Saturday, September 23, 2006

This Saturday's Financial Times

This Saturday's Financial Times had two very interesting reports.

The first, "Make Money, Not War" by Gillian Tett, was a cover page story on Islamic Finance and about the rise of the Islamic financial instruments department at the Deutsche Bank. (Other, shorter and more specific Financial Times stories on the topic of Islamic finance can be found here, here and here.

The second, "How Mental Accounts and Oil Prices Can Hit Spending" in the print version and "Oil, Diapers and the U.S. Economy" in the online version by Vitaliy Katsenelson, was filled with examples of mental accounts (a concept form behavioral economics) by way of exploring how fuel prices will affect retail businesses. The conclusion: diapers will continue to be good business! Perhaps, the enthusiasm of the author could be attributed to the fact that he might have just become a father! We all see things through our own viewpoints and windows.
We put different value on money depending on the source of funds. Borrowed money usually carries less weight when it comes to spending decisions than hard-earned cash, though it should carry a higher value since we have to pay interest on it.

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