7) Unfamiliarity with the Islamic Banking System The first problem, is that despite the growth of Islamic banks over the last 30 years, many people in the Muslim and non-Muslim world do not understand what Islamic banking actually is. The basic principle is clear, that it is contrary to Islamic law to make money out of money and that wealth should accumulate from trade and ownership of real assets. However, there does not appear to be a single definition of what is or not an Islamic-banking product; or there is not a single definition of Islamic banking. A major issue here is that it is the Shariah Councils or Boards at individual Islamic banks that actually define what is and what is not Islamic banking, and what is and what is not the acceptable way to do business, which in turn can complicate assessment of risk for both the bank and its customer. More generally, the uncertainty over what is, or is not, an Islamic product has so far prevented standardization.
Actual causes of the Global Financial Crisis There were a variety of factors (that had nothing to do with the act) to blame for this crisis. One important factor was low interest rates, which was promoted by George Bush during his presidential campaign for each American to have his own home. Low interest rates increased home loans drastically which start creating a price bubble. Further, the quality of home loans given declined over time; credit of the person was not scrutinized. Because of such high amount of subprime loans, home owners began to default on their payments impacting the rest of the economy through CDOs.
Everybody was taking over there share. Tax rate was also interrupted from 72%to 28%. Now, when they started investing in money market which was a risky investment, they did not have money to cover the insurance funds. FSLIC was “ill equipped” as per the changed behavior of the thrifts. When FSLIC started to bail out in 1983, it costs FSLIC $20 billion but it had only $6 billion in reserve at that time which led to its
AIG thought that what it insured would never have to be covered, and if it did, it would be in little amounts. But when foreclosures increased to incredibly high levels, AIG had to pay what it promised to cover which eventually caused a huge hit to AIG’s revenue stream. The AIG Financial Products devision ended up paying around $25 billion dollars in losses which caused a massive hit to the parent company’s stock price. Meanwhile, accounting problems within the division also caused losses which also lowered AIG’s credit rating. It was very clear that AIG was in danger of bankruptcy.
Crazy Eddie was a fast-growing consumer electronics chain in the 1980s. The founder of Crazy Eddie are Eddile Antar, and the key business position in this company are filled by Antar family’s members. In order to avoid paying more taxes on their business income, the Antar family had decided to skim large amounts of cash from their dairly business sales. The family made more money by skimming cash, and they deposited those cash in Israeli banks to avoid tracking in U.S. However, the family felt unsatisfied with the cash they made and they decided to take Crazy Eddile public.
Banks were making money off their mortgage loans they were selling off in synthetic CDO’s. These debts were actually worthless. When the housing market and Wall Street crashed, many lost their investments. These were meant to be safe investments but because of the actions of the banks, mortgage brokers and many other factors, millions lost everything. The Big Short Conclusion The Big Short is relevant to the content outlined in the SAG document for
In contrast, the Chartalist school is not convinced by this origin story. In “Debt: The First 5000 years”, David Graeber explains that barter requires a “double coincidence of wants”, and that this is very rare, instead “the most frequent solution is to adopt some sort of credit system” (2011). Assuming that barter is not the precise origin of money, leads to the question of what money actually is. The first part of a quote from “Lombard Street” may provide this answer “the peculiar essence of our financial system is an unprecedented trust between man and man” (qtd. in Plender, 2017).
As our religion is Islam most of the people did not have sufficient knowledge of Islamic banking products, 90% people are interested in Islamic banking but the current does not have the system of Islamic banking. The results shows that people don’t know that ley concept of Islamic banking they consider it as conventional banking. Most of the customer satisfied from Islamic banking but they consider it as a complex way of banking. They likely to take the return on investment either it are in case of interest or profit. The comparison between Islamic and conventional banking consider at very low level due to many reasons like time, knowledge, personal attention etc.
Almost all countries have only one currency to use for transactions, because it is tricky enough for most people to manage their money in one currency. However, in Zimbabwe, the people have to keep track of nine currencies. After the country’s dollar collapsed and was drawn back from circulation, many of Zimbabwe’s businesses have been forced into the role of foreign exchange dealers. Even though U.S. dollar is preferred on the streets of the capital, Harare, euro, South African rand, Australian dollar, British pound, Japanese yen, Chinese yuan, Botswana pula, and Indian rupee will also be accepted for trading (Giokos, 2016). When inflation hit 230,000,000 percent in 2009, the country 's reserve bank declared the U.S. dollar as its official currency.
If majority of the countries are working on fixed exchange rate then not only the liquidity of central bank of all such countries are reduced but the international trade liquidity is also reduced. 2. The system does not give any method of changing the rate once fixed initially. The need to change the rate arises in response to fundamental disequilibrium in country’s balance of payments. But no easy method of changing the basic rate is provided by this system.