Covered Interest Arbitrage

Do a sell-buy in USD with spot rate at PKR 81 and 3 month forward at 83 which will create a USD liability maturing in 3 months. Take the PKR liquidity generated from the sell-buy into money market and earn 13% (on annualized basis). Walk away with 200 bps of clear arbitrage profits. Hows that?

Eureka!!!!!

Went to work today with absolutely no intentions of accomplishing anything. But as I got there I realized that 1) I better get started on something important and 2) I just found out something that a lot of people don't understand.
So I started working on the market risk policy and simultaneously developing a spreadsheet based model of interest rate risk with scenario analysis. Turns out, interest rate risk is the most widely misunderstood thing. A balance sheet is one large swap book where banks borrow in one maturity band and lend in another. So the calculation of interest rate risk is nothing more than the revaluation of a basis swap with different levels of interest rates.
The primary inputs to this model would be the coupons on each asset/liability, the maturity/repricing date and the current levels of KIBOR for each maturity band.

Tamil Tigers just found a new profession

I am sick of taxes

There you go. I could not be more explicit. There are different theories as to what extent taxation can be beneficial and beyond which point any additional taxes will be detrimental to the GDP growth rate.

America has long enjoyed unrestricted access to debt from various sovereigns (China and KSA). Supporting these copious amounts of capital inflows is the unlimited taxing power of the US Congress. However, a careful analysis of this assumption would reveal that high levels of taxation take away the motivation to work. Put differently, if you know that the government will take away all your earnings to repay the debt and that you will not be getting anything back, you would prefer staying home.

Now that every one in the economy has decided to stay home and do nothing, I wonder how sharply would the GDP fall.

Anyways. What pisses me off the most is the indifference of the feudalist/legislators/senators/MNA's/MPA's towards the working middle class. Agriculture, which makes up close to 25% of our economy remains out of the tax net. Did somebody mention "broadening of tax base"? Does that mean massacre of the corporate working class of Karachi?

What's eating Rafi Usmani

Dear Mr. Usmani,

This has reference to your crappy claim regarding JJ's Fatwa for Lay's Chips. For your information, it was not an edict. Edicts are needed where the interpretation of Hadith or a verse of Quran needed further elaboration. JJ was giving out the facts. Facts that the ingredients used were fit for consumption by the Muslims.

So why are you so pissed off. Perhaps because JJ happens to be far more popular than you? Or maybe that people prefer buying JJ's clothes over your books?

Regards,

SK

Muslim Women Should be Free to marry anyone they chose

Now this one happened on the 6-7 June 2009. The panel consisted of 4 speakers, 2 favoring the motion and 2 against it. Two speakers who kept me from flipping the channel were Asra Noumani and Yasir Qadhi. I will discuss the former later and start with Yasir Qadhi, a Muslim cleric based in the US. Yasir was born to Pakistani parents in Texas. He got a degree in Chemical Engineering from Texas and then moved to the KSA to study Hadith and Theology. He is now doing PhD in Islamic Studies from Yale. In short, you have to be very careful when you confront him. He is smart.
Now Asra Noumani. A notorious feminist. Born to Indian parents in Mumbai. Thinks she is the only one free and women all over the world are subjugated and mere sex slaves. I would call her "a chip off the old block". Has got no clue what she is talking about yet will sympathize with women to get their votes. So desi. So Benazir.
Being a regular reader of muslimmatters.org, I found Yasir's perspective on the debate which was really interesting.

"I asked the producers what they meant by the motion. Did they mean that a Muslim lady had the freedom to not be forced into any marriage? In which case I could not oppose the motion, as Islamic law guarantees her the right to choose her spouse. Or did they mean that she had the right to marry anyone - including non-Muslims, and even other women (the wording of the motion clearly said anyone and not any man)? They responded that they meant it as it is - anyone!! Well, in that case, of course I opposed the motion. Islamic law does not allow a woman to marry a non-Muslim man, and of course same-sex marriages are prohibited as well!"

Needless to say, even he knew he was marked for death. Regardless of his position on the subject, what I did admire about Yasir was his ability to present facts and distinguish them from opinions. This was clearly missing in Asra's case. Since her ability to argue was driven by feminism, she was left with no other option but to resort to name-calling and getting personal.
One fundamental to follow before initiating a debate is to find some common grounds. In topics like these, the most appropriate grounds would be the religon itself along with the teachings of Quran and Sunnah. One can often argue on the interpretation in which case the opponents need to refer to Fiqah. Asra, it seems, had no understanding of how Islamic Jurisprudence works.
An interesting point that was brought in the debate, which surprisingly, had nothing to do with women, was freedom. Kudos again Yasir. I never thought it like that. We are indeed born free and are free citizens of this world. Yet not free enough to do whatever we wish. The religon does impose some restrictions upon us, not just women.

“Asra, a very simple and blunt question: would you allow a Muslim woman to marry another woman?” Her response was, as I expected, in the affirmative.

So there was nothing to agree upon in the first place. This argument had absolutely nothing to do with religon.

Here is more on the doha debates.

Something is not right

Hell am I the only one who noticed that MCB is trading at a trailing multiple of 5.5. I think I am going for this one soon. Or no. I will wait for it to hit 120.