The bold face of capitalism has been irrevocably distorted.
Banks and Multinational Corporations have gained status as shrines of the modernised world. Their continued existence seemed undeniable and their foundations appeared unshakable, while they loomed over our economy with an arrogance that inspired submission.
The global Credit Crisis has altered this perception. The technicalities that lie behind this wreck are intricate but the motivating factor that underlies it is simplistic.
We have come to realise that the promise of great financial rewards allowed brokers, investors and rating agencies to overlook risk under obviously risky circumstances. Perhaps greed can anaesthetise caution.
The cliche of "building a house of cards" must have originated in anticipation of the crisis that we are in the midst of. A greater tragedy than the tenants of capitalism "collapsing like dominoes" (yet another apt cliche) , is the repercussion of this 'crunch'.
While the real consequences of the situation still needs to play itself out, it is obvious that the least fortunate are to become even less fortunate. The American tax payers will be footing the bill of the proposed bailout. Due to the legacy of Globalisation, the trickle-down effects are already being felt.
Although South Africa is relatively insulated from the crisis, we will definitely be feeling the 'pinch'. Being an emerging market, South Africa is sure to bear some brunt of the mistakes made on Wall-Street.
The most difficult aspect for me to accept is the fact that international aid organisations will be compromised. Laura MacInnis (Reuters) reports : "Washington in particular would be under severe pressure to pare its international aid spending after agreeing a $700 billion financial rescue package, said Steve Radelet, a senior fellow at the Centre for Global Development."
Organisations confirming concern about the negative impact that the crisis will have on aid, include Oxfam and the WHO.
With faith in the capitalist system at an all time low, alternate financial systems have come under the spotlight. Tanya Cariina Hsu (a political researcher and analyst), in a paper entitled, "Death of the American Empire" mentions that eight years ago, Saudi Islamic banker Dr. Nayef bin Fawaaz ibn Sha'alan gave a series of economic lectures in Gulf states ."Islamic banking", he said, "always protects the individuals' wealth while putting a cap on selfishness and greed. It has the best of capitalism - filtering out its negatives - and the best of socialism - filtering out its negatives too ... The essential difference between the Islamic economic system and the capitalist system is that in Islam wealth belongs to God - the individual being only its manager. It is a means, not a goal. In capitalism, it is the reverse: money belongs to the individual, and is a goal in and of itself. In America especially, money is worshipped like God.".
She goes on to say : "the crash of the entire global economic system is a result of America's fiscal arrogance based upon one set of rules for itself and another for the rest of the world. Its increased creative financing deluded its people into a false sense of security, and now looks like the failure of capitalism altogether."
Perhaps economists understanding the solutions offered by Islamic Finance should 'capitalise' on this opportunity to fill a void.
The real face of the financial crisis will be revealing itself gradually in the months and years ahead ...
during this time I pray for compassion and patience - for all.
3 comments:
awesomely written, concise yet enlightening, and not in the least confusing for someone as number-skrikkerig as meself
i don't feel able to influence the global economic system but in my personal capacity am committed to islamic banking prinicples, most importantly he robin hood- with an empowerment twist redistribution of wealth...
interesting post.
Some theorists believe the crisis was engineered by the Federal Reserve Bank itself. And who benefits? The banks who messed up! After the Great Depression we thought a lesson was learnt but the mistakes of history are always repeated. I spoke to an economist who said the world will be cautious from now on. but I doubt it..
Excellent post Ayesha-brilliantly written
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