Talk:Stock Market Gamble

              Allah (swt) : ''Way lul lil Mutaffifeen'' ''Woe to the defrauders''

Today Inshallah I want to discuss with you some aspects of the problems and the turbulence to the stock markets that occurred in the far eastern economies(and now in US) and even impacted the western economies.

        Before I discuss this topic and go into some detail, I want to discuss the way that we should view this topic and approach it. We must approach this topic for the correct motive.

        Some Muslims may discuss this issue because they are just interested in the economic affairs or as just for academic reasons, e.g. some Muslims I know discuss the economic affairs merely to write essays for their courses. We should not approach this topic in this manner, the manner of an economics lesson or lecture.

        Other people may not see the relevance of discussing such a topic, they may say: ''whats the point of going into detail about the subject'' or ''You're making Islam too complicated'' Therefore they may sideline topics such as this and see it as irrelevent.

        As we are Muslims we can only approach this topic from the angle of Islam and the Islamic belief. And if we look to the Prophet (saw) he understood the economic situation at his time and he gave the judgement from Islam relating to it. Many of you may have heard that the Prophet (saw) critised the cheating in the market places, so he stated the ayah from Quran ''Woe to the defrauders (cheaters)'' So the Prophet (saw) criticised the economic situation and the economic practices of the Quraysh like their throwing of stones and cheating in the market places. This shows us that he must have understood the economy of the Quraysh in order to criticise it. Even when he (saw) established the Islamic state he looked at the economic situation not only in his state even in Makkah, the state of the Kuffar. One clear example that illustrates this is when the Quraysh had a famine and were in need of food, the Prophet (saw) sent them food to instigate discussion about his state. Obviously this must have impacted the Quraysh because the people who they belittled and boycotted now were sending them food. The point is that for the Prophet (saw) to send food, he must have firstly understood the economic situation of the Quraysh at that time.

        Similarly it is a must and wholly relavent for us as Muslims to understand the structure of the economies in the Western World and in the Islamic lands and to see their inability to solve peoples problems correctly. And we must also give the verdict from Islam relating to them and the Islamic alternative. This is the way that we should approach the subject of the problems in the stock markets.

            Reality of stock markets and shares in the capitalist system

With this in mind let us look at the events that took place during the summer and towards the end of last year (1997). During the summer of last year many countries in South East Asia suffered drops in the share prices of their companies, a decline in the value of their currencies and also the collapse of some banks and companies. This started in Thailand and then moved to the Philippines, Malaysia and Indonesia, this crisis also spread to South Korea and Taiwan in the north of Asia. It also reached the largest financial base in the region Hong Kong and consequently spread throughout Europe and America.

These problems resulted in a panic across Europe and America, even this week on Tuesday (16/6/98), Jean-Michel Severino, the World Banks vice-president for East Asia and the Pacific stated: ''We are probably at the end of the first cycle of the crisis and we are entering into a deep recession, or you could even use the term depression. This depression could be very long-lasting if it is not handled very very carefully''

Laura Tyson, the former chief economic advisor for the US said that this crisis was : ''the biggest financial crisis the world has faced since the Great Depression''

The question we should ask is: why were and still are so worried about a financial crisis hitting their economies? Why are they so worried if they believe that there economic system is the best system?

The answer to this is that they know that the capitalist economic system is unstable and liable to fluctuations, financial crashes and recessions.

They witnessed in the past, the October 1987 crash, when the Dow Jones Index (Stock exchange) in New York dropped by 22% in a single day.

They also witnessed the failure of the capitalist system in the infamous 'Wall St crash' which occurred in America in October 1929 when the American stock market collapsed, e.g. by the end of the month share owners lost $40,000million. It led to a major economic depression known as 'The Great Depression', which lasted for 10yrs and resulted in widespread poverty, e.g. 32,000 companies became bankrupt and 5000 banks had to be closed down.

They also witnessed in the past how the German capitalist economy collapsed during the Weimar Republic before the Second world war in 1923, e.g. the fall of the German currency - in January 1921 the currency rate was 64 German Marks to $1 American Dollar, in November 1923 only 2 years after it was 4.2 trillion marks to the dollar. People had to take wheel barrows of notes just to buy a loaf of bread, the paper which the money was printed on became more worth than the currency, people even burned money to stay warm.

        If we look to any financial papers on any day of the week we can see that they realise that their system is weak and prone to massive problems. 

        The problems in the stock markets worry the Western Nations although their economies have existed for many years and their stock markets have existed for a long time and even though they are the leading nations in the world.

        If we look to the Asian economies including the Muslim countries of Malaysia and Indonesia, we know that their economies are much smaller and frailer.

        I want to take a deeper look into the reality of the stock markets so that we can see how the collapse occurred and how the Western Nations use the stock markets in the campaign to economically colonise the Muslim world.

Stock markets are financial markets where people buy and sell shares of companies. But these markets are completely different to real markets in which people may sell fruit or clothes.

When a Company floats on the stock market or becomes a Public Limited Company (PLC), basically this means that they issue shares. The reason that they issue shares is to gain revenue (money) for them to use, e.g. the company for which my brother is working is a computing firm called 'Autonomy', this company currently is worth £30million pounds, it is going to float on the stock exchange soon, which means shares in the company will be issued for people to buy.

The reason that people buy shares is basically to make money because the shares market goes up and down. So people buy shares when they think prices will go up and sell shares when prices go down. It is all based on greed and confidence in the companies, therefore it is similar to gambling in a casino

Most of the people who buy shares in these companies don't do it because they care for the company and have no loyalty to it and its staff because they don't have any liability or any major link to the company,. Its not like a normal business partnership, e.g. if 2 people are partners in a company selling cars, so they both own 50% of the company, if the business makes a profit they would get an equal share, if the company made a loss both of them would make a loss.

The only real link that a shareholder gets is that they have the right to vote to elect a board of directors (People in charge of the company). But these votes are not like in normal elections, where each person gets a vote. The votes are allocated according to the number of shares a person has, e.g. if a person owns just over half the shares in a company and he wants to elect someone on the Board of Directors of the company, even though all the other shareholders no matter how much they numbered - 100,000 or 200,000 - There vote would not count he would have the decisive vote.

Businessmen usually do not even need half the shares even 5 or 10% of the shares are sometimes enough for them to control a company.

So businessmen and the people who own large amounts of shares effectively control the company and therefore can manage the company and gear it in a manner that would increase it share prices. The normal shareholders have no say in the affairs of the company and are just owners of the pieces of paper, which are called share certificates, which they buy and sell.

We know that only the major businessmen and capitalists have the capital to own large amounts of shares, e.g. ¾ of the major stockholders in the companies - ABC, CBS and NBC the 3 major television and radio networks in America are owned by banks such as Chase Manhattan, Morgan Guaranty Trust, Citibank and the Bank of America.

Furthermore the shareholders in these companies can buy and sell their shares without anyone's permission. What they look for is to make an instant profit, so if the value of shares increased they would sell all or part of their shares and if it decreased they would buy their shares back.

So I have briefly explained the reality of the stock markets, now let us apply that on what occurred in the recent collapse in the stock markets in the south-east Asia.

Firstly we have to realise that the markets in South-East Asia are much frailer and weaker than the Western markets because the Western markets have been established for many years and are much larger. Competition in these markets is also less than in the Western countries.

So it is easier for the Western Capitalists and speculators to dominate these markets.

        They enter these countries like Indonesia and buy local shares in the local companies.

        Instead of waiting for the share prices to rise they use styles to increase the prices of shares such as :

o  Hyping the company whose shares they just brought.

o  And leaking the news that they have invested heavily in these companies.

        These leads to the local people rushing to buy shares in that company which in turn leads to the share prices rising

        Once the Capitalists have reached their profit level they sell their shares to the locals making a quick profit.

        Sometimes a number of Capitalist investment funds work together as one group in the market because their aim in making profit is the same, this leads to collapse in the market when they decide to sell all at once. When they sell all their shares its like a sinking ship no one wants to remain on it, so this leads to a collapse in the local currency and causes major problems for the local banks which gave the locals credit.

        This is what occurred and is still occurring in South-East Asia, in Indonesia a Muslim country which has got the largest Muslim population in the world 80% of the companies have gone bankrupt, people are unemployed and the Indonesian rupiah is worth less, many people are even stealing to survive…these are the effects of these stock markets!

        The Western Nations know this and they are the ones who legitimise and even promote such activity. When the spokesman for the US State Department was asked about the intervention of one of the game-player Capitalists who was involved in South-East Asia named George Soros, he said: ''George Soros is a highly respected individual in the US who has done a lot of good things for many countries around the world.''

Identify one of the major problems as being the dependence on the usurious transactions coupled with the role of the banking institutions

What gives more power to these Western Capitalists to intervene in the markets is the usury (interest) based banking system. It allows them to take massive loans so that they can buy much more amount of shares than they have money.

      The banks get deposits from people, e.g. when you go to your bank you deposit money. They consider these deposits to be their own and lend them the capitalists and businessmen. If we everybody demanded there money back from the banks straight away, they would not be able to give it because they lend most of the money out.

      The banks lend the money at different rates of interest, obviously they are biased to the companies which they own or have major stakes in, like the example I gave earlier of banks owning companies in America like ABC and NBC. We can clearly see this bias in America where the interest rate changes from 5.8% on loans given to capitalists and major companies to 20% on loans given to purchase a car.

      So the banks loan this money to the dealers of shares much more than the dealers have in cash. E.g. with £5 of their own money they can buy £100 worth of shares by borrowing the money from the banks.

The nature of anything based on Kufr is that it will not solve our problems in a correct manner but will rather be doomed to failure

This is the reality of capitalist economics. We should realise that anything based on Kufr will fail and not peoples problems in a correct manner. Even the Kuffar acknowledge their failure, e.g. In my A-level Exams I had a whole exam paper on market failure, about how the capitalist system has failed in many areas, when I asked my economics teacher what     the alternative was he said: ''Capitalism is the best of the worst.''

The manner in which Islam dealt with the issue of usury and the hukm of Islam concerning this

Islam deals with economics in a completely different manner, Islam doesn't view people just from the angle of economics like the capitalists do. They view people from an economic angle, as either consumers or producers - Margret Thatcher once stated that the objective of education was to breed good consumers and producers. Rather Islam view people as they are, meaning that they have certain needs and instincts which have to be satisfied.

Islam focus's on the distribution and circulation of wealth not the hoarding of wealth. The Islamic state will encourage people to circulate wealth and prohibit the hoarding of it.

Islam prohibits Public limited companies and Riba (interest) and also prohibits the stock market. There are many evidences from the Quran and Sunnah for this. E.g. Islam does not allow people not to pay their debts and if they are partners in a company they must repay the debts which the company owns therefore having the current share system is prohibited because the owners of the shares and not liable for any of the debts of the company. The Prophet (saw) said:

''He who takes money from people with the intention of paying it back, Allah will pay on his behalf, and he who takes it with the intention to waste it Allah will waste him.''

I'm sure all of yo are aware of the various evidences that prohibit Riba (interest), like when Allah (swt) says: ''O you who believe do not devour the usury doubled and multiplied''

Therefore these problems which we discussed inshallah will not exist under the Islamic state, and therefore when Islam returns Inshallah it will bring the world under its just systems and abolish the oppressive system of Capitalism on this earth.

The Prophet (saw) told us about how our situation in the future will be good, he said: ''Near the end of my Ummah there will be a Khalif who will spend the money without even counting it.''

            Wa Kaana haqqan alaina nasr-ul Mu'mineen