A Financial Mirage in the Desert

[elleng]

'The investments were supposed to be blessed, and the bankers were desperately looking for more people to bless them.

It was about two years ago, and I was in Dubai to cover an investment conference at a hotel along Jumeirah Beach. Hundreds of Western bankers dressed in Savile Row suits were packed into an enormous room to bone up on the intricacies of the next new thing in financial products: Shariah-compliant investments.

They wanted to sell them to wealthy, oil-rich Muslim investors who needed a way to increase their fortunes but whose options were limited. Any investment vehicle needed to conform to the spirit of the Koran, which forbids any investments that pay interest. No mortgages. No bonds. No clever derivatives. Just tangible assets in the so-called real economy. . .


The Shariah Committee of the Accounting and Auditing Organization for Islamic Institutions, which is based in Bahrain, ended up changing the rules to make them stricter because of widespread abuse. As Mr. Buiter described them on his blog, “these were window-dressing pseudo-Islamic financial instruments that were mathematically equivalent to conventional debt and mortgage contracts.”

Blessings, alas, can do only so much.'

http://www.nytimes.com/2009/12/01/business/01sorkin.html?hp

[Double T]

1. Financial institutions throughout the world are ALL ABOUT fraud and abuse.

Any investor that would get involved with banking and investment criminals like this deserves to lose their greedy shirt...and probably will.