satisfy your other needs (clothing, education, medical, etc), you have to be gainfully employed.
Effectively, to live or survive in this economy, you must be healthy, and able to work until your dying day. In this economy, you will have been converted into a slave of the economy for the purposes of “sustaining” the economy. We have all, through years of indoctrination accepted this as a reality. We do not think of other available options because they will be presented as unavailable by the vested interest groups which you are blissfully ignorant.
Secondly, and I have argued this even when I was a mere student of economics, the so-called free market will mutate naturally mutate into monopolies and oligopolies. This is the natural progression of human caprice and the power of capital when left unregulated by responsible governments.
For example, small banks have systematically been eased out and replaced by a few banks – oligopoly. How much bargaining power do you have with banks? How many contract terms with the banks have you negotiated? You just sign! Everyone seems to have forgotten that commercial banks are businesses like every other business with the aim of maximising profits. However, they enjoy greater advantages and power over the so-called “customers”. Raperas must see that there are increasingly greater oligopolistic tendencies in the financial market and hence greater control over the customers. Those who control the very medium of exchange (money) needed in this economy controls your life. As a reminder, the banks are lending you "credit" - what is that??? (Another area where the public should be educated on)
Raperas should be worried that almost all the essential industries are largely in the hands of oligopolies – food, water, medical, etc. The argument often advanced is that of economies of scale and efficiency but I am certain it is going to and has lead to profiteering and bondage of the ordinary people. This will lead (if it has not already) to the phenomenon of “corporatism” – where corporations controls our lives in every aspect. Almost everyone today is getting caught up with the hype of "food biotechnology" without having thought out the longer term repercussions.
Thirdly, the rise of financial capitalism disguising as free market capitalism. Malaysians have an apt description for this phenomenon – “rise of the alongs and gamblers”. Finance capitalism has nothing to do with developing the real economy. It is characterized by the pursuit of profit from the purchase and sale of financial products such as bonds, stocks, futures and other derivatives.
It also includes the lending of capital at interest and trading in currencies. Financial capitalism destroys the philosophy behind free market. Financial capitalism puts income into the hands of those who do not produce any real goods and services – they have the “demand”. In simple language, these groups can and do price out goods and services beyond the reach of ordinary people. Some economists explain this away as "inflationary tendencies". What I am saying is this: the majority WILL get poorer sooner or later!
NEXT: The Fundamental approach verses the current vested interest approach. God Willing.
Peace.
Saturday, August 8, 2009
IS everything that is called SHARIA consistent with the QURAN?
The following is a comment by a reader of this blog:
"Salam, Bro Jay. I visit your blog often and like your postings for they are very thought provoking.
But in this case of demonstration, could it be an instance of people pouring out their pent-up feelings? Why do so many people become so gullible and easily swayed by the puppet masters? I think it is because deep down inside they have personal grievances and hence become easy preys.
Let me relate my personal experience....my wife and I signed a BBA (Bai Bitamin Ajal) Sale and Purchase Agreement with Bank Islam Malaysia in 1997. The Bank released partially the second 10% amounting to a net of about RM9,000 to the developer. Immediately after that the project was abandoned by the developer. I lost my personal savings of about RM80,000 in this scam. I offered to pay the bank the RM9K that they had released to the developer, but they turned it down and asked me to continue paying my installments! Bank Islam sued my wife and I for RM505,368.54 in 2005 in the High Court (I repeat for emphasis - the bank only released about RM9K to the developer). I engaged a lawyer to respond on our behalf and in April 2009 they withdrew the case in front of the judge. In the process I incurred a lot of legal costs. Now that they have withdrawn the case, they still haven't cleared our names in the CCRIS record, therefore making it difficult for us to get new loans or where it is approved we have to pay a higher interest rate, since we're deemed as "high risk". I have endured this tyranny for the last 12 years. The latest letter from them is asking us to pay RM22,332 to clear my name in CCRIS or they will sue me again. This is an extreme case of bullying, extortion and in contempt of court ruling (I think). But the SYSTEM allows this to happen and happen it did under the label of "Islam". The real culprit here is the developer, but they got away scott-free. Bank Islam should actually be suing the errant developer and its directors for they are the ones who would probably have a half million ringgit to spare. We are just mere wage earners, working hard to put three children through proper education and provide a semblance of a good life for them.
Now put the demonstrators in this context and you'll understand them better".
Askin.
------------------------------------------------------------------------
This is what I have to share on the above:
AND THIS IS WHAT THE QURAN SAYS:
"Maintain just measure in your business and do not cause loss to others" [Quran 26:181]
"We sent to the people of Midian their brother Shu'ayb who also told his people to worship God their only Lord. He said, "A guidance has come to you from your Lord. Maintain proper measures and weights in trade. Do not cause any deficiency in people's property or destroy the land after it has been reformed. This is for your own good, if you have any faith". [Quran: 7:85]
"And of their taking usury when they were forbidden it, and of their devouring people's wealth by false pretences, We have prepared for those of them who disbelieve a painful doom". [Quran: 4:161]
[My comment: The "Islamic Banks" can call it administrative fee and go through the rigmarole of "buy and sell" but if the transaction is oppressive (eg market price is RM100,000.00 and the the bank resells at RM500,000.00, what do you call this????), then my understanding this is riba/oppression. We are fooling Allah with so-called shariah compliant instruments?]
Peace !
PS: Please verify the translations on your own and I stand to be corrected, of course.
"Salam, Bro Jay. I visit your blog often and like your postings for they are very thought provoking.
But in this case of demonstration, could it be an instance of people pouring out their pent-up feelings? Why do so many people become so gullible and easily swayed by the puppet masters? I think it is because deep down inside they have personal grievances and hence become easy preys.
Let me relate my personal experience....my wife and I signed a BBA (Bai Bitamin Ajal) Sale and Purchase Agreement with Bank Islam Malaysia in 1997. The Bank released partially the second 10% amounting to a net of about RM9,000 to the developer. Immediately after that the project was abandoned by the developer. I lost my personal savings of about RM80,000 in this scam. I offered to pay the bank the RM9K that they had released to the developer, but they turned it down and asked me to continue paying my installments! Bank Islam sued my wife and I for RM505,368.54 in 2005 in the High Court (I repeat for emphasis - the bank only released about RM9K to the developer). I engaged a lawyer to respond on our behalf and in April 2009 they withdrew the case in front of the judge. In the process I incurred a lot of legal costs. Now that they have withdrawn the case, they still haven't cleared our names in the CCRIS record, therefore making it difficult for us to get new loans or where it is approved we have to pay a higher interest rate, since we're deemed as "high risk". I have endured this tyranny for the last 12 years. The latest letter from them is asking us to pay RM22,332 to clear my name in CCRIS or they will sue me again. This is an extreme case of bullying, extortion and in contempt of court ruling (I think). But the SYSTEM allows this to happen and happen it did under the label of "Islam". The real culprit here is the developer, but they got away scott-free. Bank Islam should actually be suing the errant developer and its directors for they are the ones who would probably have a half million ringgit to spare. We are just mere wage earners, working hard to put three children through proper education and provide a semblance of a good life for them.
Now put the demonstrators in this context and you'll understand them better".
Askin.
------------------------------------------------------------------------
This is what I have to share on the above:
AND THIS IS WHAT THE QURAN SAYS:
"Maintain just measure in your business and do not cause loss to others" [Quran 26:181]
"We sent to the people of Midian their brother Shu'ayb who also told his people to worship God their only Lord. He said, "A guidance has come to you from your Lord. Maintain proper measures and weights in trade. Do not cause any deficiency in people's property or destroy the land after it has been reformed. This is for your own good, if you have any faith". [Quran: 7:85]
"And of their taking usury when they were forbidden it, and of their devouring people's wealth by false pretences, We have prepared for those of them who disbelieve a painful doom". [Quran: 4:161]
[My comment: The "Islamic Banks" can call it administrative fee and go through the rigmarole of "buy and sell" but if the transaction is oppressive (eg market price is RM100,000.00 and the the bank resells at RM500,000.00, what do you call this????), then my understanding this is riba/oppression. We are fooling Allah with so-called shariah compliant instruments?]
Peace !
PS: Please verify the translations on your own and I stand to be corrected, of course.
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