| FrontPageMag.com | By Robert Spencer | By Hugh Fitzgerald | Books | Jihad Watch | Islam 101 | Qur'an Blog | Raymond Ibrahim | Robert Spencer |  |
|
|
|||||||||||
|
|
And if cars didn't exist, you never would have had that fender-bender that made you late for work.
The "cure" being offered here is worse than the ailment for several reasons. In particular, there is the fundamental matter of opportunity costs and benefits, and risk and reward. The West is more prosperous because its economies have created conditions where more people are willing and able to lend, borrow, invest, and generate wealth. By contrast, the Middle East has seen a "trickle-down" effect from the West due to the transfer of wealth for oil; ironically, Islamic banking would not be what it currently is without the infusion of supposedly filthy, riba-infested Western capital.
Are Western economic systems perfect? Clearly, they are not. But the bottom line is this: Bad things happen, and when they do, human institutions are able to admit imperfection and can be reformed. If one believes sharia to be divinely ordained, there exists a serious obstacle to admitting imperfection or demanding reforms in that claiming so can be unbelievable at best (if the deity is said to be inerrant), and blasphemous at worst.
Then, there is the political factor. One cannot ignore that sharia law is a system for the governance of every sphere of human life, in ways that conflict demonstrably with Western values of freedom of conscience, freedom of expression, equality before the law, and limitations on the power of government. In that light, to accept sharia finance without considering the rest of the system and its history is perhaps comparable to judging the Nazis solely on the construction of the Autobahn.
There is much more to be said about the hazards and defects of sharia finance; Tarek Fatah has written a great deal on the subject in recent years. But above all, Western economies must remember two caveats: First, in a moment of weakness, any port in a storm looks good, but the present state of the economy must not cause us to make decisions we will regret later. Second, those who are selling sharia finance are seizing upon the present weaknesses of the system, and it is imperative that bankers and policymakers are fully and truly aware of the real costs of dalliances with sharia versus the short-term opportunities to profit.
"Finance the Islamic way at Michigan bank," by Jeff Karoub and Sebastian Abbot for the Associated Press, January 13:
DETROIT (AP) — Big financial institutions have been battered by mortgages gone bad. But a tiny Michigan bank is getting attention in the industry by turning a profit on loans without even charging interest.
Its specialty: financial products that comply with Islamic law. That means no collecting interest, no short selling and no contracts that are considered exceedingly risky.
It also rules out some of the activity that got Western finance in trouble — subprime mortgages, credit default swaps and the like.
"When you look at the economic crisis we're in, if you were to follow Islamic or Sharia financing, you couldn't have this crisis," said John Sickler, corporate director for the bank, University Islamic Financial Corp. in Ann Arbor.
Islamic finance operations aren't prohibited from making a profit. Far from it. Instead, banks that comply with Islamic law, or Sharia, earn money from fees that are part of the cost of the loan, some paid up front and some over time.
University Islamic Financial has two types of financing, one called a marked-up installment sale and the other a lease-to-purchase sale. Fees in both cases are comparable to interest payments in traditional loans, bank officials say.
For example: A seller who bought a house for $100,000 could sell it for $120,000 or even $300,000, provided the buyer agrees it's a fair deal. The home could be sold on an installment plan negotiated by buyer and seller.
The bank is a subsidiary of Michigan-based University Bank, and its leaders say they have talked recently with executives from two national banks hoping to learn more about the business.
Islamic law says money cannot grow by itself, the way it does with compounding interest. Trade is acceptable as long as the equal amounts of money are traded or two different things are swapped with a fairly negotiated price.
So a dime for an apple would be considered "halal," or religiously acceptable, while one apple for two apples would be "harem," [sic] or unacceptable.
Even at University, not everyone is on board. Some customers have closed their accounts when they learned it was engaging in Islamic finance. Some employees who objected to the move quit. The bank also stopped having a Christmas party and no longer serves alcohol at after-hours events.
The Michigan bank focuses on contracts that clearly spell out the risk and reward between lender and borrower. University Islamic Financial says it's the nation's first to offer Sharia-compliant, federally insured deposits.
Islamic banking is more common overseas, but some U.S. banks and credit card companies are exploring the idea of branching out into Sharia products to reach out to the growing Muslim population.
So Islamic banking is only expected to increase in coming years. Already, Citigroup offers Sharia products and services to clients overseas, and Visa says it has worked with banks around the world to offer Islamic-compliant products.
The conventional banking system could learn a lot from the idea, said Jawad Ali, a finance lawyer based in Dubai and London who specializes in structuring Sharia-compliant deals.
"We haven't made as much money as the conventional banks because we can't, for example, sell what we don't own," he said. "We have to own it before we sell it. We may have missed out on gains in good times ... but we haven't suffered any losses."
Of course, there's no guarantee that banks will find immunity in Islamic finance from a severe global downturn.
"I am not doing banking on Mars," said Afaq Khan, the head of Saadiq, the Islamic banking arm of Standard Chartered Bank, based in London. "If real economic activity slows down significantly, the Islamic banking industry will also be affected."
A Sharia-compliant mortgage is like rent-to-own: There is no note, or mortgage, but typically part of each month's payment is held toward the ultimate purchase. The property is titled to an individual trust, or limited liability corporation.
Deutsche Bank estimates total assets in the Islamic finance market at $1 trillion — a tiny fraction of global financial assets, but the bank said in a recent report that the sector been growing at a clip of 15 to 20 percent per year.
Most big international banks already have Islamic banking arms, and a November report by Moody's Investors Service shows that Islamic banks have been fairly resilient to the global economic downturn.
The U.S. banking industry has not embraced Sharia banking. Wachovia, Wells Fargo and JPMorgan Chase said they have not adopted Sharia practices and declined to comment about what they may do in the future.
"As far as the future, we are always looking for opportunities to better serve our customers, but our specific strategy is proprietary," Wells Fargo spokeswoman Lisa Westermann said.
University Bank President Stephen Ranzini declined to name the U.S. banks that University Islamic has talked to. But he said his bank soon plans to offer its services such as residential lending to other banks and credit unions nationwide.
Sharia banking is an idea "that is long overdue in this country," said Amal Berry-Brown, vice president at Comerica, a Dallas regional bank that has talked with Ranzini. "At the same time, there really is quite a bit of work to be done."
Comerica has a strong customer base around Detroit, home to the nation's most concentrated Muslim population.
One issue: There is "a big variance" within Sharia law about exactly which financial practices are considered good and bad, said Mustafa Gultekin, a finance professor at the University of North Carolina at Chapel Hill.
For University Islamic, the niche appears to be paying off. Ranzini said he expects it to generate more than 25 percent of the overall bank's revenue this year, up from about 20 percent last year.
Posted by Marisol at January 14, 2009 12:01 AM
Print this entry
| Email this entry
| Digg this
| del.icio.us
And if infidels and the technologies they've developed in the past few centuries didn't exist, or if infidels had been ruled by the supposedly "superior" slaves of allah (the imaginary) for the last few centuries, the 9/11 attacks would have been nothing more than an oxcart rammed against a mud church or synagogue. Because that's all that "muslim technologies" would have allowed for.
Posted by: Proud_Kafir7908![[TypeKey Profile Page]](http://www.jihadwatch.org/dhimmiwatch/nav-commenters.gif)
at January 14, 2009 1:10 AM
"One issue: There is "a big variance" within Sharia law about exactly which financial practices are considered good and bad."
Simple mathe here: islam=bad, sharia law=bad,
anything to do with islam, sharia law, sharia finance=bad.
There is no variance here, it is all bad. It equals STEALTH JIHAD in all it's insidious evilness. Of course it is popular in the Detriotistan area, which is overrun by muslims.
Here is an idea that is overdue: No islam, no muslims in the USA, end of subject. No matter where they go ,they cause problems. One trip around the globe to the world's war's and hot spots, and you will find the VAST majority involve islam. As I said, simple math.
Posted by: PatriotUSA at January 14, 2009 1:56 AM
"Even at University, not everyone is on board. Some customers have closed their accounts when they learned it was engaging in Islamic finance. Some employees who objected to the move quit. The bank also stopped having a Christmas party and no longer serves alcohol at after-hours events."
This is clear evidence that Sharia Finance may lead to other applications of Sharia Law. Do the female tellers need to wear a hijab?
at January 14, 2009 5:23 AM
"This is clear evidence that Sharia Finance may lead to other applications of Sharia Law. Do the female tellers need to wear a hijab?
Posted by: CTYankee at January 14, 2009 5:23 AM"
Not on Fridays. The bank will be closed, 'cause everybody's at the mosque.
Posted by: tanstaafl at January 14, 2009 8:05 AM
"Islamic banking would not be what it currently is without the infusion of supposedly filthy, riba-infested Western capital."
-- that's because Islamic "banking" has always depended upon pillage and piracy, and always will.
at January 14, 2009 12:30 PM
""When you look at the economic crisis we're in, if you were to follow Islamic or Sharia financing, you couldn't have this crisis"
that's right , but you would have worthless societies incapable of growth and prosperity....just look at the Muslim countries that have Sharia financing for proof...all of them are worthless, corrupt, and just a disaster for the people in those countries...
Posted by: pulsar182 at January 14, 2009 12:54 PM
Finance, particularly shariah finance, needs to be recognized as a weapon of mass destruction.
Posted by: Chatillon at January 14, 2009 2:15 PM
...recognized for its potential as a weapon of mass destruction.
Posted by: Chatillon at January 14, 2009 2:16 PM
Islamic finance operations aren't prohibited from making a profit. Far from it. Instead, banks that comply with Islamic law, or Sharia, earn money from fees that are part of the cost of the loan, some paid up front and some over time.
...................
When "Islamic finance" works at all, it is just sleight of hand--see the above. Interest is haram, but I would bet in most cases those unspecified fees, some "paid over time", look a lot like interest in practice.
more:
So a dime for an apple would be considered "halal," or religiously acceptable, while one apple for two apples would be "harem," [sic] or unacceptable.
.....................
Ludicrous--it should be up to the parties involved in the trade. When might a person consider one apple for two a good trade? Well, one might trade two tiny lady's apples for a large red delicious--each "lot" would contain about the same amount of fruit. Or, one party might prefer the taste of the red delicious, while the other party considers the lady's apples rarer and hence more desirable.
We face issues like this everyday.
more:
Even at University, not everyone is on board. Some customers have closed their accounts when they learned it was engaging in Islamic finance. Some employees who objected to the move quit.
...................
Good for them. I'm sure there would be more people doing this, if more people understood that this is the thin end of the wedge of Shari'ah law.
CTYankee wrote:
"This is clear evidence that Sharia Finance may lead to other applications of Sharia Law.
....................
Well, it already has:
"The bank also stopped having a Christmas party and no longer serves alcohol at after-hours events."
Sounds like Shari'ah to me--specifically, the adoption of dhimmitude.
more:
The U.S. banking industry has not embraced Sharia banking. Wachovia, Wells Fargo and JPMorgan Chase said they have not adopted Sharia practices and declined to comment about what they may do in the future.
.....................
Well, so far so good. I bank at Wells Fargo, and we have investments with JPMorgan Chase. But I expect to see more of this pandering in the future. Wells Fargo announced a couple of years ago that they would accept illegal immigrants' "consular cards" to open bank accounts--they later back-tracked when there was a lot of public outrage.
Even if you knew nothing about the evils of Shari'ah law--why anyone would want to adopt the financial practices of some of the poorest and most dysfunctional economies in the world? This is where oil wealth has muddied the waters.
On the other hand, why would anyone--after 90+ years of the failure of communism--want to adopt any of its practices? And yet, some still do.
Posted by: gravenimage at January 14, 2009 3:21 PM
I wonder if Islamic finance is figured out using - Islamic maths !!
When will someone tell us that Muslims can only study Islamic maths and science !!
And that somehow western scientific development can learn from - science which finds its roots in the Koran?
Cough! cough!
Posted by: Cole at January 14, 2009 7:47 PM
"When you look at the medical crisis we're in, if you were to follow the mohammed-mandated Islamic or Sharia medicine of camel urine and fly wings, you couldn't have this crisis. We'd have all new ones."
Posted by: Jr. at January 14, 2009 8:51 PM
Michigan is just the type of ill-run economy that would embrace sharia banking.
Sharia banking is not the answer to the current banking crisis--common sense lending and vetting of morgagees is, however.
I have always wondered how much of a terrorist money circle-jerk sharia financing really is--because nothing is sharia that isn't corrupt.
Posted by: CapitalistGig at January 14, 2009 9:20 PM
Some people will stoop to anything for a profit. Sharia compliant banking is one more inroad for muslims to spread their filth while isolating themselves from mainstream America. Anything remotely connected to islamic law is malevolent and vile. They're so clever; instead of calling interest by its name, they call it something else and everything is allah-ok.
How could a primeval, bastardized death cult of a religion based on hate, death, destruction, and unparalleled cruelty become an intricate convolution of minutia and fabricated legalities? How does the basest of belief systems evolve into a maze of asinine edicts, rules, regulations, and mandates? Maybe they're what make it so utterly ridiculous, albeit deadly. I cannot believe that normal, rational American bankers are buying into this medieval crap.
Posted by: Susanp at January 15, 2009 1:02 AM
In a country, far, far, away:
Kufr: Here is $50,000 here that I would like to deposit and get a good interest rate at your bank.
Mohammed the bank teller: "Oh, my goodness gracious sir, this is a Shariah-compliant bank, we don't have interest! No, we offer something much better than interest. In fact, under our Sharia-compliant system, you get much more than that. Our bank invests part of your money in community projects in diverse places as Gaza, Thailand, Venezuela, Western Jordan, and South Mindanao. In fact, we believe strongly in one peaceful world."
Kufr: "That sounds very interesting, I hadn't heard of this sort of thing before."
Mohammed the bank teller: "Yes, instead of interest we have a thing called Jizya, and at the moment it's twice as much for non-muslims as it is for muslims. In fact I think for you it's 9.35% over the first year."
Kufr: "Well, that sounds like a good rate. They were only going to offer me 4% across the road."
Mohammed the bank teller: "Tell, me, are you part of the Ummah. No, I thought not. We'll just fill in this form and tick the 'A & Ps checkbox' - no, nothing to worry about. Fill out this form, sign here, and I'll just count out your money"
Kufr: "Here you go" [slides money across counter. Starts filling in the forms.]
Mohammed the bank teller: [Finishes counting money and puts in under counter]
Kufr: "And how often do these Jizya payments get added to my money in this account?"
Mohammed the bank teller: "Filthy Kufr, what money? Get out of our bank!"
Posted by: Gharkad at January 15, 2009 6:36 AM
The whole fakery of pretending to avoid the payment of interest by calculating it in exactly the manner of Infidel banks, but merely giving it a different name, has been discussed by many, including the Turkish-Ameican economist Timur Kuran, whose name may be searched at this site.
But more important, surely, is that despite having received over twelve trillion dollars since 1973 alone, no Muslim oil-rich state has managed to create a modern economy. Every single oil state is still dependent for more than 90% of its revenues from the sale of oil (or natural gas), or from interest on revenues received from the sale of oil or natural gas. Not a single such state -- not Saudi Arabia, not Libya, not Algeria, not Iran, not Qatar, not Kuwait, not the United Arab Emirates, not any of them -- has managed to go beyond, to create, despite vast sums invested, any significant development in agriculture (see the tens of billions wasted by Saudi Arabia), or in industry (just watch as those "Economic Cities" so proudly being built by Saudi Arabia all show themselves to be the white elephants anyone can safely predict they will be).
And, save for Iran, which had decades of secular rule under the Pahlevis, not a single Musilm oil state has been able to free itself from almost total dependency on a workforce of foreigners, who -- save for some Pakistanis and Indonesians a the very bottom -- consists almost entirely, and in the jobs that really count entirely, non-Muslim. Why? It is because of Islam itself, and the attitudes and atmospheics it naturally engenders. Inshallah-fatalism, and long reliance, over the entire history of Islam, on the loot to be seized from non-Muslims, or the subsequent Jizyah exacted so relentlessly from non-Muslims now under domination and rule by Muslims, accounts for a great deal of the wealth on which Muslim states relied. And without the oil revenues, that is without the wealth that comes not from any hard work, or entrepreneurial flair, by Muslims themselves, but simply from an accident of geology (and the oil itself was discovered, and extracted, and distributed, and uses found for it, entirely by non-Muslims, without the locals having much to do except cash their checks) the Muslim oil states would be of no economic account and even today, despite all that oil wealth, they are economically dependent on the West in every way -- for food, for goods of every kind, for arms, for a work-force. Take away that oil, and they would be back in the miserable condition that they were in sixty or seventy years ago. Yes, absent the transfer of wealth from Infidel states, and the use of Infidel wage-slaves (and it should be added that at the lowest end of the economic scale, many of of the Asian and Africans working in Arab countries are treated as the equivalent of slaves), and without access to Western technology, Western medicine, Western health care, Western everything, the Muslim oil states would have nothing.
And what of the other Muslim states, the ones without the oil? Save for Turkey, where the key to Turkish economic development is Kemalism, and the atmosphere it created, and the quarter of the population that is now secular (though under constant and multifarious and devious threat by Erdogan and the Primitive Party) has allowed for real education, and the rule of secular law, to create the conditions for economic activity, and those conditions have benefitted even those who regard themselves not as "secular" or Kemalist Turks but as deeply Muslim, who are not very good at understanding that their own economic success is a result of that Kemalism, and who prefer to believe that modern Turkey shows that "Islam and economic development are not incompatible but can go hand in hand." If Erdogan and the Primitive Party (in every Muslim country, the Primitive Party is that which attracts the support of the most Muslim of Muslims, the real Believers, as opposed to those who through no fault of their own are born into Islam, cannot in the current situation dare to publicly question it, but must wanly go along with things -- only in Turkey is there another, however imperfect, way) have their druthers, Kemalism will be undone, and though they do not realize it, so too will the "Turkish economic development" that they think can be separated or sundered from Kemalism, and the systematic constraints on Islam that Kemalism maintained for so long.
Take away the oil, and the oil-rich Muslim states would soon revert to their original wretchedness.
Take away the Jizyah of the vast amounts of aid given to the non-oil-rich Muslim states, such as Egypt, Pakistan, Jordan, and such pseudo-entities as the "Palestinian" Authority (which is a fiction maintained, at this point, by Western and even Israeli support, so as to pretend that the "West Bank" Arabs and even the Gazan Arabs -- further along than the "West Bank" Arabs in their self-imposed primitivitization and induced convulsions of hysteria and hate), and they too would be seen in their real dimensions, their economic stasis, their hopelessness, even as their peoople continue, deliberately, as a political act, to multiply with families of ten and twelve and fifteen children, so that they might, as they see it, ultimately ovewhelm demographically the Infidels, not least if those Infidels keep idiotically allowing Muslims to enter, and settle deep within, their own non-Muslim lands, bearing in their mental luggage the alien and pemanently hostile creed of Islam.
Without the Jizyah of Infidel aid, without the manna from Allah of the oil, the Muslim states would demonstrate, as they had before the twin-taps of the oil-revenues and the foreign aid were turned on, that inshallah-fatalism keeps their economies in a state of permanent stasis. It cannot be otherwise. Islam stunts not only moral and mental growth, but economic growth as well.
Posted by: Hugh at January 15, 2009 11:14 AM
Well of course not! They just saw your head off at the first sign of any insolvency!
Well, duh!!!
Posted by: pythagoras at January 15, 2009 9:29 PM
(Note: The Comments section is provided in the interests of free speech only. It is mostly unmoderated, but comments that are off-topic, offensive, slanderous, or otherwise annoying stand a chance of being deleted. The fact that any comment remains on the site IN NO WAY constitutes an endorsement by Jihad Watch or Dhimmi Watch, or by Robert Spencer or any other Jihad Watch or Dhimmi Watch writer, of any view expressed, fact alleged, or link provided in that comment.)