Ghandi Speech Essay

To what extent does Gandhi use relatively simple syntax, expressing ethos and pathos, to appeal to a larger audience. The ‘Quit India’ speech was given by Mahatma Gandhi on August 8th of 1942. â€Å"Let me explain my position clearly†, Gandhi said, to begin his first point. He uses very simple syntax when giving this speech because he wants his points to be made more â€Å"clearly†. Throughout the whole speech, Gandhi’s speaks using very basic language, therefore appealing to a much larger audience, of people rather than a select few. Gandhi uses ethos and pathos in order to captivate and enthrall his audience. Gandhi said â€Å"I want you to know and feel that there is nothing but purest Ahimsa in all that I am saying and doing today.† He addresses the audience using â€Å"you† to make everything more direct and personal. Ethos and pathos is also used throughout this speech to gain credibility of the people, motivating them into  "joining† the â€Å"Quit India† movement he is advertising. â€Å"It is to join a struggle for such democracy that I invite you today.†, Gandhi said. â€Å"The power, when it comes, will belong to the people to the people of India, and it will be for them to decide to whom it placed and entrusted.† Promoting congress and rejecting dictatorship are the two biggest topics Gandhi is trying to support in this speech. And that is why the above excerpt is such an important sentence to the speech. Another strategy Ghandi incorporated was the repetition of the word â€Å"we† throughout the whole speech. This was to designate that he is the voice of the people of India, not merely voicing out his own individual opinion. â€Å"We must get rid of this feeling. Our quarrel is not with the British people, we fight their imperialism.† When giving a speech, it is crucial to know who your intended audience is. That way it will make it easier for you to persuade them since you know what they are about. Mahatma Ghandi used this indication in order to persuade his audience and made his speech meaningful. In â€Å"Quit India†, he used simple sentences and being more informal in order to attract and keep the audience’ attention. Overall, the power of speech is so incredible and can impact more than just the intended audience. But in order for that to occur, the speaker must choose their words wisely, not just jotting down everything that comes to mind when given a topic. Not everyone wants to read something that is serious and not everyone is literate, especially during the time Mahatma Ghandi was delivering this speech. Therefore, putting together and  delivering this speech was important in order to attract people from all different ethnicities and political views. â€Å"Quit India† was not just a speech intended for a select audience, but it is a speech intended for ev ery human being to hear and interpret in their own way. That is the genius of Gandhi’s basic, yet meaninful, and relatable, syntax used through this speech.

Organisational Behaviour What Is Organisational Behaviour?

ORGANISATIONAL BEHAVIOUR What is organisational behaviour? The study of human behaviour, attitudes and performance within an organisational setting; drawing on theory, methods and principles from such disciplines as psychology, sociology and cultural anthropology to learn about individual, groups and processes. Three different OB perspectives Macro-perspective; the big picture Micro-perspective; the smaller units Meso-perspective; integration and movement between macro and micros Three levels of OB Individuals > groups > organisationsOB as a science Scientific discipline Theories and methods can be developed to better understand and explain behaviour Concerned with predictions and explanations Fredrick Windsor taylor – four principles of scientific management 1. Using scientific analysis, managers precisely specify every element of an employee’s work which replaces old rule-of-thumb methods (Job Design) 2. Managers select and then train, teach and develop employees, unl ike in the past when employees chose their own work and trained themselves (human Resource Management) 3.Managers are responsible for ensuring that all work is done according to their specification (Performance, Monitoring and rewards) 4. There is a division of labour based on expertise; managers manage because of their superior knowledge while employees do what they are best at (the development of management profession) Human relations school Elton mayo Believed that the â€Å"work problem† (dissent, disobedience, industrial unrest) was a result of psychological disturbances brought about by the alienating nature of work. Mayo thought that we can improve employee happiness bby making work more involving and by recognising its social nature.The hawthorn study Originally looked at the impact of working environment on productivity e. g. amount of light workers were exposed to during work By spending so much time around the workers, researchers began to notice a number of import ant social factors that had an impact on productivity Despite the isolating effects of standardisation and increasing technical division of labour, work remains a group activity. As a result of their need for recognition, security and sense of belonging, workers will gravitate towards informal groups whether formal work organisation reflects this or not.Informal group exercises a strong form of social control over the work habit and attitude of its members. Managers should recognise the impact of these informal groups in exerting an influence on productivity. Organisations should seek to ensure a good fit between formal and informal groups. Weber’s formal bureaucracy is characterised by: Specialised individual positions Formal hierarchy Rules and standard operating procedures Set boundaries for each dept Standardised training and career paths Changes from traditional to modern Intensifying competition meant that companies needed to become: More innovative in terms of customer serviceImplement continuous improvement in manufacturing More diverse in terms of products and services they offer New organisation model Networked; emphasis on teams, systems for sharing information, cross functional involvements Flat; reducing layers and empowering more employees Flexible; intensified completion, accounting for life cycles, unpredictability of external environment Divers; career trajectories, core and peripheral workforces Global; interactions across boarders Employment relationship Employment relationship is the set of arrangements and work practices that describe and govern the relationships between employees and employers.The relationship consists of economic, social and psychological contracts. The psychological contract refers to a shared cultural understanding of what is right, good and fair about the ongoing exchange. Key employment relationship changes Short term job security; life time employment to life time employability and being able to move from int ernal labour markets Advancement; changing notions of advancement Job titles; changing and multi-dimensional Compensation; pay for knowledge or skills, team-based pay Flexibility; telecommunicating work hours, contract and new forms of bargaining Chapter summary 1Define organisational behaviour and organisations, and discuss the importance of this field of inquiry Organisational behaviour is the study of what people think, feel and do in and around organisations. Organisations are groups of people who work interdependently towards some purpose. OB theories help people to: 1. Make sense of the workplace 2. Question and rebuild personal mental models 3. Get things done In organisations Compare and contrast the four perspectives of organisational effectiveness The open systems perspective views organisations as complex organisms that ‘live’ within an external environment.They depend on the external environment for resources then use organisational subsystems to transform t hose resources into outputs that are returned to the environment. Organisations receive feedback from external environment to maintain a good ‘fit’ with that environment. Fit occurs by adapting to the environment, managing the environment or moving to another environment. According to the organisational learning perspective, organisational effectiveness depends on the organisations capacity to acquire, share, use and store valuable knowledge. The ability to acquire and use knowledge depends on the firm’s absorptive capacity.Intellectual capacity consists of human capital, structural capital and relationship capital. Knowledge is retained in the organisational memory; companies also selectively unlearn. The high performance work practices (HPWP) perspective identifies a bundle of systems and structures to leverage workforce potential. The most widely identified HPWPs are employee involvement, job autonomy, developing employee competencies and performance/skill-bas ed rewards. HPWPs improve organisational effectiveness by building human capital, increasing adaptability and strengthen employee motivation and attitudes.The stakeholder perspectives state that leaders manage the interest of diverse stakeholders by replying on their personal and organisational values for guidance. Ethics and corporate responsibility are natural variations of values-based organisation because they rely on values to guide the most appropriate decisions involving stakeholders. Corporate social responsibility consists of organisational activities intended to benefit society and the environment beyond the company’s immediate financial interest or legal obligation.Debate the organisation opportunities and challenges of globalisation, workforce diversity and emerging employment relationships Globalisation, which refers to various forms of connectivity with people in other parts of the world has several economic and social benefits but it may also be responsible for work intensification, as well as reduced job security and work – life balance. Workforce diversity is apparent at both the surface level and deep level; there is some evidence of deep level diversity across generational cohorts. Diversity may give a competitive advantage by improving decision making and team performance on conflict.One emerging employment relationship trend is the call for more work-life balance. Another employment trend is virtual work, particular working from home. Working from home potentially increases employee productivity and reduces employee stress, but it may also lead to social isolation, reduced promotion opportunities and increased tension in family relations. Discuss the anchors on which organisational behaviour knowledge is based The systematic research anchor states that OB knowledge should be based on systematic research, which is consistent with evidence-based management.The multidisciplinary anchor states that the field should develop from k nowledge in other disciplines (psychology sociology, economics) not just from its own isolated research base. The contingency anchor states that OB theories generally need to consider that there will be different consequences in different situations. The multiple levels of analysis anchor states that OB topics may be viewed from the individual, team and organisations levels of analysis.

Clinical Experience of Student Essay

My learning throughout the first year has been helped by an unerring optimism in the value of nursing, and an appreciation that each and every daily interaction augments my experience. This enthusiasm, however, has caused an inhibitory effect on my self-directed researching, and created conflict in some placement areas. While developing my role as a nurse, my activities as a person at home and beyond have diminished, as I attempt to adjust to the demands of both domains (Spouse 2003:109). I resent distracting influences, and frequently domestic pressures restrain my desired pace to accumulate factual knowledge. As described by Palmer et al. (1994:40), my learning can oscillate between two extremes, â€Å"all or nothing†. Spouse (2003) depicts the student nurses’ need to develop multi-tasking skills emotionally, mentally and physically as they are caught between the cultures of clinical areas, peer-driven University life and home. The conflicts arising from these settings create a disharmony, which I believe for some, may undermine nursing as a career choice. The competence of a future nurse is evaluated by evidence-based documents, instructors, mentors assignment and examination results and is based on a continuum of regular assessments. The learning experience of a student nurse remarkably influences own practice in clinical areas, as well as the performance level of the student in academic matters. First timers in clinical rotation engage themselves in the initial stage of familiarizing and accustoming one’s self to the practice becomes crucial. This is the point when printed theories in books and hand outs are recalled nd reshuffled in the mind in order to carry out the best intervention suited for a particular situation. It was never easy for the a novice student nurse to be assigned in the OB ward or in the emergency room without sufficient knowledge about postpartum care or familiarity with the basic instrument used in minor surgeries. Also, inadequate and ineffective education influences the manner that one gains necessary principles and skills needed in actual and assisted delivery cases. This has affected the coping strategies of the trainees to different problems arising in the clinical settings. In reality, some just performed as assistants instead of handling actual deliveries—this is also dependent to the hospital protocols—and some were just given free cases. This fact has urged others’ curiosity to get a hasty view of the first learning experiences of the other nursing students who are also in the same level. Some people ought to assess the level of students’ adjustment with the respect to different conflicts they have encountered so that appropriate improvements in nursing education programs will be obtained. The trend to commit oneself to healthcare field has not yet wiped out especially in nursing profession. Students seem to be devotedly engaging themselves into this line as seen with continuous enrollment of freshmen students and transferees, may it be influenced by financial demands, personal preferences, or just by current blooms. The Professional Regulation Commission reported that the country has an oversupply of 400,000 licensed nurses (Porcalla, 2008). With this fact that there are still thousands of nursing graduates in the country who are either unemployed or working as call center agents, clerks, salesladies or salesmen, discouragement in the part of the fresh high school graduates is still invincible. Though many say that those temporary jobs are just their means of earning money while waiting for the board examination, individual encounters prove that a significant percentage of those graduates would just end up working in the same condition; others fortunately have passed the board and served as volunteer nurses to gain experience during the initial years of the profession; and some might have dealt with hard life or just settled down rearing families. For so many reasons, nursing career—for some—terminates there, which should not be. Why is it that even universities have started to limit accepting nursing enrollees due to overpopulation of out-of-work nursing graduates, the government’s need for ideal healthcare system is still unmet? The answer would be—it is a matter of competition! In the Filipino context, it goes, â€Å"Matira ang matibay. † As with the student admission criteria of one hundred eleven medical schools in the United States, education programs and requirements filter nursing students meticulously (Reynolds, W. Scott, P. A. ,& Austin W. , 2000). Spouse (2003:42) depicts the student nurses’ need to develop multi-tasking skills emotionally, mentally, and physically as they are caught between the cultures of clinical areas, peer driven university life and home. The conflicts arising from these settings create a disharmony, which Greenwood (2003) believes for some, may undermine nursing as a career choice. Aside from it, it is not new to hear stories about taking the course with the dictate of the mother in exchange for the big Dollar sign neither a complaint for expensive matriculations and a shelf of three-kilogram-books. According to Rep. Satur Ocampo, â€Å"Low and inappropriate budget of DOH for 2009 now pegged at 28. 9 billion still does not address the problem of the exodus of nurses in the country†(Porcalla, 2008). It is one of the major sicknesses of the country’s healthcare system which puts down the field. But with the growing population and high expectancies of quality care and competence, nurses should be skillful in integrating theoretical frameworks, as well as nursing philosophy, into real life situations so that high quality care can be delivered and optimal health will be met and promoted. Nursing is an art, an art of caring. Nurses are much involved in lots of health teachings and interventions; and are expected to portray a variety of roles. Be it as an educator, communicator, caregiver, counselor, advocate or as a leader, a nurse should possess a well-defined body of knowledge and expertise in the field especially on actual scenarios (Kozier et. al. ,2008). Student nurses may be perceived as trainees, yet it is far apart from that thought. It is incorporating oneself to and embracing the vocation of helping and providing care in order for mastery and dedication to be more likely. The developmental educative process in nursing is a sophisticated and complex combination of scientific, logical, humanitarian, communicative, experiences and psychomotor skills, designed to consolidate abilities to produce â€Å"knowledgeable doers† (Greenwood 2003, Sajiwandani 2000, Slevin 1992, Cheung 1992). Nursing students at this point of time should be cautious whether they have delivered or could deliver appropriate care. They have to be very vigilant because they deal with a lot of toxic things every single day (Tacdol, 2008). It is not anymore in a classroom setting, it is more of real life situations. When at the area, there is no room for mistakes. No more dummies. No more trials. The reflective process enables the students to gain a sense of proportion. While researched academic study underpins practice, there are frequently qualifications made by nursing staff about ward performed procedures, stating â€Å"real-life† situations employ differing methods to those taught in the class room. These instances challenge student’s assumptions and provide impetus for further clinical reflective investigation (Spouse 2003, cited by Greenwood 2003). They also serve to demonstrate the existence of multiple methods of care delivery, attuning them to motives and perspectives of other practitioners in the healthcare team, indicating that others have legitimate reasoning (Palmer et. al 1994 cited by Greenwood, 2003) The performance of students in the clinical area is greatly affected by difficulties they encounter especially in their first clinical duty. Factors include relationship with clinical instructors, misunderstandings arising from group works, hospital policies and requirements, alterations in contingencies when handling patients and so on. As new members of the healthcare team, adjustment to different stressors seems to be crucial. It is an undeniable fact that problems with the clinical instructor top all. Many claim that superiors sometimes do not provide favorable atmosphere for learning. Using negative reinforcement is one of the examples. Others found this as beneficial since it helps the students to ask questions, enhances perception, and inhibits recurring of errors. But many negate this assertion. Embarrassment, comparison to other schools, and stickling behavior of the superior notably outweigh the benefits it should have made. Although many have agreed that the student nurses are very effective in delivering their duties and responsibilities in the clinical areas, there should still be improvement in the learning scheme of the education provider because there is no room for mistakes in the medical profession because it deals with a very fragile thing-life- and a single mistake may cause an enormous damage which is death. The students must be prepared and trained well before their exposure in the clinical areas so as not to commit error (Babula et. al. , 2006). Group conflicts such as lack of teamwork have something to do in accomplishing case studies. Hospital policies and protocols may at times become annoying and confusing. Different shifts and location of clinical duties tend to be the second in the list. Personal moods and anxieties affect functioning of the whole personality which may result to unproductive planning and ineffective nursing interventions (Abaravar et. al. , 2006). Moreover, unexpected problems arising when handling patients are to be aided with harmonious interaction between the instructor and the students while correction and giving of remedies are done (Amania et. al. , 2008). The identification of these common conflicts that are actually the factors which affect the level of performance of nursing students in clinical duties extensively bring up good adaptation behaviors and ease up finding solutions to the mentioned conflicts. Because of the continuous efforts made by some concerned people behind the nursing education? students, educators, and also the registered nurses in the profession? improvements in nursing curriculum has been made. Though distinction between the old and new curriculum of the program have been clearly identified, effectiveness of each are still debated and talked about more often. For nursing education and nursing career does not end in passing all the academic subjects and completion of the PRC forms, one has to subject himself in difficult situations when nursing judgment becomes a necessity. As nursing student begins on the path of career, he or she finds new opportunities unfolding as from within which brighten the path ahead. The kaleidoscope image used on the cover of the 7th edition of Fundamentals of Nursing by Kozier and Erb is an everchanging piece of art with its colors, light and form. As it turns, it represents new opportunities for beautiful new designs. Seeking light and reflections to form new shapes allows one to open one’s mind to all possibilities a kaleidoscope has to offer (Kozier et. al. ,2007). Same with the field of nursing, there are many areas that a nursing student may have never imagined at the beginning of his or her journey. As nursing students open their minds and eyes to these wonderful chances, a good experience they had gained when they were still first timers would be a pertinent tool and inspiration in attuning upcoming difficulties and developing passion in the career. These would let them not to desist from this world of struggles. Conclusion A qualified nursing practitioner is a professionally trained integrated member of the health-care team. This professional education should be life-long, beginning with three years pre-registration factual knowledge and skill acquisition. As previously described there is a symbiotic relationship between nursing’s craft and nursing wisdom, and they are required in practice simultaneously. Despite the apparent impression given by traditional methods of education that these categories exist seperately, for nursing they are fluidly cohesive, one informing the other, through reflective analysis (Watts 1992:). The elements experienced by nursing students during their training are bonded internally together to authenticate their practice, by unleashing possibilities inherent in the situation between patient and the therapeutic self (Kirby and Slevin 1992). The following guidelines are intended to promote improvements in the student’s learning experience. Qualified staffs that direct pace and direction of study need to encourage students in imaginative and innovative ways to prepare them for adoption of new concepts and the flood of changes and that they will need to make in all aspects of their life. Support such as this will guide them through the vulnerable initial stages of their steep learning curve of level one, as echoed by the dissonance described in the first paragraph of the essay. Guidelines I would like to see better preparation of mentors by lecturer-practitioners within clinical placements, in order to foster environments of positive, constructively planned activities. From this, students can gain insight to challenge their assumptions and lay-view of nursing. In this respect, I would like those in the clinical settings to be encouraging students rather than attempting to degrade their efforts by dismissing their academic research based interest in the subject of nursing. I would like access to professional teaching staff in-college at all times, especially immediately prior to and post placement. I hope for tutor liaison with mentors more regularly within the clinical settings, serving to remind mentoring nurses that their duty to support students is real, and linked with Higher Education Establishments. I would like to see in-college mentors giving better, basic and consistent guidance while initially developing the concepts of critical reflective consciousness and the production of an evidence-base of knowledge thus strengthening the intellectual and practical growth of students.

Future of Mobile Global Business Assignment Example | Topics and Well Written Essays - 3000 words

Future of Mobile Global Business - Assignment Example This study evaluates some of these case studies to provide some valuable insight about the contribution of mobile use, and application in commerce and what the prospects for the future are in the mobile industry. It will critically analyse the potential futures in different perspectives such as the competition, role of stakeholders, political, technical, and social issues, and collaboration of mobile in m-business. To get an accurate insight into the contribution of the mobile industry in business, this study will focus on evaluating mobile systems such as MPS (Mobile Payment System), Mobile Ticketing System, and Mobile Learning Systems (M-Learning). In addition, the paper aims to investigate the drivers of mobile applications, their various applications and some the projections in future business world. Through evaluation and analysis of the past researches it also analyses the the past statistics and compares the present trend in the mobile industry. Apart from analysing the contri bution of mobile technology in the business world, this paper will look at how mobile applications such as M-Learning, M-ticketing, and M-Payment systems influence the future development of mobile commerce. It also evaluates the various scenarios of how mobile devices can be used in mobile commerce, their disadvantages, advantages, and the challenges posed in terms of acceptance by people, and the implementation of the technology itself. Key words Mobile mobility; mobile technology; mobile payment system; M-Learning; mobile ticketing system; Short Message Service (SMS); mobile application Introduction One of the most powerful and famous portable technology is mobile technology. It comprises of mobiles phones, PDAs (Personal Digital Assistances), and laptop computers. Mobile services have the capacity to enable and provide services of spatial and temporal constraints. As opposed to other interpersonal services such as online services, which are delivered on the spot, mobile services allow users access to information and services when on the move without being bound to a one spot. In addition, it offers accessibility, ease of use, and flexibility. For instance, through the Mobile Ticketing Service (M-Ticketing), users are able to make bookings and purchase tickets for games, transport, and theatres (Alfawaer, 2011, p848). The advent of mobile phone technology has allowed consumers access to services and content anywhere, anytime. For instance, through wireless devices, mobile phone technology users are able to carry out sell or buy transactions, pay bills, track stock quotes, access bank accounts, make orders, or receive promotions anytime, anywhere. This has been through electronic commerce (E-commerce), which is carrying out business over the internet. This definition is so general and says nothing about the devices used. Normally, a person can access the internet via a wired LAN (connected to a desktop pc) or through a wireless network (phones, PDAs, Laptops, etc.). When we access e-commerce via wireless networks such as through a mobile phone, we refer to it as mobile commerce (M-Commerce). Through mobile devices such as PDAs and mobile phones, mobile business services have a promising future. Applications functions such as news, ticketing, can be optimized for business functionality (Abdelkarim & Nasereddin, 2004, p52). In the business world, information is considered the most valuable aspect of business than money. Given this importance, accuracy, volume, and the swiftness of available information is equally significant. Modern businesses today bases their future profits on the timeliness of information concerning the development of customers’

Human Resource Management Essay Example | Topics and Well Written Essays - 750 words - 2

Human Resource Management - Essay Example Khan had gone for an interview with the organization wearing the hijab, which did not prevent her from being hired as she had agreed to wear it if it matched the company colours. However, a higher-ranking manager spotted her in one and suspended her immediately after which he went ahead and dismissed her from work. In the judgement, US district attorney Yvonne Gonzalez Rogers of Oakland argued that Abercrombie had granted exemptions since 2005 which allowed employees to wear Jewish yarmulke, a baseball cap among other exemptions she went ahead to argue that Khan’s attire had not in any way affected the business. The attorney found out that Abercrombie had violated the religious rights of Khan and therefore awarded her damages to the tune of 48, 000 dollars. In addition, the organisation was required to permanently drop any ban that it had in respect to headscarves. In the settlement, the organisation was also required to accommodate different religious beliefs and practises as long as it did not suffer any undue hardships. Worker absenteeism costing the economy billions Absenteeism among workers has caused most of the economies in the world to lose billions of dollars. This absenteeism ranges from short offs to long leaves from work. The rates of absenteeism differs between different working conditions and industries, for instance workers who are on full time employment terms have a higher rate of absenteeism as compared to those that are working on contractual basis. In addition, government employees are more likely to be involved in higher levels of absenteeism as compared to people working in the private sector. In Canada, the level of absenteeism among full time workers is an average of 9.3 days, which represents almost two full working weeks. The trend of absenteeism is more rampant among full time government employees who are estimated to be absent from work about 12.9 days a year and private sector workers who are absent from work 8.2 days a year. It is estimated that in 2012, the Canadian economy lost about 16.6 billion US dollars due to workers absenteeism. This trend is likely to continue as the workers age if it is not properly handled. A major shortcoming in dealing with the problem of worker absenteeism is that despite of the economic implications that it has on the Canadian economy, less than half of the employees track down the number of absent days that employees have. Despite it being hard to compare the levels of absenteeism between countries, the levels of absenteeism in Canada are high compared to those in United States of America and United Kingdom. Age discrimination in the workplace in Michigan Age discrimination in the work place occur when the employer makes employment related decisions on the basis of age or treats the employees differently due to their age. in Michigan, several age discrimination practises are illegal, for instance, sacking, hiring or refusing to hire an individual based on his age is con sidered illegal, treating employees differently based on their age in relation to promotions, wages, knowledge advancement opportunities, benefits or training is also not allowed (Hulett, 2011). In addition, when an employer advertises a vacancy in his organisation stating preferences for people of a certain age bracket is also considered as an illegal age discrimination practise in Michigan. In Michigan, age discrimination

CASE STUDY of the ESA Habitat Conservation Planning (HCP) process Essay

CASE STUDY of the ESA Habitat Conservation Planning (HCP) process - Essay Example The duration of HCPs can range from one year up to one hundred years. The United States Fish and Wildlife Services have the discretion to negotiate with landowners when there are no other stakeholders used. Found on the north of San Francisco Peninsula stands the San Bruno Mountain Habitat Conservation Plan. In this essay, this HCP will be analyzed in details from all dimensions. A development project in the San Bruno Mountains necessitated the development of the San Bruno Mountains HCP. There arose a conflict on the development of the mountainous region by the Visitacion Associates with the San Mateo County authorities. To discourage the development of the area, the US Fish and Wildlife Service (USFWS) came in and recommended that the habitat would be conserved for butterfly conservation. The complexity arose from the interconnectedness of the Visitation Associates with the Republican government of Ronald Reagan. Despite their support from the Federal government, the local environmentalists were firm in supporting USFWS propositions. As a result of the confrontations, there was developed an agreement between the developer and the San Mateo County authorities to have the HCP established. The HCP provides a habitat for the mission blue butterfly (Plebejus icarioides missionensis) and the San Bruno elfin butterfly (Callophyrs mossi bayensis). These two have be en found to be endangered. In addition, the HCP provides for the protection of the Callippe silverspot butterfly (Spayeria callippe callippe). Despite the heightened disagreements at the start of the negotiations in the 1980s, the HCP was successfully established (Thomas Reid Associates, 1993). The establishment of the San Bruno HCP was surrounded by several controversies especially based on the involvement of many parties. The San Mateo County supervisor Bacciocco spearheaded the negotiation process by bringing the

Lessons Learned From War Essay Example | Topics and Well Written Essays - 1250 words

Lessons Learned From War - Essay Example This paper will explore some of the lessons that can be learned from wars and the manner in which these lessons can be helpful. It is also going to discuss whether leaders learn the right reasons or not from war. Conceivably one of the most major lessons that can be learned from wars is that only the dead experience the end of the war. When the war starts between two or more nations, it takes time before the two states can take diplomatic actions and negotiations to end the war (Worrell 27). Meanwhile, it is the soldiers at war and innocent civilians who die or suffer casualties while the leaders keep on giving orders on where to attack next and what actions should be taken to protect their territories. On the war front, it is only the dead who do not experience the war since they are already dead. The rest of the people whether soldiers or civilians are put in a position where they worry about their life. They are at war and every move that their enemy makes becomes a threat to their lives. Stoessinger asserts that, despite the large sum of people that perished in the Vietnam War, it was just a passage of history and it was in vain for the combatants and civilians to suffer or land becoming devastated (132). The lesson derived here is that even as the war keeps on consuming the lives of the innocent it will still continue until the political leaders settle their differences. To this end â€Å"unless communist belligerency was deterred promptly and effectively, a third was between Communist and the non-Communist states were inevitable† (Stoessinger 68). This shows that it is until when leaders come to the agreement that wars do end. Unfortunately, during all this time it is the innocent civilians and the soldiers at war that suffer. Over the years, wars have shown that the impact is hugely felt by the civilians but only fewer leaders pay the price for their mistakes. Millions of civilians and hundred thousand soldiers died during World Wars with many others getting wounded. Regrettably, very few leaders suffered as a result of the war.  

Final Assignment Questions Example | Topics and Well Written Essays - 1250 words

Final Questions - Assignment Example IP is quite an important asset to the people of America for it is of very high economic value as well as an important element of the health and safety of the general American public (NIPRCC, 2011). The counterfeit merchandise therefore does not only pose a threat to the safety and health of the American public but also largely pause a threat to the general economy of the American nation since such products deprive the nation of hundreds of billions and trillions of dollars in terms of lost profits, tax revenue losses, job loss as well as additional product enforcement costs in the different supply chains (NIPRCC, 2011). Counterfeit products such as the pharmaceuticals, automobile parts pauses a great threat to the health and safety of the entire American public. This is because the counterfeit products fail to match the desired quality standards. Increase in counterfeit products has resulted from increased theft of IP which has further threatened the general security of the American nation. Increased theft of the US trade secrets and more so regarding the US war fighter poses a huge threat to the American national security (NIPRCC, 2011). In the year 1999, the president of America William J. Clinton issued an executive order 13133 that was purposely meant to address the issue of unlawful conduct and especially through the use of the internet. The reasoning behind the issue of this order was that if the use of the internet can be properly controlled, crimes such as sale of illegal firearms and explosives via the internet, sale of drugs, child pornography as well as fraud could adequately be controlled by the American government. The unlawful conduct in the internet was to be addressed through a working group selected by the president to resolve the particular issue. As stipulated by the executive order 13133, the working group goals included analyzing the already existing federal laws and assessing the extent to which these laws

Business advantages for mobile apps Research Paper - 1

Business advantages for mobile apps - Research Paper Example The members of a business organization at various horizontals and verticals can stay focused, up-to-date and organized for all business operations. An overwhelming advantage is the cutting edge marketing procedure offered by the mobile applications. The launching of mobile applications is easier and faster than loading of a mobile website. The interference of mobile phones in the professional lives of people helps in reducing time for marketing products and services. The target customers can be reached through their mobile smart phones through promotional messages even when they cannot access their emails. The mobile applications are applications that are run through the internet and are intended to run on mobile smart phones and other mobile devices. The customized mobile applications developed by the business house allow the company to manifold its performance. The increased flexibility and performance is a key advantage of mobile application technology (Mallick, 2003, 196). Mobiles phones are personal devices and each person has a unique experience of accessing the mobile applications. Services like geo-location services, video footage and audio recordings for advertisements, news applications and various features attracts the interest of the customers to install the applications in their mobile devices (McClure et al, 2012, p. 10). The internet services that were previously available only on the desktops or laptops have now arrived on mobile phones. There are three distinct advantages identified with the use of mobile applications; these are â€Å"speed, volume of information, an d advertising† (Walters, 2012). Speed is of prime importance in today’s society. In our daily rat race most of us cannot afford to spend the amount of time staring at the computer while it boots up and gets ready for an internet session. Students, working people and others mostly access the internet these days on mobile phones. The mobile applications do not

Cultural Oppression Essay Example for Free

Cultural Oppression Essay Women has come a long way from being the gods of the feminist society, oppression from the paternal Roman Catholic, and the continuous struggle to uplift itself from the discrimination in out society. Therefore it is not correct to say that â€Å"The world has evolved in a huge way, but for the groups that remained oppressed it does not seem like evolution has even touched them. † It seems a very narrow way of putting the struggle of women from centuries of oppression when in fact before World War I there were no women in the military, no women in college, no women in office, and no women in the library. Same goes for the homosexuals. There are already four states that allow same sex marriage in the United States and the world is not so unforgiving 50 years ago when homosexuals where killed. Indeed, homosexuals and women have come a long way and it is rather fitting that we recognize them in their accomplishments in pursuing their common good. I agree with Miss Johnson. This society is so bent on discrimination based on color when in fact African Americans are just as able as Caucasians in getting every job done. As long as there are equal opportunities for both races then there won’t be some dumb Joe lying around. We claim to be the most advanced nation in the world but it seems we still have prehistoric traces of slavery in our society. We still think that just because African Americans came to America as slaves then they are a backward race. What the people of America should remember that the very same slaves built this nation with their bare hands and they wouldn’t be slaves had we not made them that way. It seems that we have a double standard when we talk about freedom and liberty for all Americans. That shouldn’t be so because history has proven that it’s never a war of colors, it’s only a war of interests and power. The author mentioned about the struggling African Americans who are in the upper class. Well, money can’t erase prejudice from people especially the prejudice that is rooted in our history. That’s why the weak should fight for its liberation because nobody will save them from it but themselves. Reference

Mens Rea An Enormous Aspect Of Criminal Law Philosophy Essay

Mens Rea An Enormous Aspect Of Criminal Law Philosophy Essay Mens Rea is an enormous aspect of criminal law. Is the mental element that beseeched by the definition of a circumstantial crime and it encompass three degrees: intention, recklessness and negligence. The most reprehensible form of mens rea is intention, as it is more censurable to cause harm premeditatedly and additionally is used in more crucial offences such as murder which demands intention to kill or to engender Grevious Bodily Harm. A part of analysts considered negligence as the third degree of mens rea, as it refers to a failure to acknowledge the dangers. Hence, it will be evaluated as a distinctive guideline of blame as it mentions to the absence of a state of mind. Notwithstanding, mens rea is engaged with the appellants state of mind at the time of the actus reus, which covers everything except of the defendants state of mind, as it often illustrates the guilty act. Conjointly, the doctrine of transferred malice, appoint liability to the defendant of an offence if he has the appropriate intention and accomplished the actus reus on a different person than the intended. 0n this wise, in Latimer  [1]  , the defendant attempted to blow at one person but he missed and crashed one other, thus the doctrine of transferred malice exists, as the mens rea is the same. Consequently, in order for a criminal liability to subsist, the actus reus and the mens rea must coincide. Obviously mens rea associates with serious crimes such as homicide, theft and burglary, which have a wide range of elements in order to recognise the intention of the defendant. Homicide is an enormous aspect of criminal law which includes all the unlawful killings. The main categories of them are murder and manslaughter. All the homicide offences have a common actus reus, the unlawful killing. If the defendant has the mens rea for the murder, then the prima facie liability for the murder starts to exist. At this stage the jury has to consider if the defendant has the defence of provocation or diminished responsibility. If he has so, then he is liable of voluntary manslaughter, but if he has not, then he is liable for murder. On the other hand, if the defendant does not have the appropriate intention for murder, then he is convicted with involuntary manslaughter. As reported to section 1 of the Homicide Act killing shall not amount to murder unless done with malice aforethought  [2]  , which was illustrated in Cunningham  [3]  , as express and implied malice. Express malice divided into two sections, direct and oblique malice. Direct malice, is an un interrupted intention to kill someone and oblique malice, is not the prime purpose of the defendant. He has no intention to cause death but nevertheless, as a result of his actions, the victim died. Hence, if the jury has satisfied that at the time when the defendant recognised that fatal consequences would be virtually certain to result from his actions, then there is an intention to kill even thought there is no actual desire to achieve that result. In Woolin  [4]  , the defendant had thrown his baby causing him to die. Woolin did not intent to kill his baby, but he could foresight that his actions was about to cause the death of the baby. Moreover, another aspect of malice aforethought is implied malice. This indicates that, the defendants main intention is to cause GBH but as a result of his actions, the victim dies. In consonance with section 8  [5]  , the jury has to consider all the evidence, before adjudicated that the defendant is guilty of murder, and not only if he intended or foresaw a result of actions as a natural and probable consequence. In other words, the jury has to consider only the appellants subjective state of mind. According to this section, a jury has the opportunity to conclude about the mental state of the accused from the objective view of the reasonable man and if they decided that a reasonable man would intended to cause death or serious injury, then they will be persuaded that the defendant did. In Moloney  [6]  , the jury could argue that the defendant foresaw the consequences of his actions as a natural consequence, so he is liable for the death of the victim even if he did not wish or desire to kill him. On the other hand, if the accused did not have the intention to kill or to cause serious injury, as happened in Hancock and Shankland  [7]  , then the co nvictions of murder overturned to those of manslaughter. This is able to happen only if death was not a natural consequence but a probability. As it was stated in Nedrick  [8]  , the evidence of foresight is intention evidence. The judges directed the jury to consider if the death was intended, as natural consequence becomes virtual certainty, as I mentioned above. Apparently, as the mens rea in murder is intention to kill or to cause GBH, under the Homicide Act  [9]  there are three defences which decrease liability from murder to voluntary manslaughter. These defences are provocation, diminished responsibility and suicide pact. If the appellant is liable for murder, meaning that he has the appropriate elements of actus reus and mens rea, and he can rely on one of the above defences, then he is liable for manslaughter. Under section 3  [10]  , a person who charged with murder, was provoked by things said or done or both, to lose his self-control. Pursuant to this the jury has to indentify if the defendant actually provoked to act and whether a reasonable person would be provoked to act as the defendant did. Section 2  [11]  , illustrates the defence of diminished responsibility, where a person cannot convicted of murder if he suffers from an abnormality of mind, as this disorder invalidated his mental responsibility of what he is d oing. Additionally, section 4  [12]  demonstrates the defence of suicide pacts. The defendant kills the victim if there is a common agreement between two or more parties and the object of that agreement is death. This indicate that if a person convicted with murder, then if he has the appropriate proof that he was acting under a suicide pact then he would be liable for manslaughter. In some cases manslaughter can be caused due to negligent actions of the defendant, as he has a duty of care towards the victim. If he failed to perform his duty then he is in a breach of duty and that may cause the death of the victim. In Adomako  [13]  , the breach of that duty caused the death of the victim. I think that people who have duty of care towards others, must be able to recognise if there is a possibility for a death and try to avoid it. Pursuant to the Theft Act 1968, a person is guilty of theft if he dishonest appropriates property belonging to another with the intention of permanently depriving the other of it  [14]  . Conspicuously, there are two essential features of mens rea in theft, dishonesty and the intention of permanently depriving. Dishonesty is the first element of the mens rea in theft and as it construes in section 2(1) of the Theft Act a person cannot be dishonest if he has the presumption that he has the right in law to deprive the other of the property. Additionally, he cannot be dishonest if the embezzlement accomplished in the belief that the others would acquiesce if they have the knowledge of the stealing and if there is an authentic belief that the owner of the property would not be able to detect it by taking reasonable steps. On the contrary, as it reported to section 2(2)  [15]  , a person can be found liable for dishonest if he misappropriates the property of someone else, in spite of his desire to pay for the property. In consonance with Feely  [16]  , the plaintiff apprehended that his action was dishonest and he said that he has the intention to repay for the stealing. Under those circumstances, the jury has to make a determination whether the facts of dishonesty coexist with the standards of the ordinary decent person. As a result, the Court of Appeal, in the case of Ghosh  [17]  , conceived a test so that to be able to recognise if the appellants behaviour considers as dishonest according to the standards of ordinary decent people. If it was not then he is not dishonest. Howbeit, if his behaviour was acknowledged to be dishonest, then the defendant is not dishonest unless he comprehended that people would regard him as dishonest. Although the crucial ambition of that test was to authorize that dishonestys appraisement could be based on objective and subjective archetypes, it does not abolish the capability between the juries to be inconsistence. Indubitably, if the defendant did not find dishonest, then there is no theft. Intention to permanently deprive is the second element of mens rea in theft. In agreement with section 6(1)  [18]  , if a person borrows property which belongs to someone else, then he is not liable for theft. Nevertheless, if he decides to keep the borrowed property, then this situation would be considered as theft, as it stated in Walkington  [19]  , in which the defendant took the property with the intention to decide later whether to keep it or not. In Easom  [20]  , the defendant had a conditional intention to steal if he found something precious. Besides, this was not adequate to adjudge him of theft. In Lloyd  [21]  , the defendant has the intention to treat the property of the true owner as it his own and to deprive the owner of his rights to his property. As Lord Lane stated a mere borrowing is never enough to constitute the necessary guilty mind unless the intention is to return t he thing in such a changed state that it can truly be said that all its goodness or virtue has gone  [22]  . Supplementary, burglary is a serious offence which encompasses mens rea. Under section 9(1)(a)  [23]  , a person is guilty of burglary if he enters into a building or part of it as an invader, with intention to steal, commit GBH or cause criminal damage. Moreover, section 9(1)(b), specific the offences. Keep in line with section 9(1)(a), the defendant at the time of entering into a building must have the appropriate constituent of mens rea, to have the knowledge that his entry is not permitted. In Cunningham  [24]  , in order to recognise if a defendant considered himself as a trespasser, a subjective test has been taken. On the contrary, if a person enters into a building with permission, then the doctrine of trespass ab initio takes effect. As the entry has to be unlawful, this principle does not match the offence of burglary. In Collins  [25]  , the defendants conviction for burglary, with intent to rape, was revoke as the Court of Appeal cannot be sure that the defend ant has the appropriate knowledge that his entrance is unlawful and as it stated, the entry has to be substantial and effective. Accompanying, in ulterior offences, the mens rea has to be acknowledged either in trespass with intention or in trespass which is caused recklessness. However, as Laing  [26]  validates, trespass is one of the features of burglary. In that case the defendant entered into a shop, after closing time, but he had not stolen anything and also he had no intention to do so. As is obvious, trespass is an element of burglary but in order for someone to be charged with burglary, he must have the other essential elements of the offence such as intention. The only thing that is required in order to convict someone of stealing is intention. Besides, in some cases the conditional intention is seated. Before 1979 as is illustrated in Husseyn  [27]  , conditional intention was not adequate, as the defendant did not have the intention to steal unless he found something precious. Afterwards, in consonance with Attorney Genarals References  [28]  , conditional intent will be satisfied, as the only thing that required is intention even if there is nothing worth in the building to steal.

Impact of Financial Crisis on Islamic Banks

Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title Impact of Financial Crisis on Islamic Banks Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title