By Alyssa A. Lappen
Indonesian sukuk buyers may sink in the same ship with the dupes heeding Western headlines and Islamic gurus since the Bernard Madoff scandal broke last December. These financial product pushers have increasingly exaggerated the “safety” of Islamic finance securities to offset “the cancer of interest-bearing debt.” Investors are now snapping up three-year Indonesian bonds that will supposedly hold their full value and make money---an astronomical 12%---while paradoxically avoiding speculation, alcohol, gambling, interest, and other “haram” activities forbidden under shari'a law.
Granted, Bernie Madoff's “hedge fund” investors did not expect to be robbed blind. But they knowingly exchanged high risk for high returns. Indeed, alternative funds are so risky that U.S. securities laws limit their sale to investors with at least $2 million in financial assets---in other words, enough to protect them against being totally wiped out.
But even folks who should know better don't grasp the risks of Islamic finance. London's Financial Times, for example, touted the Amana Trust “Islamic” Income fund, based in Washington state, for “losing only 25.8 per cent” in 2008---“half [sic] the average 44% loss for US stock funds.” Likewise, an SEI Investments company analyst recommended Islamic mutual funds as protection from the stock and bond markets' “extreme ups and downs,” despite their substantial losses in the last quarter of 2008. Read more ...
Indonesian sukuk buyers may sink in the same ship with the dupes heeding Western headlines and Islamic gurus since the Bernard Madoff scandal broke last December. These financial product pushers have increasingly exaggerated the “safety” of Islamic finance securities to offset “the cancer of interest-bearing debt.” Investors are now snapping up three-year Indonesian bonds that will supposedly hold their full value and make money---an astronomical 12%---while paradoxically avoiding speculation, alcohol, gambling, interest, and other “haram” activities forbidden under shari'a law.
Granted, Bernie Madoff's “hedge fund” investors did not expect to be robbed blind. But they knowingly exchanged high risk for high returns. Indeed, alternative funds are so risky that U.S. securities laws limit their sale to investors with at least $2 million in financial assets---in other words, enough to protect them against being totally wiped out.
But even folks who should know better don't grasp the risks of Islamic finance. London's Financial Times, for example, touted the Amana Trust “Islamic” Income fund, based in Washington state, for “losing only 25.8 per cent” in 2008---“half [sic] the average 44% loss for US stock funds.” Likewise, an SEI Investments company analyst recommended Islamic mutual funds as protection from the stock and bond markets' “extreme ups and downs,” despite their substantial losses in the last quarter of 2008. Read more ...
Source: FrontPage Magazine
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