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I agree with almost everything you said there. But I would like to point out that the Libor scandal you mentioned, as well as the problems with JPMorgan are all regarding banks. As Muslims we should not even be concerned with these institutions from a stock market perspective in that we shouldn't be owning any shares in them. This is my own opinions on the matter I should point out by the way, so take them with a pinch of salt, but purely from a stock market view what happened to these banks and their shares should not affect us as we shouldn't own shares in institutions who almost entirely deal in riba. Personally, I see this is the will of Allah SWT that after so many years the Libor scandal broke out, shares plummeted (Barclays for eg went down by 8% in one day) and these banks faced heavy backlashes from their customers and are now under pressure. To me, those who invested in such companies will have been hit and that is a punishment for having invested in institutions so immersed in Haraam.

From a non stock perspective, I also agree that when these institutions mess up they should face severe consequences, and I agree with you that many times they get away with it or are bailed out by the taxpayer.

The only thing I didn't understand is why you said Muslims should avoid the market at these times. Because your entire post was regarding banks and then you switch back to the markets? I apologise but I couldn't quite see the link. I don't know if you were changing the subject and referring to the current recession and hence not to invest or if you were linking this to the banks? If it's the latter, then we shouldn't be buying shares in banks anyway, if it's the former then I understand what you mean.

In a recession (known as major bear markets sometimes) to invest in companies requires a different approach to investing during a bull market when the market is on the rise and in good ground. I think it would be wise for Muslims in general to avoid the stock market whether it's a bull or a bear market unless they really know what they are doing, otherwise you will either lose big, lose small or gain small. To gain big really requires a lot of work.

Brother, appreciate your comments. I think you have misunderstood me, I am not talking about investment in banks, rather their corrupting influence on the overall market. Mufti E Desai has mentioned the companies business to be a key factor in determining whether you can invest in them or not. Banks and most finacial houses are off limits for Muslims.

The reason I have singled out banks quite ruthlessly is because most banks, be they high street or investment banks, tend to have an investment trading arm that dabbles with the financial-markets. All the big banks have a trading arm, some have reduced the size of their trading arm in the last few years, but they are still there. This is where vast sums of money is ploughed into the market, putting not just their companies at risk but even the savings of their savings-account holders (were the bank to go under from the pressure of write-downs). In order to prevent that possibility, they have forced government (taxpayer) to bail them out with vast funds to buy-up their overpriced assets, that would never happen in 'normal markets'. The knife they hold to the taxpayers neck is complete ruin in the financial system - virtually blackmail.

They are abusing their position and have turned it into a weapon to garuantee they can continue as they wish. They are the single most influental players in the stock markets because of the leveraged products they create, that adds in massive liquidity and also removes it at a stroke. That distorts any kind of reality from the markets as they are. Look at the big corporations of the world - go to their home pages and look at the disclosure on ownership of these corporations in the stock markets, you will find the top shareholders in most of these corporations includes several banks & investment banks. Banks and stock markets are attached at the hip. Most of their other operations are similarly linked.

I pray Muslims pursue alternatives to the stock market casino.


Allahu A'lam