Financial Crisis and Islamic Finance

It doesn’t matter how optimistic your government might be, the financial crisis is not over. The amount of debt USA and Europe is submerged in is enough to tell the tale. The system hasn’t gone through the reform it should have gone through and there is not any signs that the same is likely in near future.

To really deal with the crisis, you need to get your hands down to the root of the problems. And that is greed of the financial players – the bankers, the traders and the shareholders. Money is like a drug. It gives all the sensations a drug can give you. Starting with little doses, you feel good. Eventually you start to want more. With more comes even more desires. At one point your greed of money takes over you and you give up everything for money. Did you watch the movie Wall Street 2 in which Gekko uses his son-in-law to get the money he gave to his daughter and then runs away with the money. Both Wall Street movies are a good choice if you want to understand what they are playing at.

How to curb the greed? With better financial regulation. But financial regulation is hard to squeeze out of people who have been running after money since I was born. I mean what we see is more bailing out of banks and financial institutions, with tax payer’s money that is. What I see is pushing more money into the financial market without strengthening the real economy, actual production.

That is where Islamic Finance beats the market. I bet you wouldn’t be interested in betting with my money if you were bearing some of the risks of betting. Gambling with other people’s money seems next to cool these days. “Hey, know what I just did? Just used some whack-shack’s money to buy some high-paying CDOs. Don’t care if they default. Its the whack-shack who is going bust. 8)”. Not with Islamic Finance, where financier and entrepreneur share risk as well as profit. Makes sense.

I am not an expert on Islamic Finance, I just happen to like finance and Islam. I just know that Islamic Finance is flourishing in these days of recession. Talking of recession, I will write a piece on it. Ok, I’ll write several pieces on it, since its hard to ignore the high use that word is going through, “recession”.

This video gives some insights on the root of the financial crisis. I agree that it is not the fault of the finance model but the greed of the user which has brought destruction. Also search “financial crisis explained” on youtube to find some good stuff meant for non-technical viewers. 

What’s you view of Islamic Finance? Is Islamic banking truly Islamic? Share your views.