My Views

Writing

2011-11-03T12:10:00.001+05:00

I have number of blogs and it is really very difficult for me to keep posting to all of them different pieces. Sometimes, even it is difficult to regularly post to my this blog. While searching for tips on writing ideas, I came across Scott Berkun. He says

The first goal is to get one word on the page. It can be any word, but you have to choose it, and put it down. I’m partial to the ridiculous[1], so for me it’s often Papaya, Pomegranate or Throat-warbler-man-grove (If you’re thinking that’s not a word, go back two paragraphs). If one word was easy, go for two. Still feeling lucky? Go for a small sentence. It doesn’t matter what the words are, but get them down. Write the lyrics to the song on the radio, the names of people you’ve slept with, your favorite Dr. Seuss lines, it just doesn’t matter. Once all the magic muscles in your little fingers get going, you’ll soon find yourself, in between rounds of one fish blue fish, writing some intelligent things. If it peters out, repeat. Return to the unit of writing anyone can do, and build up again.

I think, he is right.

I will be syndicating my blog posts to my blogs wherever relevant. All the posts shall be part of this blog as well.

Progress So Far

2011-07-28T09:38:00.003+05:00

I have posted two pieces to two different pages - Politics and Inbox. But it seems that only "Home" page is working as a blog and all others are static like wordpress. But what I am looking a feel like "Joomla" that posts articles on "Home" page as well as on related category page. This feature is missing in Wordpress and Blogger. But let's find a way around.

Welcome Back

2011-07-27T14:04:00.001+05:00

I am back again on Blogger but this time I would like to use Blogger platform like Joomla. I have created pages and would be posting on the pages regularly to see how it works. Things look promising. Let's give a try and also let me know how far I am successful.

New Blog Domain

2011-04-15T15:42:00.002+05:00

Dear Readers

Assalam-O-Alaikum

I have uploaded my personal website and have started writing blog as usual. Everybody is requested to please visit the site at http://saeedbabar.com and leave his / her comments about posts.

I am looking forward to your visit and comments.

Thanks.

Asset Valuation in Finance

2011-03-28T10:59:00.001+05:00

There are nine theories and ten methods for valuation. The valuation of any asset is a highly subjective one and depends on hosts of factors, some beyond the control of buyer or seller. This picture captures some of the essence of valuation.

The nine theories are

Fernandez (2007) assumes that the company will have a constant debt-to-equity ratio in book value terms. In this scenario, the risk of the increases of debt is equal to the risk of the free cash flow.
Miles and Ezzell (1980) assume that the company will have a constant D/E ratio in market value terms: the correct discount rate for the tax shield (D Kd T) is Kd for the first year, and Ku for the following years.
Modigliani and Miller (1963) assume that the amount of debt of every future year is known today and discount the tax savings due to interest payments at the risk-free rate (RF).
Myers (1974) makes assumptions similar to those of Modigliani and Miller (1963) and discounts the tax savings due to interest payments at the required return to debt (Kd).
Miller (1977) concludes that the leverage-driven value creation or value of the tax shields is zero.
Harris and Pringle (1985) and Ruback (1995) discount the tax shields at the required return to the unlevered equity (Ku). According to them, the value of tax shields (VTS) is VTS = PV[D Kd T ; Ku].
Damodaran (1994). To introduce leverage costs, Damodaran assumes that the relationship between the levered and unlevered beta is: βL = βu + D (1-T) βu / E (Instead of the relationship obtained in Fernandez (2007), βL = βu + D (1-T) (βu - βd) / E).
Practitioners method. To introduce higher leverage costs, this method assumes that the relationship between the levered and unlevered beta is: βL = βu + D βu / E.
With-cost-of leverage. This theory assumes that the cost of leverage is the present value of the interest differential that the company pays over the risk-free rate.

The ten methods are

equity cash flows discounted at the required return to equity;
free cash flow discounted at the WACC;
capital cash flows discounted at the WACC before tax;
APV (Adjusted Present Value);
the business’s risk-adjusted free cash flows discounted at the required return to assets;
the business’s risk-adjusted equity cash flows discounted at the required return to assets;
economic profit discounted at the required return to equity;
EVA discounted at the WACC;
the risk-free rate-adjusted free cash flows discounted at the risk-free rate; and
the risk-free rate-adjusted equity cash flows discounted at the required return to assets.

But valuation of asset is a highly subjective. There can never be generalizations. Value depends on the

Demand and supply
Urgency to buy or sell
Behavior of seller and buyer
One’s forecast of future events
One’s future planning
Cash flows and discount rates

All time blogging

2011-03-23T10:07:00.001+05:00

It is no longer that you need to be with a computer and an internet connection to be able to blog. All you need is a mobile phone with internet activated on it. You can blog from anywhere. That is what I am doing right now with my HTC Desire smart phone.

Published with Blogger-droid v1.6.7

Impact of Debt Financing on EBIT of Firm–Introduction Part 1

2011-03-21T11:22:00.001+05:00

In finance, capital structure refers to the way a corporation finances its assets. A firm can be financed by 100% equity or with some mix of equity and debt. It is an important decision, how the assets of a firm are financed i-e what should be the financing mix? Should the firm be financed with 100 equity or with some mix of equity and debt? The finance literature on the subject of capital structure is extensive but yet to come up to any definite answer.

Equity in finance is defined as the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. Debt imply intent to pay a fixed periodic payment and pay back an amount owed by a specific date, which is set forth in the repayment terms. It has a claim ahead of equity on the earnings of the firm.

Does capital structure choice of a firm matter? In financial literature related to the question of financing mix of a firm, we find five major strands of research viz.

Tax Based Theories
Agency Costs Theories
Signaling Theories
Pecking Order Theories
Information Asymmetry Theories

Modigliani Miller (1958) argued that under certain assumptions value of the firm is independent of how its assets are financed i-e its capital structure. Later in (1963) they revised their famous MM proposition by saying that the existence of tax subsidies on interest payments would cause the value of the firm to rise with the amount of debt financing by the amount of the capitalized value of the tax subsidy. For value of the firm to increase in case of debt financing because of larger cash inflows due to tax subsidy is only possible when EBIT of the firm remains the same no matter how the assets are financed. So, essentially they argued that EBIT of the firm would be independent no matter how the capital is divided among equity and debt. Jensen and Meckling (1976) argued that the firm is not an individual. It is a legal fiction which serves as a focus for a complex process in which the conflicting objectives of individuals (some of whom may “represent” other organizations) are brought into equilibrium within a framework of contractual relations. In this sense the “behavior” of the firm is like the behavior of a market, that is, the outcome of a complex equilibrium process. If the behavior of the firm is “the outcome of complex equilibrium process” – balancing act of value maximization of different stakeholders given the positive monitoring and bonding costs then it cannot be said that its operations are independent of its choice of capital structure. They further argued that Modigliani-Miller theorem is based on the assumption that the probability distribution of the cash flows to the firm is independent of the capital structure. It is now recognized that the existence of positive costs associated with bankruptcy and the presence of tax subsidies on corporate interest payments will invalidate this irrelevance theorem precisely because the probability distribution of future cash flows changes as the probability of the incurrence of the bankruptcy costs changes, i.e., as the ratio of debt to equity rises. The existence of agency costs provide stronger reasons for arguing that the probability distribution of future cash flows is not independent of the capital or ownership structure. They went on to assert that debt carries covenants that limit management’s ability to take optimal actions on certain issues and that would reduce the profitability of the firm. In general the revenues or the operating costs of the firm are not independent of the probability of bankruptcy and thus the capital structure of the firm. As the probability of bankruptcy increases, both the operating costs and the revenues of the firm are adversely affected, therefore, its EBIT of the firm cannot be independent of how it is financed. Stephen A. Ross (1977) advocated that implicit in the irrelevancy proposition is the assumption that the market knows the (random) return stream of the firm and values this stream to set the value of the firm. What is valued in the marketplace, however, is the perceived stream of returns for the firm. Putting the issue this way raises the possibility that changes in the financial structure can alter the market's perception. Value of a firm will rise in case of debt financing because it will signal to the market that EBIT of the firm would be sufficient enough to meet its obligations. The reason was that any change in financial structure of the firm changes its perception in the market about its earnings stream and when leverage is increased, it is perceived in the market that the firm has expectations of strong earnings stream. So, in his opinion, if the firm decides to finance future expansion or change its financial structure with debt, it is because that firm expects a strong earnings stream and so the value of the firm would increase. Stewart C. Myers (1984) argued that optimal debt ratio in capital structure is determined by tradeoff of benefits and costs of debt financing by holding constant the firm’s assets and investment plans. Benefits of debt are interest tax shields whereas costs include various costs of bankruptcy and financial distress. If there were no adjustment costs then each firm’s debt-to-value ratio should be its optimal ratio. But there are adjustment costs and time lag as the firms move toward their target debt ratio that is why there is observable dispersion in debt ratios in cross section of data. He cited a study by Donaldson (1961) that states “Management strongly favored internal generation as a source of new funds even to the exclusion of external funds except for occasional unavoidable ‘bulges’ in the need for fund.” He further cited Donaldson “Given that external finance was needed, managers rarely thought of issuing stock.” This behavior of managers is due to asymmetric information and costs of financial distress. Because of asymmetry of information, managers are unwilling to issue equity if market undervalue new issue of equity. If the firm does seek external funds, it is better off issuing debt than equity securities. The general rule is, "Issue safe securities before risky ones." What if the managers' inside information is unfavorable, so that any risky security issue would be overpriced? In this case, wouldn't the firm want to make /\N as large as possible, to take maximum advantage of new investors? If so, stock would seem better than debt (and warrants better still). The decision rule seems to be, "Issue debt when investors undervalue the firm, and equity, or some other risky security, when they overvalue it.” If the manager with superior information acts to maximize the intrinsic value of existing shares, then the announcement of a stock issue should be bad news, other things equal, because stock issues will be more likely when the manager receives bad news. On the other hand, stock retirements should be good news. The news in both cases has no evident necessary connection with shifts in target debt ratios.It is assumed that EBIT of the firm is independent from source of financing. It does not matter as far as EBIT is concerned how the new investment opportunity is financed. It is a matter of perception in the market due to asymmetry of information that changes the value of the firm. Stewart C. Myers and Nicholas S. Majluf (1984) argued that because of asymmetry of information new stockholders assume that management acts in the interests of 'old' (existing) stockholders. If managers have inside information there must be some cases in which that information is so favorable that management, if it acts in the interest of the old stockholders, will refuse to issue shares even if it means passing up a good investment opportunity. That is, the cost to old shareholders of issuing shares at a bargain price may outweigh the project's NPV. Investors, aware of their relative ignorance, will reason that a decision not to issue shares signals 'good news'. The news conveyed by an issue is bad or at least less good. This affects the price investors are willing to pay for the issue, which in turn affects the issue-invest decision. Under these circumstances, a firm with ample financial slack - e.g., large holdings of cash or marketable securities, or the ability to issue default-risk-free debt - would take all positive-NPV opportunities. The same firm without slack would pass some up and if external financing is required will prefer debt to equity. This model also assumes that EBIT of a firm is independent of its choice of financing mix, it is the discount rate that varies with the perception of investors about a particular choice of financing mix.

Commodity Speculation and Middle East Turmoil

2011-03-15T11:55:00.001+05:00

Here is an excerpt about the subject

The short answer with regard to the role of speculation in the Middle East turmoil (and the spike in gas prices) is that speculation is obviously playing a large role. Everyone I’ve spoken to seems to think this is a virtual replay of 2008, only the larger spike here is in food commodity prices. Wheat and corn are both up more than 75% over the last 12 months; cotton is up over 125%; coffee up 85%. Meanwhile oil prices are soaring and there’s talk again of futures maybe hitting $200 a barrel – oil futures are trading at about three times what they were in February 2009. The blame for all of this is going to be laid at disruptions in the Middle East and other factors, but the inescapable fact is that commodity index speculation was up $80 billion last year, meaning that there was $80 billion of new money coming on the market betting on the rise of commodity prices. The total amount of commodity index speculation approached $400 billion last year, meaning the amount of speculative money on the market was roughly twenty times pre-2003 levels – and again, this is all “long-only” speculation, i.e. money betting on prices to go up. Obviously disasters and political unrest and other factors (a very weak harvest in Russia last year was a factor in the wheat price spike, for instance) play a part in all of this, but I think in the end what we’re going to find out is that index speculation was a huge factor in both the skyrocketing food prices that led to the Middle East crisis and this current oil-price situation.

Another Inside Story

2011-03-11T11:56:00.001+05:00

Two films apart from the recently celebrated “Inside Job” show some glimpses how money is made in the Wall Street and these carry the same name Wall Street (1987) and Wall Street:Money Never Sleeps (2010).

Mario Puzo has rightly quoted at the start of his famous novel “The Godfather” that Behind every great fortune there is a crime. Great fortunes or huge wealth can not be achieved without usurpation.

Here is an excerpt from another such story

The vast investigation into insider trading on Wall Street that culminated this week in Raj Rajaratnam going on trial in New York accused of securities fraud was always likely to ensnare a large institution – perhaps a big hedge fund or a Wall Street bank. No one, however, expected the institution in question to be McKinsey & Co.

It was bad enough for the blue-chip management consultancy when Anil Kumar, one of its partners, admitted to supplying Mr Rajaratnam with inside information in return for bribes (Mr Rajaratnam denies all charges). But the Securities and Exchange Commission’s claim last week that Rajat Gupta, who was the head of McKinsey between 1994 and 2003, passed on tips as a board member of Goldman Sachs and Procter & Gamble, is a heavy blow.

It is hard to believe that trading on price-sensitive inside information from clients is rife inside the puritan, strait-laced firm – if evidence of that emerged, it would soon collapse, as Arthur Andersen did after Enron. But the accumulation and sharing of privileged knowledge is integral to how it works and it cannot afford its corporate and government clients to pull the shutters down.

Thomas Watson Jr, the former president of IBM, wrote in his autobiography Father, Son & Co of being asked by a company executive in 1956 whether he should share sensitive internal pricing information with a Booz Allen Hamilton consultant. “‘Sure,’ I said, ‘It’s like your doctor. You have to tell them everything.’”

The calculation every client makes is, in the words of Christopher McKenna, a professor at the Oxford university’s Saïd Business School who studies professional services firms, that “consultants will carry information in and information out. The client has to decide which of those flows is worth more.”

Indeed, one of the main reasons companies hire consultants is to make sure they do not fall behind what their competitors are doing – in return for parting with their own secrets, they gain access to their rivals’ suitably disguised “best practices”. The consultant is a broker who attempts to amass so much knowledge that each company has to hire him, no matter how uncomfortable that feels.

Can we predict future?

2011-02-23T10:45:00.001+05:00

Ragu Rajan of University of Chicago Booth School of Business tries to explain who is responsible for not forewarning about the financial crisis that has engulfed the entire financial world.

At the height of the financial crisis, the Queen of England asked my friends at the London School of Economics a simple question, but one for which there is no easy answer: Why did academic economists fail to foresee the crisis? There have been several responses to that query. One is that economists simply lacked models that could account for the behavior that led to the crisis. Another is that economists were blinkered by an ideology according to which a free and unfettered market could do no wrong. Finally, an answer that is gaining ground is that the system bribed economists to stay silent. In my view, the truth lies elsewhere. I would argue that three factors largely explain our collective failure: specialization, the difficulty of forecasting, and the disengagement of much of the profession from the real world.

He reluctantly accepted that forecasting future events is difficult, if not impossible. Here is another study that shows, why it is so difficult.

Stossel cited a study in the journal Economics and Portfolio Strategy that tracked 452 managed funds from 1990 to 2009, finding that only 13 beat the market average. Equating managed fund directors to “snake-oil salesmen,” Malkiel said that Wall Street is selling Main Street on the belief that experts can consistently time the market and make accurate predictions of when to buy and sell. They can’t. No one can. Not even professional economists and not even for large-scale market indicators. As economics Nobel laureate Paul Samuelson long ago noted in a 1966 Newsweek Column: “Commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions!”
Even in a given tech area, where you might expect a greater level of specific expertise, economic forecasters fumble. On December 22, 2010, for example, the Wall Street Journal ran a piece on how the great hedge fund financier T. Boone Pickens (chair of BP Capital Management) just abandoned his “Pickens Plan” of investing in wind energy. Pickens invested $2 billion based on his prediction that the price of natural gas would stay high. It didn’t, plummeting as the drilling industry’s ability to unlock methane from shale beds improved, a turn of events even an expert such as Pickens failed to see.
Why are experts (along with us non-experts) so bad at making predictions? The world is a messy, complex and contingent place with countless intervening variables and confounding factors, which our brains are not equipped to evaluate. We evolved the capacity to make snap decisions based on short-term predictions, not rational analysis about long-term investments, and so we deceive ourselves into thinking that experts can foresee the future. This self-deception among professional prognosticators was investigated by University of California, Berkeley, professor Philip E. Tetlock, as reported in his 2005 book Expert Political Judgment. After testing 284 experts in political science, economics, history and journalism in a staggering 82,361 predictions about the future, Tetlock concluded that they did little better than “a dart-throwing chimpanzee.”

The said study concluded that expertise in one area of study leads to narrowed focus and increases confidence but also blurs the value of dissenting views and transforms data collection into belief confirmation. One way to avoid being wrong is to be skeptical whenever you catch yourself making predictions based on reducing complex phenomena into one overarching scheme.

Having said so leads us to nowhere. Since the world is a very complex phenomena and there are many intervening variables, we shall never be able to predict future whatsoever may be at our help. There will always be surprises.

A Hadith of Prophet (PBUH) - Narrated Abdullah Ibn Umar (RAA)

Allah's Apostle said, "The keys of the Unseen are five:

Verily with Allah (Alone) is the knowledge of the Hour,
He sends down the rain and
knows what is in the wombs.
No soul knows what it will earn tomorrow, and
no soul knows in what land it will die.

Verily, Allah is All-Knower, All-Aware." (31.34)

Sahih Al-Bukhari 6.151

Pakistan Economy and Loopholes

2011-02-19T15:39:00.001+05:00

A balance of payment crisis compelled Pakistan to seek $11.3 billion IMF loan in 2008. Strings attached with the loan invited harsh criticism from the political parties and business groups. The three-point reform agenda requires implementation of reformed sales tax, reduction in budget deficit and end to government subsidies. At present, Pakistan is in a peculiar situation today. Fiscal deficit is high, debt is increasing rapidly, growth is minimal and unemployment on the rise. The mounting debt and liabilities, approaching Rs11,000 billion, doubling in the last three years, is being used for non-productive expenditure. The budget deficit is set to hit 7.5 percent against the targeted 4.7 percent for fiscal 2010/11 (July-June). Pakistan badly needs to generate additional revenue to meet its budgetary deficit and conditions agreed to IMF. That is why the Govt. is doing all what it can to win favors for RGST but still it looks a far cry. While the IMF forecasts emerging economies, notably China and India, to drive the global growth, Pakistan’s economic sovereignty is facing serious challenges. The debt profile of the country is worsening day by day with fears of a looming debt trap. With over half a billion debt increase in the first quarter of FY11, shared equally by domestic and foreign components, the country’s total debt reached Rs10.7 trillion. With fiscal deficit threatening to reach Rs1.5 billion for FY11, according to the Finmin, a significant rise in the country’s debt is inevitable.

But on the other hand there are many loopholes that if plugged can generate all the necessary revenue without resorting to increase in power tariff and RGST. One such case is “ISAF Missing Containers”.

The International Security Assistance Force (ISAF) is a NATO-led security mission in Afghanistan established by the United Nations Security Council on 20 December 2001 by Resolution 1386 as envisaged by the Bonn Agreement. It is engaged in the War in Afghanistan (2001–present).

ISAF started importing goods through Karachi and established Forward Mounting Base (FMB) unit at Karachi in 2002 as part of co-ordination mechanism by designating one of the its officers at Karachi to regularly co-ordinate customs clearance matters with Additional Collector Customs Karachi Port. But this co-ordination system fizzled out when the FMB was shifted by ISAF to Kabul within a year of its establishment at Karachi. In June 2010, it was leaked to media that over 11,000 ISAF containers with equipment worth Rs220 billion went missing during the last two years or so.

The FBR data showed that during the period June 2005-2010, a total of 558,141 containers were transited to Afghanistan. Of these, 166,949 (30 percent) containers belonged to the US Military; 52,929 (9 percent) to ISAF/Nato and the remaining 338,263 (61 percent) were commercial ATT consignments. The biggest aspect of the ISAF Containers Scam is the non-availability of the data on the movement of ISAF containers. The FTO report on the scam shows that in response to data requisitioned from FBR for the period January 1, 2007 to October 15, 2010, Pakistan Revenue Automation Limited (PRAL) confirmed that Karachi Customs had handled a total of 306,267 transit containers during this period. For 71,202 containers, there is no information regarding either their departure from Karachi or their arrival at the border customs stations. In case of 27,871 containers, that did arrive at the destinations, their departure information from Karachi is not available. Another 55,140 containers are shown to have left Karachi but have no entries of arrival at the border stations. A total of 152,054 containers have records for departure from Karachi and arrival at the border customs station, but no record of crossing into Afghanistan. Finally, not a single container, out of 306,267, is recorded to have ever crossed over to Afghanistan during the almost four-year period under reference. According to one informed insider, the arrival or otherwise of the ‘missing containers’ could be verified from the ISAF Kabul officials. The containers that were meant to go missing after availing of ISAF duty-tax free clearance by Customs were never meant to reach ISAF warehouses in Kabul and therefore the ISAF headquarters could easily confirm whether they ever arrived in Kabul or not.

It is estimated very conservatively that the scandal involving the ISAF containers have caused a huge loss of over Rs 37 billion to the economy. Chief Justice Iftikhar Mohammad Chaudhary on Wednesday hearing the embezzlement of billions of rupees in International Security Assistance Force (ISAF) containers case observed that revelations made in the Federal Tax Ombudsman report is just the tip of the iceberg, as further investigations could divulge much more. He said because of smuggling the national exchequer faces a loss of $2 billion every year. The Chief Justice further said that even the Islamabad markets are flooded with the smuggled goods. Justice Ramday said that the domestic barrowing have reached Rs4008 billion since 2008 to 2010. The court wondered that besides the smuggling of alcohol and arms, what else is being smuggled on the pretext of Afghan trade.

The Afghan Transit Trade Agreement (ATTA) scam is bleeding our beleaguered economy dry to the tune of up to Rs37 billion per year . The ATTA allows goods destined for Afghanistan to transit through Pakistan duty free but ATTA goods, amounting to an estimated $2 billion, either stay in Pakistan or are smuggled back in. Described as the “main source of smuggling” in Pakistan, the ATTA scam is hemorrhaging our economy on several fronts. The ATTA has become an unmitigated source of customs duty evasion. When the Federal Board of Revenue (FBR) enhances duties on any product, official imports to Pakistan decline as people shift to import the same product, fraudulently, under the ATTA. Such was the case with stainless steel imports, which doubled under ATTA within six months, immediately after duties were increased on it. So the ATTA has dented the FBR authorities’ ability to accrue revenue via customs duties which, when combined with the stranglehold of the feudal and political classes on preventing income tax collection, has stymied Pakistan’s tax-to-GDP ratio to an eye-watering nine per cent. This is a critical issue for the nation’s economic future. The extent of the problem with ATTA is borne out by the fact that Afghanistan’s per capita imports are 72 per cent higher than Pakistan, even though its GDP per capita is almost 300 per cent lower. The statistics reveal the extent of smuggling into Pakistan. The Afghan economy cannot sustain such high imports. In fact, 80 per cent of these goods are smuggled into Pakistan, damaging local industry and destroying legal businesses here. Worse still, Pakistan’s high-value edibles are smuggled into Afghanistan, bleeding our exchequer further, as both fertilizers and flour are heavily subsidized by the government. The resultant shortage in Pakistan drives up prices — another body blow for the Pakistani people, already bludgeoned by food inflation.

Revenue loss on account of smuggling of Afghan transit trade alone, as estimated by the World Bank, amounted to US$ 35 billion during nine years from 2001 to 2009. It is no secret that Pakistani tax evaders have been transferring to Swiss banks huge amounts of money generated through illegal activities by some politicians, bureaucrats, terrorist networks and businessmen to Swiss banks. White-collar crimes are also responsible for facilitating transfer of capital towards informal economy either from the black market or the formal economy with the connivance of FRB’s officials. Due to Pakistan’s low productivity resulting from massive exemptions, poor administration, low threshold, and lack of transparency and enforcement, the country faces a massive challenge of balancing low revenues and the avaricious politicians, corrupt bureaucrats, and greedy businessmen, who are mostly crook, corrupt and tax evaders, succeed to remit this black money to their hidden accounts in Switzerland and other European countries. On the one hand parallel economy in Pakistan is growing at an alarming rate of 20 percent per annum and on the other hand, according to an estimate, the money lying in Swiss banks of Pakistanis has reached to the tune of US $200 billion. The volume of black money generated in the year 2008-09 alone has been measured by the independent sources which is not less than $ 40 billion. The rent-seekers and beneficiaries of loan write-offs in Pakistan have also shifted funds worth billions of dollars to Switzerland.

What caused food inflation?

2011-02-14T16:25:00.001+05:00

In 2008, the government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly,sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

Some have attributed this rise in prices to recent flood and global food crisis. Yet some relate this price increase to poor harvest and strong demand from emerging economies.

This food inflation is a cause of concern for the policy makers and it is suggested that underlying the sudden, volatile uprising in Egypt and Tunisia is a growing global crisis sparked by soaring food prices.

Here is an excerpt from an article that throws flood light on to the causes of food price escalation.

The cause of the recent jump in global food prices remains a matter of debate. Some analysts blame the Federal Reserve’s “quantitative easing” program (increasing the money supply with credit created with accounting entries), which they warn is sparking hyperinflation. Too much money chasing too few goods is the classic explanation for rising prices.

The problem with that theory is that the global money supply has actually shrunk since 2006, when food prices began their dramatic rise. Virtually all money today is created on the books of banks as “credit” or “debt,” and overall lending has shrunk. This has occurred in an accelerating process of deleveraging (paying down or writing off loans and not making new ones), as the subprime housing market has collapsed and bank capital requirements have been raised. Although it seems counterintuitive, the more debt there is, the more money there is in the system. As debt shrinks, the money supply shrinks in tandem.

That is why government debt today is not actually the bugaboo it is being made out to be by the deficit terrorists. The flipside of debt is credit, and businesses run on it. When credit collapses, trade collapses. When private debt shrinks, public debt must therefore step in to replace it. The “good” credit or debt is the kind used for building infrastructure and other productive capacity, increasing the Gross Domestic Product and wages; and this is the kind governments are in a position to employ. The parasitic forms of credit or debt are the gamblers’ money-making-money schemes, which add nothing to GDP.

Prices have been driven up by too much money chasing too few goods, but the money is chasing only certain selected goods. Food and fuel prices are up, but housing prices are down. The net result is that overall price inflation remains low.

While quantitative easing may not be the culprit, Fed action has driven the rush into commodities. In response to the banking crisis of 2008, the Federal Reserve dropped the Fed funds rate (the rate at which banks borrow from each other) nearly to zero. This has allowed banks and their customers to borrow in the U.S. at very low rates and invest abroad for higher returns, creating a dollar “carry trade.”

Meanwhile, interest rates on federal securities were also driven to very low levels, leaving investors without that safe, stable option for funding their retirements. “Hot money” – investment seeking higher returns – fled from the collapsed housing market into anything but the dollar, which generally meant fleeing into commodities.

At one time food was considered a poor speculative investment, because it was too perishable to be stored until market conditions were right for resale. But that changed with the development of ETFs (exchange-traded funds) and other financial innovations.

As first devised, speculation in food futures was fairly innocuous, since when the contract expired, somebody actually had to buy the product at the “spot” or cash price. This forced the fanciful futures price and the more realistic spot price into alignment. But that changed in 1991. In a revealing July 2010 report in Harper’s Magazine titled “The Food Bubble: How Wall Street Starved Millions and Got Away with It,” Frederick Kaufman wrote:

The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That was the year Goldman Sachs decided our daily bread might make an excellent investment. . . .
Robber barons, gold bugs, and financiers of every stripe had long dreamed of controlling all of something everybody needed or desired, then holding back the supply as demand drove up prices.

Strange Coincidence By RK Kaushik

2011-02-11T14:45:00.000+05:00

In history, sometimes along with human beings institutions also migrate. In the year 1947, one such institution, which migrated from Amritsar to Lahore was Muslim Anglo-Oriental (MAO) College. This college had a very famous Principal, who was also the first person from Punjab to get a PhD in English from Cambridge University of England.

It was one day in the summer of 1937 that he, a bachelor, went for shopping in Hall Bazaar of Amritsar. As ill luck would have it, he forgot his purse in the shop and came back. A British lady by the name of Ms. Christable picked up the purse and went next day to return it to Prof. Mohammed Din in his college.

Since the British lady had also been a Cambridge student, an instant friendship started. May be, that was love at first sight. Later, they decided to get married and their Nikah ceremony was performed by Sir Allama Iqbal.

Prof. Mohammed Din had three children — two daughters followed by a son, who was born in 1946. Christable’s younger sister Alys also started visiting Amritsar and developed a liking for a lecturer of English at MAO College named Faiz Ahmed Faiz. The younger sister followed the elder one and married Faiz.

At the time of Partition, most of the Muslim students and teachers of MAO College of Amritsar moved to Pakistan along with the college. The college itself got shifted to the premises of DAV College of Lahore located in the lower Mall. It still runs there.

Prof Mohammed Din was handsome and a voracious reader, besides being a famous Urdu poet, with the surname of Taseer. He took over the Principalship of Islamia College, Lahore. Prof. Mohammed Din Taseer had an early death in the late 50s. His son and two daughters were brought up by his wife Christable — now converted to Islam with the new name Bilquees. The daughters settled in England after marriage in Muslim families and the son, Salman Taseer, became a chartered accountant. He later joined politics and became a famous leader of the Pakistan People’s Party. He became the Governor of Punjab province of Pakistan in May 2008 and was murdered a few days ago by a fanatic.

Sometimes I think that had Prof Mohammed Din not lost his purse in the shop in Hall Bazaar, Amritsar, and had that not been found by the British damsel, many such events would not have happened.

Salman Taseer was murdered because of his stand on the blasphemy law regarding Holy Prophet. There is a strange coincidence. His father too had praised, defended and arranged for the funeral of Illamddin in 1929 because Illamddin, who had killed Rajpal Malhotra, the owner of Hind Pocket Books and father of former Punjab Governor Surender Nath because of his comments on Holy Prophet.

Raymond Davis, Diplomatic Immunity and Hypocrisy of USA

2011-02-07T17:01:00.001+05:00

Article 31(1) of Vienna Convention on Diplomatic Relations 1961 states

A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the case of: …….

Article 41(1) of the convention states

Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving State. They also have a duty not to interfere in the internal affairs of that State.

Raymond Davis, an employee of the American Consulate in Lahore, shot dead two Pakistanis on Jan. 27, claiming that he had acted in self-defense. Davis, driving a white-color car, was later arrested as his car was stuck up in the traffic after his brazen attack. Another Pakistani was crushed to death by the U.S. consulate car, when it arrived at the scene for Davis help. The police registered a double-murder case against the U.S. national on the requests by families of the slain men. The police said the accused had also been charged for carrying illegal arms as he failed to show license for his pistol.
Davis had introduced himself to the police as Technical Advisor in the American Consulate in Lahore.

The Davis incident brings up many questions. Firstly, who IS Raymond Davis? Reports are still mixed. According to ABC News, Davis is a private security officer. The U.S. Embassy in Islamabad calls Davis a "diplomat". The truth is anyone's guess. The U.S Embassy says Davis was "assigned to the U.S. Embassy in Islamabad, has a U.S. diplomatic passport and Pakistani visa valid until June 2012." They have called for his release, saying that as a diplomat, Davis has immunity under the Vienna Convention. But on Sunday night, Dawn News, a local Urdu channel, broadcast what it says are images of Davis' passport -- which did not have a diplomatic visa.

Though the United States on Saturday formally requested diplomatic immunity for an American who killed two people before a large number of people, the US itself has not granted similar immunity to even senior diplomats of other countries involved in such cases in the US. In the 1997 case, Gueorgui Makharadze, the Georgian ambassador in Washington, had killed an American teenager in a road accident. The then US president Bill Clinton had flatly refused to grant diplomatic immunity to the Georgian diplomat and consequently Makharadze was sentenced to 21 years by a US court. Pakistan’s New York-based permanent representative to the UN, Munir Akram, got involved in a case involving his live-in girlfriend, he was not given diplomatic immunity. In a minor case of very little significance in 1982, a North Korean diplomat grabbed a woman’s breasts in a park in Eastchester, outside New York City and then took shelter in his country’s UN mission for 10 months before he finally pleaded guilty of a minor charge and then left the country. Minister Kamal Nath, a Congress Leader and a Indian Union Minister in the Government led by Prime Minister Dr. Manmohan Singh, had sought diplomatic immunity who is an accused in the infamous Sikh Genocide of 1984. After being summoned by the US Court in 2010, he has been denied diplomatic immunity by US Department of State.

United States is equally hypocrite when its diplomats are involved in abuse of diplomatic immunity. An American Marine serving his embassy in Bucharest, Romania, collided with a taxi and killed the popular Romanian musician Teo Peter on December 3, 2004. Christopher Van Goethem, allegedly drunk, did not obey a traffic signal to stop, which resulted in the collision of his Ford Expedition with the taxi the rock star was travelling in. Van Goethem's blood alcohol content was estimated at 0.09% from a breathalyser test, but he refused to give a blood sample for further testing and left for Germany before charges could be filed in Romania. The Romanian government requested the American government lift his immunity, which it has refused to do. An American diplomat, Consul General Douglas Kent, stationed in Vladivostok, Russia, was involved in a car accident on October 27, 1998, that left a young man, Alexander Kashin, crippled. Kent was not prosecuted in a U.S. court. Under the Vienna Convention on Consular Relations of 1963, diplomatic immunity does not apply to civil actions relating to vehicular accidents. However, on 10 August 2006, a U.S. Court of Appeals ruled that since he was using his own vehicle for consular purposes, Kent may not be sued civilly.

The hypocrisy of United States does not end with diplomats only, it extends to other diplomatic immunity areas as well. The biggest headache for the British authorities remains the collection of fines from diplomatic missions resulting from their refusal to pay the congestion charge for driving into the center of London. Embassies have clocked up fines totaling 36 million pounds (US$54 million), with the U.S. embassy alone owing 3.8 million pounds, the figures showed. UNITED NATIONS – Diplomatic immunity might allow foreign embassies to avoid paying parking fines. It’s nearly $18 million dollars, with the Top Ten worst offenders accounting for approximately $8 million of this staggering figure. Congressman Weiner said ““It’s insulting to all New Yorkers that countries like Yemen, Zimbabwe and Iran owe the City millions in unpaid parking tickets”.

The United States has had a history of being reluctant to pay its U.N. dues, with critics of the world body charging it has a bloated and sometimes corrupt bureaucracy. U.N. supporters say the dues are cheap at the price. The announcement about the reduction in U.S. arrears at the United Nations comes as U.S. Republicans threatened on Tuesday to use their new power as the majority in the House of Representatives to withhold funding for the world body, which they accused of waste and bias. The United States has paid off more than a third of the nearly $1.2 billion in payments it owed the United Nations at the end of last year.

Raymond Davis Incident - Same Happened Once in 1964

I am pasting below an excerpt from the Imam Khomeini's Speech that he delivered after a similar incident (referring to Raymond Davis Incident) took place in Iran - 1964. After the speech, which incited a lot of people, he was sent in exile in November the same year. I am sure you will be able to relate it with what has happened in Lahore.....

Khomeini's Speech Excerpts “The Granting of Capitaluatory Rights to the USA“ 27 October, 1964

.I cannot express the sorrow I feel in my heart Iran no longer has any festival to celebrate; they have turned our festival into mourning…They have sold us, they have sold our independence; but still they light up the city and dance The dignity of the Iranian Army has been trampled underfoot! A law has been put before the Majlis according to which we are to accede to the Vienna Convention, and a provision has been added to it that all American military advisers, together with their families, technical, and administrative officials, and servants “ in short, anyone in any way connected to them " are to enjoy legal immunity with respect to any crime they may commit in Iran. If some American's servant, some American cook, assassinates your marja in the middle of the bazaar, or runs over him, the Iranian police do not have the right to apprehend him! Iranian courts do not have the right to judge him! The dossier must be sent to America, so that our master there can decide what is to be done They have reduced the Iranian people to a level lower than that of the American dog. If someone runs over a dog belonging to an American, he will be persecuted. But if an American cook runs over the Shah, the head of the state, no one will have the right to interfere with him. Why? Because they wanted a loan and Americans demanded this in return.

Source: Islam and Revolution: Writings and Declarations of Imam Khomeini, p 181-188.

A visiting delegation of the powerful US House Armed Services Committee conveyed a veiled threat on Friday that Pakistan-US defense cooperation could be under cloud if the standoff persisted on the issue of immunity for Raymond Davis, an American national accused of killing two men in Lahore.

Shumaila, the widow of Muhammad Faheem, one of the two civilians shot dead in Lahore by a US citizen Raymond Davis committed suicide after taking poisonous pills on Sunday. The United States on Monday called the suicide of the wife of a Pakistani shot by a US official "a tragedy" but renewed calls on the country to free the American. The United States has put all bilateral contacts with Pakistan on hold until Islamabad releases an employee of the its consulate in Lahore, arrested for shooting down two men, diplomatic sources told Dawn.

The government on Saturday appeared to be all set to grant `immunity` to Raymond Davis, accused of double murder in Lahore, after Washington limited its bilateral interaction with Islamabad till the resolution of the matter. Apart from the pressure from Washington, what may have led the government to this decision was a message from Pakistan`s Ambassador to the US, Hussain Haqqani. He urged the government to grant immunity to Davis at the earliest. His message was sent after the State Department virtually snapped all communication with the embassy in Washington. According to a top diplomatic source, a cable from the Washington embassy clearly warned that the diplomatic stand-off with the US was likely to grow more intense with each passing day. The cable is said to have also conveyed the strong sentiments in Washington on the issue and said that the US could go all out to get Davis released.

Below is a last paragraph of a column from Mr. Irfan Siddiqi on the subject of this blog:

Difference in Cash and Credit Price and Islamic Finance

2011-02-03T11:32:00.001+05:00

Difference of cash and credit price charged by suppliers looks like Time value of Money and in Islam charging for time in relation to money is prohibited as Riba. Is it so? The answer can be found by analyzing what is Riba, nature of money in Islamic Economics, Time Value of Money and rulings on credit transactions.

Usury from Medieval Latin usuria, "interest", or from Latin usura, "interest") originally was the charging of interest on loans; this included charging a fee for the use of money, such as at a bureau de change. In places where interest became acceptable, usury was interest above the rate allowed by law. Today, usury commonly is the charging of unreasonable or relatively high rates of interest. The term is largely derived from Christian religious principles; Riba is the corresponding Arabic term and ribbit is the Hebrew word. "When money is lent on a contract to receive not only the principal sum again, but also an increase by way of compensation for the use, the increase is called interest by those who think it lawful, and usury by those who do not." (Blackstone's Commentaries on the Laws of England, p. 1336).

The Holy Qur'an did not give any definition for the term for the simple reason that it was well known to its immediate audience. It is like the prohibition of pork, liquor, gambling, adultery etc, which were imposed without giving any hard and fast definition because all these terms were well known and there was no ambiguity in their meaning. Similar was the case of riba. It was not a term foreign to Arabs. They all used the term in their mutual transactions. Not only Arabs but all the previous societies used to practice it in their financial dealings and nobody had any confusion about its exact sense.

Hadith while explaining the word riba has mentioned in detail the transactions of riba which were used to be effected by the Arabs of Jahiliyya on the basis of which the earliest commentators of the Holy Qur'an have defined riba in clear terms. Imam Abubakr Al-Jassas (D.380 AH) in his famous work Ahkamul Qur'an has explained riba in the following words: "And the riba which was known to and practiced by the Arabs was that they used to advance loan in the form of Dirham (silver coin) or Dinar (gold coin) for a certain term with an agreed increase on the amount of the principal advanced." On the basis of this practice the same author has defined the term in the following words: "The riba of Jahiliyya is a loan given for stipulated period with a stipulated increase on the principal payable by the loanee." The well-known Imam Fakhruddin Al-Raazi has mentioned the practice of riba in the days of Jahiliyya as follows: "As for the riba An-Nasiah, it was a transaction well-known and recognized in the days of Jahiliyya i.e. they used to give money with a condition that they will charge a particular amount monthly and the principal will remain due as it is. Then on the maturity date they demanded the debtor to pay the principal. If he could not pay, they would increase the term and the payable amount. So it was the riba practiced by the people of Jahiliyya."

The claim of an increased amount over the principal had different forms in the days of Jahiliyya. Firstly, while advancing a loan the creditor used to claim an increased amount over the principal and would advance loan on this clearly stipulated condition as is mentioned by Imam Al-Jassas in his Ahkamul Qur'an already quoted above. Secondly, the creditor used to charge a monthly return from the debtor while the principal amount would remain intact up to the day of maturity as mentioned by Imam Ar-Raazi and Ibn Aadil already quoted. The third form is mentioned by Mujahid, but the full explanation of this transaction is given by Ibn Jarir himself on the authority of Qatadah in the following words: "The Riba of Jahiliyya was a transaction whereby a person used to sell a commodity for a price payable at a future specific date, thereafter when the date of payment came and the buyer was not able to pay, the seller used to increase the amount due and give him more time." The same explanation has been given by al-Suyuti on the authority of Faryabi in the following words: "They used to purchase a commodity on the basis of deferred payment, then on the date of maturity the sellers used to increase the due amount and increase the time of payment." This form of Riba has been frequently mentioned by the commentators of the Holy Qur'an because they wanted to explain a particular sentence of the verses of Riba which is as follows: "The non-believers say that sale is very similar to Riba." (Aya 275 of Sura Al-Baqarah). This saying of the non-believers clearly refers to the particular transaction of sale mentioned above. Their objection was that when we increase the price of commodity in the original transaction of sale because of its being based on deferred payment, it is treated as a valid sale. But when we want to increase the due amount after the maturity date, when the debtor is not able to pay, it is termed as Riba while the increase in both cases seems to be similar. This objection of the non-believers of Makkah has been specifically mentioned by the famous commentator Ibn Abi Hatim on the authority of Said ibn Jubair: "They used to say that it is all equal whether we increase the price in the beginning of the sale, or we increase it at the time of maturity. Both are equal. It is this objection which has been referred to in the verse by saying 'They say that the sale is very similar to Riba.'” The same explanation is given in al-Bahr al-Muheet by Abu Hayyan and several other original commentators of the Holy Qur'an. It clearly shows that the practice of increase at the time of maturity relates to two situations: firstly, a situation where the original transaction was that of sale of a commodity as mentioned by Qatadah, Faryabi, Saeed Ibn Jubair etc, and the second situation was where the original transaction was that of a loan whereby monthly interest used to be charged by the creditor and the principal amount used to remain intact until the date of maturity, and if the debtor would not pay the principal at that point of time, the creditor used to increase the due amount on the principal in exchange of further time given to debtor. It is thus established that the Riba prohibited by the Holy Qur'an was not confined to one transaction only. It had different forms which all were practiced by the Arabs of Jahiliyya. The common feature of all these transactions is that an increased amount was charged on the principal amount of a debt. At times, this debt was created through a transaction of sale and it was created through a loan. Similarly, the increased amount was at times charged on monthly basis, while the principal was to be paid at a stipulated date, and some time it was charged along with the principal. All these forms used to be called Riba because the lexical meaning of the term is increase. That is why, the commentators of the Holy Qur'an like Imam Abu bakr al-Jassas have defined the term in the following words: "The Riba of Jahiliyya is a loan given for a stipulated period against increase on the principal payable by the Loanee."

One of the wrong presumptions on which all theories of interest are based is that money has been treated as a commodity. It is, therefore, argued that just as a merchant can sell his commodity for a higher price than his cost, he can also sell his money for a higher price than its face value, or just as he can lease his property and can charge a rent against it, he can also lend his money and can claim interest thereupon.

Imam Al-Ghazzali (d.505 A.H.) the renowned jurist and philosopher of the Islamic history has discussed the nature of money in an early period when the Western theories of money were non-existent. He says:

"The creation of dirhams and dinars (money) is one of the blessings of Allah…. They are stones having no intrinsic usufruct or utility, but all human beings need them, because every body needs a large number of commodities for his eating, wearing etc, and often he does not have what he needs and does have what he needs not.. Therefore, the transactions of exchange are inevitable. But there must be a measure on the basis of which price can be determined, because the exchanged commodities are neither of the same type, nor of the same measure which can determine how much quantity of one commodity is a just price for another. Therefore, all these commodities need a mediator to judge their exact value…. Allah Almighty has, therefore, created dirhams and dinars (money) as judges and mediators between all commodities so that all objects of wealth are measured through them… and their being the measure of the value of all commodities is based on the fact that they are not an objective in themselves. Had they been an objective in themselves, one could have a specific purpose for keeping them which might have given them more importance according to his intention while the one who had no such purpose would have not given them such importance and thus the whole system would have been disturbed. That is why Allah has created them, so that they may be circulated between hands and act as a fair judge between different commodities and work as a medium to acquire other things…. So, the one who owns them is as he owns every thing, unlike the one who owns a cloth, because he owns only a cloth, therefore, if he needs food, the owner of the food may not be interested in exchanging his food for cloth, because he may need an animal for example. Therefore, there was needed a thing which in its appearance is nothing, but in its essence is everything. The thing which has no particular form may have different forms in relation to other things like a mirror which has no color, but it reflects every color. The same is the case of money. It is not an objective in itself, but it is an instrument to lead to all objectives…

So, the one who is using money in a manner contrary to its basic purpose is, in fact, disregarding the blessings of Allah. Consequently, whoever hoards money is doing injustice to it and is defeating their actual purpose. He is like the one who detains a ruler in a prison…

And whoever effects the transactions of interest on money is, in fact, discarding the blessing of Allah and is committing injustice, because money is created for some other things, not for itself. So, the one who has started trading in money itself has made it an objective contrary to the original wisdom behind its creation, because it is injustice to use money for a purpose other than what it was created for…. If it is allowed for him to trade in money itself, money will become his ultimate goal and will remain detained with him like hoarded money. And imprisoning a ruler or restricting a postman from conveying messages is nothing but injustice."

Time value of Money has been defined as The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. Money that you hold today is worth more because you can invest it and earn interest. After all, you should receive some compensation for foregoing spending. A key concept of TVM is that a single sum of money or a series of equal, evenly-spaced payments or receipts promised in the future can be converted to an equivalent value today. Conversely, you can determine the value to which a single sum or a series of future payments will grow to at some future date. The basic idea of time value of money is that a Rupee today is worth more than a Rupee tomorrow. This can be shown in many ways, many people find it easiest to understand if they think in terms of something they already know: food. For example having the money today allows you to buy some food immediately. Alternatively you may be willing to forgo current consumption and wait until later to purchase your food. Thus you could lend your "food money" to another with the promise of being paid back at some future time. Since you are passing up food today you would demand a return sufficient to allow you to buy at least as much food in the future that you are giving up now. As we do not know the future this type of deal involves risks. For example the borrower may decided to not pay you back. This is called default risk. Or the borrower may pay you back but due to rising prices you can no longer purchase the same amount of food as you had expected to be able to buy. As a result of these risks (you as a lender) would require a higher interest rate to compensate for accepting the risks. However if you ask for too high of interest rates you will not find any takers for your loan.

Islam acknowledges an increment in a commodity’s price in any sale contract to be paid at a future date, as long as money’s time value is not claimed as a predetermined value. In other words, any conditional increase in the loan’s principal in return for a deferred repayment due to an expected depreciation in the value of the money, asset, or other factors (e.g., inflation and commercial losses) is prohibited. The following few quotations from traditional jurists exemplify that increasing the price of a commodity for delay is acceptable:

1. Al-Kasani (Hanafi) in Bada’i`i al-Sana’i`i: “The price may be increased based on deferment.”
2. Ibn Rushd (Maliki) in Bidayat al-Mujtahid: “He has given time a share in the price.”
3. Al-Nawawi (Shafi`i) in Al-Majmu`: “Deferment earns a portion of the price.”
4. ‘Ibn Taymiyah (Hanbali) in his Fatawa: “Deferment takes a share of the price.”

This is tantamount to the acceptance of time value in the pricing of goods. What is prohibited is any addition to the commodity’s price once it has been mutually agreed upon, because of any delay in its payment. Such a prohibition also suggests that Islam does not permit a fixed predetermined time value for money. The reasons behind the permissibility of increasing the price of a commodity in credit sales is that once the commodity is sold, even on credit, the purchaser retains its ownership on a permanent basis, and thus the seller has no right to reprice the sold commodity, since it no longer belongs to him/her. Jalal al-Din al-Suyuti (d. 911/1507) and Ibn Jarir al-Tabari (d. 310/922) reported the similar situation of involvement with riba in which a person sold a commodity on credit; when the payment was due and the purchaser could not repay it, the price was increased and the time for payment was extended. Imam Tirmidhi (d. 279/857) reported that the Prophet (pbuh) forbade “two sales in a single contract.”

Following is a Hadith from Al-Muwata 31.74, which throws some light on the term “Two Sales in One Sale”.

Yahya related to me from Malik that he had heard that al-Qasim ibn Muhammad was asked about a man who bought goods for 10 dinars cash or fifteen dinars on credit. He disapproved of that and forbade it.

Malik said that if a man bought goods from a man for either 10 dinars or 15 dinars on credit, that one of the two prices was obliged on the buyer. It was not to be done because if he postponed paying the ten, it would be 15 on credit, and if he paid the ten, he would buy with it what was worth fifteen dinars on credit.

Malik said that it was disapproved of for a man to buy goods from someone for either a dinar cash or for a described sheep on credit and that one of the two prices was obliged on him. It was not to be done because the Messenger of Allah, may Allah bless him and grant him peace, forbade two sales in one sale. This was part of two sales in the one sale.

Malik spoke about a man saying to another, "'I will either buy these fifteen sa of ajwa dates from you, or these ten sa of sayhani dates or I will buy these fifteen sa of inferior wheat or these ten sa of Syrian wheat for a dinar, and one of them is obliged to me.' Malik said that it was disapproved of and was not halal. That was because he obliged him ten sa of sayhani, and left them and took fifteen sa of ajwa, or he was obliged fifteen sa of inferior wheat and left them and took ten sa of Syrian wheat. This was also disapproved of, and was not halal. It resembled what was prohibited in the way of two sales in one sale. It was also included under the prohibition against buying two for one of the same sort of food."

Islamic jurists have explained this to mean that, for instance, if a person tells someone: “I will sell this cloth for ten (dirhams) in cash and on credit for twenty (dirhams)” and, at separation, one price is not settled. If one of the two prices is settled, he sale is valid. Al-Tirmidhi also added that if a seller says: “I sell the cloth for 10 (dirhams) cash and 20 (dirhams) on credit” and the buyer accepts one of these prices or says: “I will purchase it for 20 (dirhams) on credit,” or the parties differ on the price, the sale is still valid.

While it is best to buy an article by paying cash, it is also permissible to buy on credit by mutual consent. A group of jurists are of the opinion that, should the seller increase his price if the buyer asks for deferred payments, as is common in installment buying, the price differential due to the time delay resembles interest, which is likewise a price for time; accordingly, they declare such sales to be haram. However, the majority of scholars permit it because the basic principle is the permissibility of things, and no clear text exists prohibiting such a transaction. Furthermore, there is, on the whole, no resemblance to interest in such a transaction, since the seller is free to increase the price as he deems proper, as long as it is not to the extent of blatant exploitation or clear injustice, in which case it is haram. Al-Shawkani says, "On the basic of legal reasons, the followers of Shafi'i and Hanafi schools, Zaid bin 'Ali, al-Muayyid Billah, and the majority of scholars consider it lawful." (Nayl al-awtar,vol. 5, p. 153. Al-Shawkani said, "We have compiled a treatise on this subject and have called it 'Shifa al'ilal fi hukum ziyadat al-thamam li mujarrad al-ajal' (The Reason for Increasing the Price Due to Lapse of Time), and have researched it thoroughly.")

The condition for the credit price to be different from cash price of a commodity is that the parties to transaction must settle one price before parting otherwise the difference of cash and credit price is not permitted.When one of the price is settled, seller cannot change the price based on any change in payment period as this would constitute Riba.

Money’s time value is acceptable in the case of pricing assets and their usufruct, it is not acceptable in the case of any addition to the loan’s or debt’s principal. Time valuation is possible only in business and the trade of goods, not in the exchange of monetary values and loans or debts, as the Shari`ah considers a loan to be a virtuous act from which one cannot take any benefit. Therefore, no time value can be added to a loan’s or a debt’s principal after it has been created or the purchaser’s liability has been stipulated.

Yusuf Al-Qaradawi has followed the footsteps of Hazrat Umar (RAA) who said that “We have given up 90% of all legitimate transactions for the fear that an element of Riba might be present in them.” When you are in doubt about a transaction whether it involves an element of Riba or not just give up.

Suicide Bombings

2011-01-29T19:04:00.001+05:00

A suicide attack (also known as suicide bombing or "kamikaze") is an attack intended to kill others and inflict widespread damage, in which the attacker expects or intends to die in the process.

In the Bible, Samson sacrificed himself in bringing down the temple on the Philistine leadership, killing more through his death than he did during his life. The Spartans, at Thermopylae, faced down the Persians, knowing that the doomed effort would nevertheless delay the invading army long enough to give the Athenians time to prepare Greek defenses. In the first century AD in the Roman province of Judea, Jewish Zealots and Sicarians (”dagger men”) launched suicide missions, mostly against Jewish moderates, to provoke an uprising against Roman rule.

Modern suicide bombing as a political tool can be traced back to the assassination of Tsar Alexander II of Russia in 1881. Alexander fell victim to a Nihilist plot. While driving on one of the central streets of Saint Petersburg, near the Winter Palace, he was mortally wounded by the explosion of hand-made grenades and died a few hours afterwards. The Tsar was killed by a member of Narodnaya Volya, Ignacy Hryniewiecki, who died while intentionally exploding the bomb during the attack. Rudolf Christoph Freiherr von Gersdorff intended to assassinate Adolf Hitler by suicide bomb in 1943, but was unable to complete the attack.During the Battle for Berlin the Luftwaffe flew Selbstopfereinsatz against Soviet bridges over the Oder river. These missions were flown by pilots of the Leonidas Squadron under the command of Lieutenant Colonel Heiner Lange. From 17 April until 20 April 1945, using any aircraft that were available, the Luftwaffe claimed that the squadron destroyed 17 bridges, however the military historian Antony Beevor when writing about the incident thinks that this was exaggerated and that only the railway bridge at Küstrin was definitely destroyed. He comments that "thirty-five pilots and aircraft was a high price to pay for such a limited and temporary success". The missions were called off when the Soviet ground forces reached the vicinity of the squadron's airbase at Jüterbog.Following World War II, Viet Minh "death volunteers" fought against the French Colonial Forces by using a long stick-like explosive to destroy French tanks.

In America’s first war against Islam, Americans were the ones who introduced the use of suicide bombers. Indeed, the American seamen who perished in the incident were among the U.S. military’s first missing in action. It was September 4, 1804. The United States was at war with the Barbary pirates along the North African coast. The U.S. Navy was desperate to penetrate the enemy defenses. Commodore Edward Preble, who headed up the Third Mediterranean Squadron, chose an unusual stratagem: sending a booby-trapped U.S.S. Intrepid into the bay at Tripoli, one of the Barbary states of the Ottoman empire, to blow up as many of the enemy’s ships as possible. U.S. sailors packed 10,000 pounds of gunpowder into the boat along with 150 shells. The crew of the boat then guided the Intrepid into the bay at night. So as not to be captured and lose so much valuable gunpowder to the enemy, they chose to blow themselves up with the boat. The explosion didn’t do much damage — at most, one Tripolitan ship went down — but the crew was killed just as surely as the two men who plowed a ship piled high with explosives into the U.S.S. Cole in the Gulf of Aden nearly 200 years later.Despite the failure of the mission, Preble received much praise for his strategies. “A few brave men have been sacrificed, but they could not have fallen in a better cause,” opined a British navy commander. The Pope went further: “The American commander, with a small force and in a short space of time, has done more for the cause of Christianity than the most powerful nations of Christiandom have done for ages!” Preble chose his tactic because his American forces were outgunned. It was a Hail Mary attempt to level the playing field. The bravery of his men and the reaction of his supporters could be easily transposed to the present day, when “fanatics” fighting against similar odds beg to sacrifice themselves for the cause of Islam and garner the praise of at least some of their religious leaders. The blowing up of the Intrepid was not the only act of suicidal heroism in U.S. military history. We routinely celebrate the brave sacrifices of soldiers who knowingly give up their lives in order to save their unit or achieve a larger military mission. We commemorate the sacrifice of the defenders of the Alamo, who could have, after all, slunk away to save themselves and fight another day. The poetry of the Civil War is rich in the language of sacrifice. In Phoebe Cary’s poem “Ready” from 1861, a black sailor, “no slavish soul had he,” volunteers for certain death to push a boat to safety.

The doctrine of asymmetric warfare views suicide attacks as a result of an imbalance of power, in which groups with little significant power resort to suicide bombing as a convenient tactic (see advantages noted above) to demoralize the targeted civilians or government leadership of their enemies. Suicide bombing may also take place as a perceived response to actions or policies of a group with greater power. Groups which have significant power have no need to resort to suicide bombing to achieve their aims; consequently, suicide bombing is overwhelmingly used by guerrillas, and other irregular fighting forces.

Suicide missions played a key role in European history. “Books written in the post-9/11 period tend to place suicide bombings only in the context of Eastern history and limit them to the exotic rebels against modernism,” writes Niccolo Caldararo in an essay on suicide bombers. “A study of the late 19th century and early 20th would provide a spate of examples of suicide bombers and assassins in the heart of Europe.” These included various European nationalists, Russian anarchists, and other early practitioners of terrorism. Given the plethora of suicide missions in the Western tradition, it should be difficult to argue that the tactic is unique to Islam or to fundamentalists. Yet some scholars enjoy constructing a restrictive genealogy for such missions that connects the Assassin sect (which went after the great sultan Saladin in the Levant in the twelfth century) to Muslim suicide guerrillas of the Philippines (first against the Spanish and then, in the early twentieth century, against Americans). They take this genealogy all the way up to more recent suicide campaigns by Hezbollah, Hamas, al-Qaeda, and Islamic rebels in the Russian province of Chechnya. The Tamil Tigers of Sri Lanka, who used suicide bombers in a profligate fashion, are ordinarily the only major non-Muslim outlier included in this series. Uniting suicide attackers have reasons behind the missions. Three salient common factors stand out. First, suicidal attacks, including suicide bombings, are a “weapon of the weak,” designed to level the playing field. Second, they are usually used against an occupying force. And third, they are cheap and often brutally effective.

Remove the occupying force, as Robert Pape argues in his groundbreaking book on suicide bombers, Dying to Win, and the suicide missions disappear. It is not a stretch, then, to conclude that we, the occupiers (the United States, Russia, Israel), through our actions, have played a significant part in fomenting the very suicide missions that we now find so alien and incomprehensible in Iraq, Afghanistan, Chechnya, Lebanon, and elsewhere. The archetypal modern suicide bomber first emerged in Lebanon in the early 1980s, a response to Israel’s invasion and occupation of the country. “The Shiite suicide bomber,” writes Mike Davis in his book on the history of the car bomb, Buda’s Wagon, “was largely a Frankenstein monster of [Israeli Defense Minister] Ariel Sharon’s deliberate creation.” Not only did U.S. and Israeli occupation policies create the conditions that gave birth to these missions, but the United States even trained some of the perpetrators. The U.S. funded Pakistan’s intelligence service to run a veritable insurgency training school that processed 35,000 foreign Muslims to fight the Soviets in Afghanistan in the 1980s. Charlie Wilson’s War, the book and movie that celebrated U.S. assistance to the mujihadeen, could be subtitled: Suicide Bombers We Have Known and Funded.

We have been conditioned into thinking of suicide bombers as targeting civilians and so putting themselves beyond the established conventions of war. As it happens, however, the nature of war has changed in our time. In the twentieth century, armies began to target civilians as a way of destroying the will of the population, and so bringing down the leadership of the enemy country. Japanese atrocities in China in the 1930s, the Nazi air war against Britain in World War II, Allied fire bombings of German and Japanese cities, the nuclear attacks against Hiroshima and Nagasaki, U.S. carpet bombing in Cambodia and Laos, and the targeted assassinations of the Phoenix program during the Vietnam War, Russian depredations in Afghanistan and Chechnya, the tremendous civilian casualties during the Iraq War: all this has made the idea of conventional armies clashing in an area far from civilian life a quaint legacy of the past. Terrorist attacks against civilians, particularly September 11th, prompted military historian Caleb Carr to back the Bush administration’s declaration of a war against terror. “War can only be answered with war,” he wrote in his best-selling The Lessons of Terror. “And it is incumbent on us to devise a style of war more imaginative, more decisive, and yet more humane than anything terrorists can contrive.” This more imaginative, decisive, and humane style of war has, in fact, consisted of stepped-up aerial bombing, beefed-up Special Forces (to, in part, carry out targeted assassinations globally), and recently, the widespread use of unmanned aerial drones like the Predator and the Reaper, both in the American arsenal and in 24/7 use today over the Pakistani tribal borderlands. “Predators can become a modern army’s answer to the suicide bomber,” Carr wrote. Carr’s argument is revealing. As the U.S. military and Washington see it, the ideal use of Predator or Reaper drones, armed as they are with Hellfire missiles, is to pick off terrorist leaders; in other words, a mirror image of what that Tamil Tiger suicide bomber (who picked off the Indian prime minister) did somewhat more cost effectively. According to Carr, such a strategy with our robot planes is an effective and legitimate military tactic. In reality, though, such drone attacks regularly result in significant civilian casualties, usually referred to as “collateral damage.” According to researcher Daniel Byman, the drones kill 10 civilians for every suspected militant. As Tom Engelhardt of TomDispatch.com writes, “In Pakistan, a war of machine assassins is visibly provoking terror (and terrorism), as well as anger and hatred among people who are by no means fundamentalists. It is part of a larger destabilization of the country.”

So, the dichotomy between a “just war,” or even simply a war of any sort, and the unjust, brutal targeting of civilians by terrorists has long been blurring, thanks to the constant civilian casualties that now result from conventional war-fighting and the narrow military targets of many terrorist organizations. West has their suicide bombers — they call them heroes. They have their culture of indoctrination — they call it basic training. They kill civilians — they call it collateral damage. Is this, then, the moral relativism that so outrages conservatives? Of course not. These comparisons are not to excuse the actions of suicide bombers, but to point out the hypocrisy of their black-and-white depictions of noble efforts and their barbarous acts, of their worthy goals and despicable ends. Enlightened Activists — the inhabitants of an archipelago of supposedly enlightened warfare — have been indoctrinated to view the atomic bombing of Hiroshima as a legitimate military target and September 11th as a heinous crime against humanity. We have been trained to see acts like the attack in Tripoli as American heroism and the U.S.S. Cole attack as rank barbarism. Explosive vests are a sign of extremism; Predator missiles, of advanced sensibility.

Freedom of Speech and Act Vs. Islam

2011-01-24T18:59:00.000+05:00

Freedom of speech is the freedom to speak freely without censorship or limitation, or both. The synonymous term freedom of expression is sometimes used to indicate not only freedom of verbal speech but any act of seeking, receiving and imparting information or ideas, regardless of the medium used. In practice, the right to freedom of speech is not absolute in any country and the right is commonly subject to limitations. The right to freedom of speech is recognized as a human right under Article 19 of the Universal Declaration of Human Rights and recognized in international human rights law in the International Covenant on Civil and Political Rights (ICCPR). The ICCPR recognizes the right to freedom of speech as "the right to hold opinions without interference. Everyone shall have the right to freedom of expression." According to the Freedom Forum Organization, legal systems, and society at large, recognize limits on the freedom of speech, particularly when freedom of speech conflicts with other values or rights. Limitations to freedom of speech may follow the "harm principle" or the "offense principle", for example in the case of pornography or hate speech. Limitations to freedom of speech may occur through legal sanction or social disapprobation, or both.

The degree to which the right is upheld in practice varies greatly from one nation to another. In many nations, particularly those with relatively authoritarian forms of government, overt government censorship is enforced. Censorship has also been claimed to occur in other forms and there are different approaches to issues such as hate speech,obscenity, and defamation laws even in countries seen as liberal democracies. The majority of African constitutions provide legal protection for freedom of speech. However, these rights are exercised inconsistently in practice. Several Asian countries provide formal legal guarantees of freedom of speech to their citizens. These are not, however, implemented in practice in some countries. In India, Freedom of speech has been restricted by the constitution of the Indian Union by the National Security Act which is still in effect and laws like POTO and TADA act in the past. Currently, all members of the European Union are signatories of the European Convention on Human Rights along having various constitutional and legal rights to freedom of expression at the national level. However, Freedom of Speech has limitations in European countries e.g. in Denmark, Traditionally the left-wing parties support freedom of speech but not when such speech is anti-minority and or is blasphemous. In Netherland, the penal code has laws however sanctioning certain types of expression. Such laws and freedom of speech are at the centre of a public debate in The Netherlands after the arrest on 16 May 2008 of cartoonist Gregorius Nekschot, French law prohibits public speech or writings that incite to racial or religious hatred, as well as those that deny the Holocaust. In France, as part of “internal security” enactments passed in 2003, it an offense to insult the national flag or anthem, with a penalty of a maximum 9,000 euro fine or up to six months' imprisonment. Restrictions on "offending the dignity of the republic", on the other hand, include "insulting" anyone who serves the public (potentially magistrates, police, firefighters, teachers and even bus conductors). In Germany, the most important and sometimes controversial regulations limiting freedom of speech and freedom of the press can be found in the Criminal code: e.g. Insult is punishable under Section 185. Satire and similar forms of art enjoy more freedom but have to respect human dignity (Article 1 of the Basic law). Malicious Gossip and Defamation (Section 186 and 187). Hate speech may be punishable if against segments of the population and in a manner that is capable of disturbing the public peace (Section 130 [Agitation of the People]), including racist agitation and anti-semitism. UK law imposes a number of limitations on freedom of speech not found in some other jurisdictions. For example, its laws recognise the crimes of incitement to racial hatred and incitement to religious hatred. UK laws on defamation are also considered among the strictest in the Western world, imposing a high burden of proof on the defendant. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society. This section is double-edged. First it implies that a limitation on freedom of speech prescribed in law can be permitted if it can be justified as being a reasonable limit in a free and democratic society. Conversely, it implies that a restriction can be invalidated if it cannot be shown to be a reasonable limit in a free and democratic society. Despite these protections, Canada has had a string of high-profile court cases in which writers have been prosecuted for their writings, in both magazines and web postings. In the United States freedom of expression is protected by the First Amendment to the United States Constitution. There are several exceptions to this general rule, including copyright protection, the Miller test for obscenity and greater regulation of so-called commercial speech, such as advertising. The Department of Homeland Security "has even gone so far as to tell local police departments to regard critics of the War on Terrorism as potential terrorists themselves."

In all religions there is limitations to Freedom of Speech. Religion holds that we must obey God’s will regardless of what we think. “Above all,” writes the devoutly religious René Descartes, reminding us of the applicable tenet, “we ought to submit to the Divine authority rather than to our own judgment even though the light of reason may seem to us to suggest, with the utmost clearness and evidence, something opposite.” While western religionists today are not calling for death to those who “offend God,” they are calling for—and increasingly achieving—punishment for such “offenders.” They seek to limit and further limit freedom of speech—to build “victory” upon “victory.” Their ultimate goal is—as according to the Bible it must be—to bring all art and communication under God’s authority. On the premises of religion, there is no right to free speech; there is only the “right” to speak the “truth” as revealed by “God.”

Islam allows Freedom of Speech but with limitations as in all other religions and so called modern countries like the examples given above.

Allah (SWT) cursed those who use defamation or hate speech.

Among the Jews there are some who take the words out of their context and utter them with a twist of their tongues to slander the true Deen (faith) and say: "We hear and we disobey;" and "Hear, may you (O Muhammad) hear nothing!" And "Ra'ina" (an ambiguous word meaning: "listen, may you become deaf," or "our shepherd," or "in judeo-Arabic language conveying the sense of "our evil one"). If only they had said: "We hear and we obey;" and "Hear us;" and "Unzurna ("look upon us," or " pay attention to us"): it would have been better for them and more proper. Due to all this Allah has cursed them for their unbelief. In fact with the exception of a few, they have no faith. (Aya 46 of Sura An-Nisa)

As in all other laws who disobeys the law there is punishments, it is similar in Islam. Allah (SWT) says

And if ye are in doubt as to what We have revealed from time to time to Our servant then produce a Surah like thereunto; and call your witnesses or helpers (if there are any) besides Allah if your (doubts) are true. But if ye cannot and of a surety ye cannot then fear the fire whose fuel is Men and Stones which is prepared for those who reject Faith. (Ayat 23-24 of Sura Al-Baqara)

And behold We said to the angels: "Bow down to Adam"; and they bowed down not so Iblis he refused and was haughty he was of those who reject Faith. "But those who reject Faith and belie Our Signs they shall be Companions of the Fire; they shall abide therein." (Ayat 34, 39 of Sura Al-Baqara)

Allah (SWT) has decreed punishment for those who defies His Law.

And well ye knew those amongst you who transgressed in the matter of the Sabbath; We said to them: "Be ye apes despised and rejected." (Aya 65 of Sura Al-Baqara)

We also (sent) Lut: he said to his people: "Do ye commit lewdness such as no people in creation (ever) committed before you? "For ye practice your lusts on men in preference to women: ye are indeed a people transgressing beyond bounds." And his people gave no answer but this: they said "drive them out of your city: these are indeed men who want to be clean and pure!" But We saved him and his family except his wife: she was of those who lagged behind. And We rained down on them a shower (of brimstone): then see what was the end of those who indulged in sin and crime! (Ayat 80-84 of Sura Al-A’raf)

The manners of Prophet (PBUH) in matters of speech

Allah's Apostle neither talked in an insulting manner nor did he ever speak evil intentionally. He used to say, "The most beloved to
me amongst you is the one who has the best character and manners." (Sahih Al-Bukhari 5.104)

I said: Give me some advice. He said: Do not abuse anyone. He said that he did not abuse a freeman, or a slave, or a camel or a sheep thenceforth. He said: Do not look down upon any good work, and when you speak to your brother, show him a cheerful face. This is a good work. (Sunan Abu-Dawood 1889)

The Prophet (peace be upon him) said, "If you guarantee me six things on your part I shall guarantee you Paradise. Speak the
truth when you talk, keep a promise when you make it, when you are trusted with something fulfil your trust, avoid sexual
immorality, lower your eyes, and restrain your hands from injustice." (Al-Tirmidhi 1260)

Allah's Messenger (peace be upon him) said, "Do not speak much without mentioning Allah, for much talk without mention of Allah
produces hardness of heart, and the one who is farthest from Allah is he who has a hard heart." (Al-Tirmidhi 720)

Allah's Apostle (peace be upon him) heard some people disputing about the Qur'an. Thereupon he said: It was because of this that
those gone before you had perished. They set parts of the books against the others (whereas the fact is) that the Book of Allah has
been revealed with one part confirming the others. Therefore, do not falsify some parts with the others and speak only that which
you know; that which you do not know, refer it to one who knows it well. (Al-Tirmidhi 84)

“Everyone shall have the right to express his opinion freely in such manner as would not be contrary to the principles of the Shariah. Everyone shall have the right to advocate what is right, and propagate what is good, and warn against what is wrong and evil according to the norms of Islamic Shariah.” Thus freedom of speech is interpreted and limited by sharia in Islam.

The slogan “Freedom of Speech” is another trick of satanic Western politics to advance its agenda. It is a hypocrisy.

Each European country has law against denying Holocaust. Did we have a page on Holocaust cartoons on Facebook, the ultimate place of liberty? Bishop Richard Williamson was last person to be fined 12,000 Euro on 27th Oct 2009 in Germany. On 14th Jan 2008, Wolfagang Frohlich was imprisoned for 6.5 years in Austria for voicing his opinion about Holocaust. An Iranian paper, in 2006, hosted an International Holocaust Cartoon competition and suggested Western newspapers to publish few of those. Jyllands-Posten Cultural Editor had initially agreed to publish few selected cartoons but later the paper backed out. The Cultural Editor was sent on indefinite leave. The website of Hamshahri newspaper which had organized this competition was hacked and suffered a denial-of-service attack. Jews all over world protested against the competition. Rabbi Marvin Hier termed it as classic formula of Adolf Hitler, which says if there’s a problem, it’s the fault of the Jews. In April 2003, a Danish cartoonist Christoffer Zieler offered some cartoons of Jesus Christ to Jyllands-Posten, Denmark’s largest daily paper and generally seen as right-wing. Zieler received an email back from the paper’s Sunday editor, Jens Kaiser, which said: “I don’t think Jyllands-Posten’s readers will enjoy the drawings. As a matter of fact, I think that they will provoke an outcry. Therefore, I will not use them.” But the same paper in 2005, showing blatant double standard published Prophet Mohammed cartoons.

The wikileaks.org domain name was registered on 4 October 2006. The website was unveiled, and published its first document in December 2006. WikiLeaks states that its "primary interest is in exposing oppressive regimes in Asia, the former Soviet bloc, Sub-Saharan Africa and the Middle East, but we also expect to be of assistance to people of all regions who wish to reveal unethical behaviour in their governments and corporations." WikiLeaks has received praise as well as criticism. The organisation has won a number of awards, including The Economist's New Media Award in 2008 and Amnesty International's UK Media Award in 2009. In 2010, the New York City Daily News listed WikiLeaks first among websites "that could totally change the news", and Julian Assange was named the Readers' Choice for TIME's Person of the Year in 2010. The U.S. Justice Department opened a criminal probe of WikiLeaks and founder Julian Assange shortly after the leak of diplomatic cables began. Access to WikiLeaks is currently blocked in the United States Library of Congress. On 3 December 2010 the White House Office of Management and Budget sent a memo forbidding all unauthorised federal government employees and contractors from accessing classified documents publicly available on WikiLeaks and other websites. The U.S. Army, the Federal Bureau of Investigation and the Justice Department are considering criminally prosecuting WikiLeaks and Assange "on grounds they encouraged the theft of government property",although former prosecutors say doing so would be difficult.

Humans As Rational Beings

2011-01-19T14:46:00.001+05:00

Neoclassical economics is built on very strong assumptions that, over time, have become “established facts.” Most famous among these are that all economic agents (consumers, companies, etc., are fully rational, and that the so-called in- visible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny.

But how rational is human? Only one entity in this entire universe can answer this question with certainty – the One who created all things in this universe.

To Him is due the primal origin of the heavens and the earth; when He decreeth a matter He saith to it: "Be"; and it is. (Aya 117 of Sura Al-Baqara)

Allah (SWT) says in Ayat 19 –21 of Sura Al-Ma’arij

Truly man was created very impatient,

Fretful when evil touches him;

And niggardly when good reaches him

So there are bounds to rationality of human beings. The demands of classically deﬁned rationality, according to Albin, simply go far beyond the capabilities of human actors to deal with the world’s complexities. These are the ‘barriers and bounds to rationality.’

Adam Smith first coined the term “The Invisible Hand” in his important book “The Wealth of Nations.” With this term he was trying to capture the idea that the marketplace would be self-regulating. The basic principle of the invisible hand is that though we may be unaware of it, an unseen hand is constantly prodding us along to act in line with what’s best for the whole economy. This means that when this invisible hand exists, when we all pursue our own interest, we end up promoting the public good, and often more effectively than if we had actually and directly intended to do so. This is a beautiful idea, but the question of course is how closely it represents reality.

That’s Harvard economist Greg Mankiw’s advice to students of all ages:

Economists like me often pretend that people are rational. That is, with mathematical precision, people are assumed to do the best they can to achieve their goals.
For many purposes, this approach is useful. But it is only one way to view human behavior. A bit of psychology is a useful antidote to an excess of classical economics. It reveals flaws in human rationality, including your own.

The main stumbling-block with traditional approaches to development, Sendhil Mullainathan said in a talk this year, is “this little three-pound machine that’s behind your eyes and between your ears” — the human brain. “This machine is really strange, and one of the consequences is that people are weird. They do lots of inconsistent things.

In 2008, a massive earthquake reduced the financial world to rubble. Standing in the smoke and ash, Alan Greenspan, the former chairman of the Federal Reserve Bank once hailed as “the greatest banker who ever lived,” confessed to Congress that he was “shocked” that the markets did not operate according to his lifelong expectations. He had “made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders.”

Why did Mr. Greenspan, along with the rest of the world’s regulators, fail to foresee that this could happen? We think their mistake was to neglect the role of human nature. To prevent future catastrophes, regulators should focus explicitly on how to provide safeguards against two all-too-human frailties explored by decades of work in behavioral economics: bounded rationality and limited self-control.The standard (non-behavioral) economic model has greatly influenced regulators. In that model, economic agents (econs for short) choose optimally, no matter how hard a problem they face. They play chess as well as they play tic-tac-toe. The problem with this approach is that the world is populated by humans, not econs. Humans are not stupid, but when things get complicated they flounder: they suffer from bounded rationality.

Salman Taseer, Malik Mumtaz Hussain Qadri, Aasia Bibi Vs. State

2011-01-14T15:20:00.000+05:00

The objective analysis of all events that culminated in murder is the need of the hour but unfortunately, the analysis so far is a lopsided one either to the one end of the scale or the other end, hence both are extreme views and nothing but is an effort to join the either of the bandwagon.

First, what is the matter of one Aasia Bibi? Asia Bibi, 45, was handed down the death sentence by a court in Nankana district in central Punjab on Monday. Ms Asia’s case dates back to June 2009 when she was asked to fetch water while out working in the fields. But a group of Muslim women labourers objected, saying that as a non-Muslim she should not touch the water bowl. A few days later the women went to a local cleric and alleged that Ms Asia made derogatory remarks about the Prophet (peace be upon him). The cleric went to police, who opened an investigation.

Second, What should be the response of the state as an Islamic Republic? The response of the Govt. should be probe the allegations in a transparent manner and make public all its inquiries in this matter. Federal Minister for Minorities Affairs Shahbaz Bhatti has also urged the provincial government to provide all possible chances to Aasia Bibi to plea her case on merit. Talking to reporters outside parliament house after attending a meeting of National Assembly standing committee on Monday, Mr Bhatti said the government would not allow anyone to misuse the blasphemy law. President Zardari has also sought a report from the minorities` affairs ministry on the sentencing to death on blasphemy charges of a Christian woman of Nankana Sahib. Aasia Bibi was sentenced to death under Sections 295 B and C of the Pakistan Penal Code after an altercation between her and her co-workers over fetching water from fields. According to media reports, police took her into protective custody to shield her from a mob and later registered a case against her. The spokesman said the president had asked Minorities Affairs Minister Shahbaz Bhatti to submit a report on the issue within three days.

The response of the Govt. should be in line with the recommendations of the Standing Committee on Law and Justice, which is being reproduced below.

The Standing Committee on Law and Justice after detailed deliberations decided to recommend the proposed deletion of ‘or imprisonment of life’ from Section 295-C of the Pakistan Penal Code. The members, however, observed that there was a need for a more specific definition of the offence under Section 295 PPC which the members were of the considered opinion was in the present form very generalised. The committee suggests that the matter may be referred to the Council of Islamic Ideology for suggesting a more specific definition of the offence falling under Section 295 PPC As well as for its opinion as to whether during the lifetime of the Holy Prophet (PBUH) or during the period of Khulafa-i-Rashideen or afterwards in any of the Muslim countries, what was the punishment awarded to the offenders for committing offence falling under Section 295 PPC” (Gazette Extraordinary, Feb 22, 1992).

Third, What Salman Taseer did as a representative of the state? After Bibi’s conviction last November, the case seized the attention of Taseer, the outspoken governor of Punjab. Outraging conservatives, he visited Bibi in jail along with his wife, Aamna, and his daughter. He posed for photos, offered warm support, and promised a presidential pardon. He spoke on high authority – President Asif Ali Zardari told Taseer he was “completely behind him”, a reliable source said. He was playing with fire. Religious leaders were outraged at Taseer’s description of the blasphemy statute as a “black law”. Protesters torched the governor’s effigy outside his sweeping residence in central Lahore.

Fourth, What was the aspiration of the public at large? The public reaction to this case has been divided. Protestors in Lahore rallied on 21 November demanding Aasia’s release. Yet only a few days later during another protest in the same city, an Aalmi Tanzim Ahle Sunnat (ATAS) leader Pir Muhammad Afzal Qadri requested Pakistan’s Chief Justice Iftikhar Chaudhry to take suo moto action against Governor Salmaan Taseer for supporting Aasia Bibi.

Fifth, What was the role of our so called learned and moderate civil society in all this incident? Recently a Christian woman, Aasia Bibi, was sentenced to death for allegedly committing blasphemy. Mr Taseer emerged as one of her most high-profile supporters. He not only visited her in jail and held a press conference with her, but also promised to get a presidential pardon for her. Although the pardon was prevented by a court order and the PPP distanced itself from any attempt to amend the blasphemy law, Mr Taseer kept criticising it publicly. Human rights groups say the law is often exploited by religious conservatives as well as ordinary people to settle personal scores. But the law has widespread support in a country that is more than 95 per cent Muslim, and most politicians are loath to be seen as soft on the defence of Islam. Taseer, however, was an outspoken critic. Ms Jahangir criticised the blasphemy law in its present form and observed that laws should be made to protect religious minorities and not to provide a tool to some people to exploit it in the name of religion. Sherry Rehman, Tahira Abdullah and Ali Hassan, rejected the blasphemy law as discriminatory and called for either repealing or suitably amending it.

The big question is what other laws or powers by state in this country are not misused. Here are few examples, where laws are flouted and yet all so called moderates, human rights activists have not uttered any voice but only Blasphemy case.

Pursuant to Art. 265 the Constitution came into force on August 14, 1973, referred to in the said Article as the ‘Commencing day’. The Constitution was held in abeyance by the Proclamation of Martial Law issued by General M. Zia-ul-Haq on July 5, 1977 and published in the Gazette of Pakistan, Extraordinary Part I, at page 411, on the said date. The whole of Pakistan once again came under the control of the Armed Forces of Pakistan on October 12, 1999, by virtue of the Proclamation of Emergency issued by General Pervez Musharraf, Chairman Joint Chiefs of Staff Committee and Chief of Army Staff, on October 14, 1999 and published in the Gazette of Pakistan, Extraordinary Part I, at page 1265, on the said date. The Pakistani daily Dawn — a pro-US paper not known for its anti-war stance — reports that US drones killed over 700 civilians in 44 bombings since Obama took office in January 2009. Of the 44 attacks, only five succeeded in hitting their target. In other words, Obama has surpassed his predecessor’s murderous record in Pakistan. (Of course these attacks are carried out with the complicity of Pakistan’s ruling elites — as Jane Mayer reported, and as Pervez Musharraf confessed — and are cheered on by native informers such as Ahmed Rashid). For more than half a century Kashmir, or Paradise on Earth as it is called, has suffered due to the extremely brutal Indian occupation. Since 1988 over 80 000 civilians including women and children have died at the hands of the Indian army and paramilitary forces. Their crime? They want India to end the brutal occupation of Kashmir, their homeland. The saga of missing persons seems to be getting more and more complicated with every passing day as the governments, whether federal or provincial, political parties and parliament are simply incapable or indifferent to providing the needed support to the Supreme Court to keep intelligence agencies under check and to make them behave as per the law of the land. The latest report from a Sindh village near Moro in which two couples were shot dead, and a woman was allegedly abducted, reinforces the need for taking practical measures that go beyond expressing outrage. Part of the reason why violence against women continues, and is tolerated as a fact of life, is that many sitting in our legislatures espouse the same tribal values that prescribe the death penalty, particularly for women who dare to make a decision to marry out of their own free will. According to the report, a total of 1,981 people — 1,726 men, 177 women and 78 children — were killed last year. The data does not include those killed in road accidents. Of the 447 victims of targeted killings, 215 were killed apparently for their association with major political, religious and nationalist parties, 187 for their ethnic background and 23 on sectarian grounds. In the recent past, a number of sitting and former representatives of the government has been accused of serious corruption. It is general perception that the corruption culture more flourish in PPP regimes. The glaring proof of absence of the rule of law in this regime is clear from the last-one year mega corruption cases of National Insurance Corporation, Pakistan Steel Mills and Rental Power Plants which have been taken up by the Supreme court. The fake degrees issue has most politicians and their party bigwigs scampering around to avoid potential political fallout. But Nawab Muhammad Aslam Raisani is not one of them. “A degree is a degree, whether fake or genuine,” said the swashbuckling chief minister of Balochistan. Siddiqui's supporters, including international human rights organizations, have claimed that Siddiqui was not an extremist and that she and her young children were illegally detained, interrogated and tortured by Pakistani intelligence or U.S. authorities or both during her five-year disappearance. The U.S. and Pakistan governments have denied all such claims. The CCP’s investigation proves the presence of a strong sugar mafia in the country. Despite ample availability of sugar, it is being sold at Rs125 to 135 per kilogramme against a production cost of less than Rs55 per kg.

Sixth, Why Salman Taseer was so outraged and Why Malik Mumtaz Hussain Qadri was compelled to do what he did? Why both took the matter of Aaasia Bibi in their own hands when the matter was being probed into and was in the court to decide?

We claim to be Muslims and that means we have accepted the authority of Allah (SWT) and we have submitted all our wishes to the wish of Allah (SWT) so it is pertinent to know What Allah (SWT) says about Islam, Love of Prophet (PBUH) and our behavior towards that.

O ye who believe! enter into Islam whole-heartedly; and follow not the footsteps of the Evil One; for he is to you an avowed enemy. (Aya 208 of Sura Al-Baqara)

Those to whom We have given the Book rejoice at what hath been revealed unto thee: but there are among the clans those who reject a part thereof. Say: "I am commanded to worship Allah and not to join partners with Him. Unto Him do I call and unto Him is my return." (Aya 36 of Sura Ar-Ra’d)

Once you are in Islam then accept all opf it rather than the part you like and reject the part you dislike.

Allah and His angels send blessings on the Prophet: O ye that believe! send ye blessings on him and salute him with all respect. Those who annoy Allah and his Apostle Allah has cursed them in this world and in the Hereafter and has prepared for them a humiliating Punishment. (Ayat 56-57 of Sura Al-Ahzab)

Love for the Prophet Muhammad (PBUH) is a measure of one's iman (faith and inner conviction) and our iman is completed and perfected only when our love for the Prophet exceeds our love for everything else in this world, including our own lives. The Holy Qur'an says: "The Prophet is preferable for the believers even to their own selves..." (Aya 6 of Sura Al-Ahzab)

Narrated 'Abd Allah bin Hisham: 'We were with the Prophet (SAAW) and he was holding the hand of 'Umar ibnu Al-Khattab (RAA). 'Umar said to him, "O Allah's Messenger (SAAW)! You are dearer to me than everything except my ownself." Allah's Messenger (SAAW) said: "No, by Him in Whose Hand my soul is, (you will not have complete Faith) untill I am dearer to you than your ownself." Then 'Umar (RAA) said: "However, now, by Allah, you are dearer to me than my ownself." He (SAAW) then said: "Now, O 'Umar, (now you are a believer)."

The (Prophet) frowned and turned away. Because there came to him the blind man (interrupting). (Ayat 1-2 of Sura Abasa)

There is no anger against beloved Prophet. Those who take these verses as a disgrace to the Prophet and desires to lower his prestige are on wrong thinking and misguided. Farooque-Azam Hazrat Umar (RAA) came to know that an Imam (Person leading in prayer) recites always this chapter, he sent a man to behead such person as he used to recite the chapter for defaming the prophet. Such a man goes out of Islam and becomes apostate.

The matter of Aasia Bibi was then sub-judice and as a representative of the Islamic Republic of Pakistan, as the official name of the country is, then Salman Taseer was not supposed to comment on it let alone going to the extent of calling the law as “Black Law”. He was not functioning as he should be as head of a province in whose territory such incident happened. He should have referred the matter for suitable amendment in the law to competent authority rather than calling names and showing his anger. He took the matter in his own hands because he thought he is correct and all others are wrong or he had no confidence in the legal course of action.

Malik Mumtaz Hussain Qadri also took the matter in his own hand because he thought that Govt. is not up to the mark and Salman Taseer, the Governor, has no respect for the prophet because he was only vocal on this issue at the expense of many other pressing issues. He also had no confidence in the legal course of action. Because Govt. was fully tilted towards one end.

So why people took matters in their own hands than seeking legal remedy?

There is a sense in which conduct regarded as criminal is often quite the opposite. Far from being an intentional violation of a prohibition, much crime is moralistic and involves the pursuit of justice. It is a mode of conflict management, possibly a form of punishment, even capital punishment. Viewed in relation to law, it is self-help. To the degree that it defines or responds to the conduct of some one else-the victim-as deviant, crime is social control. It should be clear, however, that the victims of moralistic crime may be entirely unaware of why they have been selected, especially when the offender is unknown. Such crimes may therefore be understood as secret social control . In modern society the state has only theoretically achieved a monopoly over the legitimate use of violence. In reality, violence flourishes (particularly in modern America), and most of it involves ordinary citizens who seemingly view their conduct as a perfectly legitimate exercise of social control. It might therefore be observed that the struggle between law and self-help in the West did not end in the Middle Ages, as legal historians claim.It continues. Many people still "take the law into their own hands."

The idea that violence is associated with statelessness still enjoys considerable support. With various refinements and qualifications, an absence of state authority has been used to explain high levels of violence in settings as diverse as the highlands of New Guinea, Lake Titicaca in the Andes, and western Sicily. It has also been used to explain war and, other violent self-help in international relations. A version of the same approach may be relevant to an understanding of self-help in modern society.

In the end, the conclusion that emerges from above discussion is that state failed to perform its functions. Had the state taken serious notice of the case, conduct of Salman Taseer the following events would not have happened.

میں باغی ھوں

2011-01-12T10:50:00.000+05:00

اس دور کے رسم رواجوں سے
ان تختوں سے ان تاجوں سے
جو ظلم کی کوکھ سے جنتے ہیں
انسانی خون سے پلتے ہیں
جو نفرت کی بنیادیں ہیں
اور خونی کھیت کی کھادیں ہیں