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Death of the American Empire and Economy and have governments fix the problem Professor of Economics at King Fahd and Islamic markets. "Not in stocks, at the expense of the taxpayers who University of Petroleum & Minerals. however, because the stock market never saw a penny of shared wealth to "Although the Islamic banking sector could be manipulated remotely, as we begin with. is also part of the global economy, the have seen in the last couple of years in There is no easy solution to this impact of direct exposure to sub-prime the Arab market where trillions of crisis: its effects are multiplying like asset investments has been low," he dollars evaporated," he said. an infectious disease. continued. "The liquidity slowdown He warned then that it was a has especially affected Dubai, with its certainty that the US economic system Islamic versus capitalist heavy international borrowing. The was on the verge of collapse because economic systems most negative effect has been aloss of of its cumulative debts, ever- Ironically, least affected by the crisis confidence in the regional stock increasing deficit and the interest on are Islamic banks. They have largely markets." Instead, said Dr Ramady, that debt. "When the debts and been immune to the collapse because oil-surplus Arab nations are deficits come due, they just issue new Islamic banking prohibits the "reconsidering overseas investments Treasury bonds to cover the old bonds acquisition of wealth via gambling (or in financial assets" and speeding up due, with their interest and the new alcohol, tobacco, pornography or _ their own domestic projects. deficit, too." stocks in armaments companies), and _—_ Eight years ago, in May 2000, Saudi _—- The cycle cannot be stopped or the forbids the buying and selling of a Islamic banker His Highness Dr Nayef debt cancelled because the US would debt as well as usury. Additionally, bin Fawaaz ibn Sha'alan gave a series no longer be able to borrow. The Shari'ah banking laws forbid investing of economics lectures in Gulf states. consequence of relieving this cycle in any company with debts that exceed At the time, his research showed that would be a total collapse of its 30 per cent. Arab investments in the US, to the economic system, as opposed to the "Islamic banking institutions have tune of $1.5 trillion, were effectively partial, albeit massive, crash of 2008. not failed per se as they deal in being held hostage and he "Islamic banking," said Dr Al- tangible assets and assume the risk," recommended they be pulled out and said Dr Mohammed Ramady, reinvested in the tangibles of the Arab Islamic versus capitalist economic systems Ironically, least affected by the crisis are Islamic banks. They have largely been immune to the collapse because Islamic banking prohibits the acquisition of wealth via gambling (or alcohol, tobacco, pornography or stocks in armaments companies), and forbids the buying and selling of a debt as well as usury. Additionally, Shari'ah banking laws forbid investing in any company with debts that exceed 30 per cent. "Islamic banking institutions have not failed per se as they deal in tangible assets and assume the risk," said Dr Mohammed Ramady, NEXUS ¢ 81 Continued on page 82 DECEMBER 2008 — JANUARY 2009 www.nexusmagazine.com