Public warned of rising fraud - Oman Daily Observer

WEDNESDAY, APRIL 10 2013
PERSPECTIVE
23
Economy
Understanding opportunities of Islamic economics
By Mohammed al Balushi
morwared@hotmail.com
IN fact, you hardly come across
where news channels are free from
economic discussions, debates and
forecasts. You only ind a few people
who dare to come out from their
comfort zones and spend nights and
nights to implement their economic
ideas. Sometimes I permit myself to
ask me about the problem facing the
economy, and the irst question that I
ask myself is that: what if I don’t have
something to eat? Alright! You must
work. This is the simple answer in
which I induce myself.
The second question will be that:
what if I don’t have work or fail to
ind a job? Another simple answer
that I give to myself is that: develop
your skills and knowledge and try to
sell them to get fed. The last question
that I ask myself is that: what if all my
skills, knowledge are not sold and
there is no market or such a policy by
the government which support me
with my economic vision, then what
I suppose to do. Just wait for God’s
indication who can better decide for
any individual.
At this point I always disagree with
myself and with others who try to in-
luence me to wait and be patient. It
doesn’t mean I am faithless. There is
no harm to be patient and to wait, but
why wait?
If it is about the nature, someone
could understand like where people
wait for seasons of winter, summer,
spring and autumn. Life doesn’t
mean to wait and see, especially in
the world of materialism. Though
you have made several efforts and
the outcome was not satisfactory, and
you are sure that things are already
moved from your ends and hands.
Rather, life means to grow, to move, to
ind new ways, new opportunities and
to work till the end. Now let us raise
the valid question which is “why Islamic
economic could not progress?”
and how much the Islamic economics
understood by people, and is the topic
worth of debate?
It has been referenced from the
various Islamic books that the period
from the 7th century to 13th century
was known as the golden age of Islam.
During this period Muslim scholars
had made signiicant developments in
the areas of Mathematics where you
ind Algebra, induction and irrational
numbers, and there were two famous
names (Omar Khayam Al Biruni, and
Ibn Khaldun), who had worked on
that, and continuing, from the same
research which says that, in the ield
of medicine, Muslim scholars, made
signiicant contributions to the medical
profession, affecting many specialists,
including anatomy, pathology,
physiology and many more. Al Razi,
Abul Qasim, and Ibn Sina were most
popular names in the ield of medicine
at that period.
Although, the research said that
from the same golden period some
economic developments were made,
for examples: introduction of common
currency with the inclusion of
inancial contracts like murabaha,
musharaka and sakk. Miserably, this
has increased my level of suspicions,
that why there were no such names
like Adam Smith, and Karl Marx, in
the list of Muslim economists. Whenever,
there are discussions in Islamic
circle, the economic part is missing,
that how Islamic economics fulil the
demand of consumers.
Can Islamic economics provide
and supply the demand of people?
That question is still there. As an individual
you don’t want the economy
of Islam or any other economy in the
world to tell you or decide on your
behalf that this can satisfy your need
and demand. In the other word you
don’t want someone to impose on you
with his ideas and options; rather, you
as an individual want from the suppliers
(Islamic inance, Islamic banking,
Islamic economy and all other economic
and inancial institutions) to
fulill your demand, if we gossip economically.
However, I tried to reopen some
more pages about Islamic economics
and I found some Islamic economists
like Nasir al Din (1201-1274), Al Ghazali
(1058-1111), and Asaad Davani
(b.1444). How and what did they contribute
to economy and why did not
the Islamic economy progress after
them? I asked myself. Nevertheless,
researchers have said that: the 15th
through the early 20th centuries saw
mostly colonising much of the world,
including Muslim nations. By the end
of the 19th century, Europe controlled
60 to 70 per cent of the land in the entire
world, colonisation continued for
several more decades. Every aspect of
society, from education to economics,
was colonised. Western economics
and banking systems were imposed
on colonised lands, so capitalism (and
its interest–based transactions) took
hold. That can be one of the reasons
that: why the Islamic economics could
not progress.
Can the concept and practice of
Islamic economy solve the globe economic
crisis? Will Islamic banks be
better parts and leading players on
that? The research says that: between
2006 and 2008 the market capitalisation
of conventional banks declined
by 42.85 per cent, while the market
capital of Islamic banks declined only
by 8.5 per cent.
Additionally, the total assets of the
conventional banks grew 36 per cent,
while the Islamic banks’ total assets
grew 55 per cent. The proits of conventional
banks dropped from a $116
billion proit in 2006 to a $42 billion
loss in 2008, while Islamic banks
experienced a net proit increase of
9 per cent in the same period. Will
Muslim scholars be able to convince
positively the Western countries and
Europe to practise the Islamic way of
economy? Will really the Islamic economy
safeguard the world’s wealth
from the losses or is it just going to be
an idea only?
Oil
Banking
Spills lame Canadian oil debate
By Jeffrey Jones
Emergency crews work to clean up an oil spill near Interstate 40 in Maylower, Arkansas. — Reuters
TWO high-proile oil spills won't
stem the now-record low of
Canadian oil into the United
States, despite the frenzy that the
spills triggered among friends and
foes of the Keystone XL pipeline to
the main US reineries.
The fate of Keystone remains undecided,
yet Canadian crude will become
an increasing part of the US
energy mix, despite growing competition
from new US production.
US thirst for Canadian crude has
shot up nearly 30 per cent over the
past ive years as reiners opt to buy
from the north instead of bringing in
more expensive Opec oil, thanks to a
boom in production from the vast Alberta
oil sands.
Midwest reiners have invested
billions of dollars to tweak plants to
take more of the heavy crude from
the region, and a small but growing
network of rail routes have sprouted
up to augment existing pipelines.
So even as environmentalists
seized on oil spills last week in Arkansas
and Minnesota to warn about the
impact of expansion in the tar sands
— the world's third-largest crude deposit
— it appears only a crash in the
price of oil or unexpected regulation
will derail the growing energy interdependence.
"Short-term, this is not good for
producers, it's not good for Canadian
oil going south, it's not good for Keystone,"
John Stephenson, vice-president
and portfolio manager at First
Asset Investment Management in Toronto
said of the two spills.
"But I think the reality is this oil is
going to make it south of the border,
quite likely by rail or one of the other
pipelines across the Canadian-US border,
so I see it as a short-term hiccup
at worst."
Canada's black gold has allowed
the Obama administration to crow
about dwindling reliance on oil from
less-friendly suppliers in the Middle
East and elsewhere. In addition, a glut
of the Canadian heavy oil has tempered
higher gasoline prices, especially
in the US Midwest.
That may trump increasingly bad
PR for Canada's oil, much of which
is produced by energy- and carbonintensive
methods such as mining or
steaming, making it a prime target in
the battle over policies to ight global
warming.
Yet the growing role of Canadian
crude in the US economy cannot be
denied. Overall US oil imports fell
to 8.5 million barrels a day last year
from over 10 million in 2007, but
supplies from Canada jumped to
2.4 million barrels a day, from just
under 1.9 million, over the period,
according to the US Energy Information
Administration.
That puts Canadian crude at nearly
29 per cent of foreign supplies in the
United States, despite the remarkable
increase in US domestic light oil output
from regions such as the North
Dakota Bakken that has fueled predictions
of North American energy
self-suficiency in 15 years.
In fact, the two types of crude compete
little for reinery space, as Canada's
heavy crude is being directed at
US Gulf Coast plants that are conigured
to process heavy oil, which now
arrives in dwindling volumes from
Venezuela and Mexico.
"If that's the case, then Obama's
left with not an energy choice -- he's
left with a geopolitical choice," said
Michal Moore, director of energy and
environmental policy at the University
of Calgary's School of Public Policy
and a former California energy regulator.
"Do you want to piss off Canada
by not letting oil into the reineries
that can handle it most easily? I don't
know how he makes that judgment
but I will say that this doesn't help."
Other reiners have also invested
to process more feedstock from Canada,
with BP sinking $4 billion into its
Whiting, Indiana plant to take more of
the heavy, sour oil.
In addition to heavy tar sands oil,
Canada also exports large volumes of
conventional lighter crude.
In January, the US imported over
1.5 million bpd of heavy Canadian
crude, deined by the Canadian Association
of Petroleum Producers as
having an API Gravity of less than 27
degrees, and nearly 1.15 million bpd
of lighter, easier to reine oil, according
to the EIA.
Last week's spills both involved oil
from Canada.
On Friday, Exxon Mobil Corp's
aging Pegasus pipeline ruptured in
Arkansas, forcing a cleanup of thousands
of barrels of heavy Canadian oil
that leaked into a suburban neighborhood.
The incident followed an oil spill
in rural Minnesota after a Canadian
Paciic Ltd train derailed. The tankercar
leaked several hundred barrels of
Alberta crude and reignited concern
about oil moving by train as pipeline
capacity lags production growth.
Producers shipped about 45,000
barrels of Canadian oil into the United
States by train last year, up from
almost nothing just ive years earlier,
based on Reuters calculations of data
from Canada's National Energy Board.
Current shipments could be as much
as 150,000 barrels a day, estimated
Steven Paget, analyst at FirstEnergy
Capital Corp.
The spills are the latest in a string
of problems for shippers of Canadian
crude that have inlamed the debate
over the oil sands. The largest spill
was the Enbridge Inc line break in
Michigan in 2010, which sent more
than 20,000 barrels of Canadian oil
into the Kalamazoo River system.
US regulators last month ordered
Enbridge's US afiliate to do more
cleanup at the site, pushing the bill to
near $1 billion.
TransCanada Corp, backer of the
long-delayed $5.3 billion Keystone
XL pipeline to Texas reineries from
Alberta, and the line's supporters, say
oil spills highlight the need for safer
energy infrastructure rather than a
shift from pipelines.
"I don't think it will have an impact
(on Canadian exports and the approval
of pipelines). Look, it's being seized
on by those who oppose hydrocarbon
development, but if you follow their
logic to its conclusion, what they're
saying, I guess, is they don't want to
see any pipelines built," Canadian
Natural Resources Minister Joe Oliver
said of the Arkansas spill.
"It's not because of Canadian crude
that there was a spill. It was an old
pipeline, more than 60 years old."
Oliver has led Ottawa's intense
lobbying campaign in favor of the
830,000 barrel a day Keystone XL
project, which will take Canadian
crude to Gulf reineries. Washington is
set to decide on the line this summer
and it could be in service in 2015.
All predictions are for a steady
climb in Canadian production, explaining
the industry and government's
quest for new markets in the
United States and non-traditional
areas such as Asia, one of the biggest
drivers engines of world oil demand
growth. Canada's National Energy
Board has predicted output will average
3.6 million barrels a day this year,
up 12.5 per cent from 2012, putting
it nearly 400,000 barrels a day ahead
of No 2 Opec producer Iraq's current
output.
Stress tests make
banks more stable
By Pedro Nicolaci da
Costa
FEDERAL Reserve
Chairman Ben
Bernanke said the
central bank's periodic
bank stress tests have
made the inancial system
more resilient.
Contrasting the current
state of banks to
their tattered condition
in 2009 after the historic
inancial crisis, Bernanke
said the sector's rebound
was positive for the
broader recovery given
the importance of credit
to economic growth.
"The resilience of the
US banking system has
greatly improved since
then, and the more intensive
use and greater
sophistication of supervisory
stress testing, as
well as supervisors' increased
emphasis on the
effectiveness of banks'
own capital planning
processes, deserve some
credit for that improvement,"
Bernanke said in prepared remarks to a conference on inancial
stability sponsored by the Atlanta Federal Reserve Bank.
In a speech that did not directly touch on the outlook for the US
economy and monetary policy, Bernanke hinted at why the central
bank continues to pursue an extraordinarily easy monetary policy.
"The economy is signiicantly stronger than it was four years ago,
although conditions are clearly still far from where we would all like
them to be," he said.
Some critics have argued the Fed's stress tests are not suficiently
harsh, while banks have complained they do not fully understand the
central bank's methodology.
The Fed has released scores for major bank holding companies
that show how low their capital ratios would fall under proposed
plans for dividends and stock buybacks if "severely adverse" economic
conditions unfolded over the next two years.
Bernanke said providing too many details about the methodology
could lead banks to curtail their own internal risk-management systems.
He argued US inancial institutions had bolstered their balance
sheets by raising more capital. However, he said too many irms still
rely too heavily on short-term sources of funding, raising some potential
for trouble.
"In the area of liquidity and funding, continued improvement is
still needed on some dimensions," he said. "Notably, supervisors
will continue to press banks to reduce further their dependence on
wholesale funding, which proved highly unreliable during the crisis."
Bernanke said it was important the stress test scenarios remain
severe even as the economy improves so as to not generate complacency.
The Fed was widely criticised in the wake of the global inancial
crisis for missing the oncoming train wreck and being too lenient on
banks that took excessive risks.
The crisis led to a series of unpopular bailouts of inancial institutions
that tarnished the central bank's reputation. — Reuters