Earlier quoted context omitted.
>That's fine if you're willing to ignore the world of the middle East. Who said anything about Shariah finance being tied to the Middle East?
That's were the strings of those banks are pulled from...
Evidence?
Why non-Muslims are converting to sharia finance
131–140 of 163 posts
Re: Why non-Muslims are converting to sharia finance
#132Earlier quoted context omitted.
"banks are devising loopholes" But Tarek El Diwany repeats himself. There could be some real differences between conventional and Sharia-based lending, but, no sarcasm, banks are great at moving around risks in ways non-finance people can hardly imagine and it would be a trivial exercise for them to move the chips around to make the Sharia stuff merely appear to be Sharia while still being conventional, using the mas…
It’s definitely possible, but the sharia bank would also have a contractual obligation to share in the loss. For something like a mortgage on a home, the title would belong to the sharia bank until the loan was paid off. Banking becomes extremely conservative in state of affairs. In theory, strict rules like these should be extremely hard to game; in practice, banks and other financial institutions are a little too c…
Seems like they need to have some inspector-scholars verify that there are no haram banking practices going on.
From my perspective, a "sharia bank" is an oxymoron. Muslims should be exclusively patronizing "sharia credit unions". Professional bankers are too clever by far to be obeying the spirit of the Muslim business laws. If there were doing it correctly, they would have zero non-Muslim customers, because sharia banking is fundamentally uncompetitive with non-Muslim banking in such a way that even academic macro-economists can prove it.
Re: Why non-Muslims are converting to sharia finance
#133I had the opportunity to translate technical documents for both conventional and sharia financial products a few years ago, and I find the market fascination of them mind-boggling. These products seemed to incorporate convoluted jargon and concepts which dramatically increased complexity but at the same time, produced no extra utility for end-users. On top of that, the addition of ongoing shariah-compliance introduce…
Sustainable investments, ethical investing are mostly similar to sharia financial products https://international-adviser.com/uae-among-true-believers-i...
Re: Why non-Muslims are converting to sharia finance
#134Earlier quoted context omitted.
> Are you an actual muslim or just by name. Neat, I've never seen a No True Muslim fallacy before.
Never heard of Sunnis, Shiites, Allevites, Ahmadiyya? There are probably others I'm forgetting.
You know what, I honestly hadn't really thought about schisms and Scotsman fallacy being as equivalent before. I've been slightly enlightened.
Re: Why non-Muslims are converting to sharia finance
#135I had the opportunity to translate technical documents for both conventional and sharia financial products a few years ago, and I find the market fascination of them mind-boggling. These products seemed to incorporate convoluted jargon and concepts which dramatically increased complexity but at the same time, produced no extra utility for end-users. On top of that, the addition of ongoing shariah-compliance introduce…
I agree that your experience is exactly what sounds like: taking a conventional financial instrument, replacing all mention of the word “interest” with something way more complicated, and adding rules that seem difficult to always stay on the right side of. That happens to be exactly what Tarek El Diwany (mentioned in the second last paragraph of article) is saying. Shariah banks have to operate in a world that has c…
>> the boom-and-bust economic cycles have grown more catastrophic
While agreeing with your post more generally, this one statement seems a bit off the mark. Shouldn't the Great Recession should fairly be compared with Great Depression? So far, at least, the Great Depression was far more catastrophic, as was for that matter the Long Depression starting in 1873. All three of these were real financial sector collapses, not simple recessions. Independent central banking seems to have done great good, generally, despite of course being imperfect.
Re: Why non-Muslims are converting to sharia finance
#136I had the opportunity to translate technical documents for both conventional and sharia financial products a few years ago, and I find the market fascination of them mind-boggling. These products seemed to incorporate convoluted jargon and concepts which dramatically increased complexity but at the same time, produced no extra utility for end-users. On top of that, the addition of ongoing shariah-compliance introduce…
I agree that your experience is exactly what sounds like: taking a conventional financial instrument, replacing all mention of the word “interest” with something way more complicated, and adding rules that seem difficult to always stay on the right side of. That happens to be exactly what Tarek El Diwany (mentioned in the second last paragraph of article) is saying. Shariah banks have to operate in a world that has c…
The boom and bust cycle has been driven primarily by land speculation since classical antiquity. The ability of banks to use their credit creation powers to fuel real estate bubbles through mortgage lending can be halted using a frequently reassessed land value tax and land value increment tax. In the early 1900s Germany completely eliminated land speculation in the colony of Kiautschou using a 6% annual tax on assessed unimproved value of land, of what lots would sell for if cleared of improvements, and a 33% land value increment tax on increases in assessed land value. This allowed the colony to develop rapidly and continuously without any period of recession while running a budget surplus.
Re: Why non-Muslims are converting to sharia finance
#137Earlier quoted context omitted.
These banks are UK banks that required by UK banking laws to know their customers (KYC [0]) and follow all applicable anti-money laundering laws. Every journalist in every news organization, mainstream or alternative, would love to break that sort of news if it were true. [0] https://en.wikipedia.org/wiki/Know_your_customer
Most of them, if not all, have links with the middle East or other muslim countries. Either they are subsidiaries of middle eastern banks, or were funded by middle eastern investors. As a Westerner and an atheist, ethics to me is staying far away from these organisations.
Big Western banks are infamous for abetting drug cartel money laundering- you won't avoid nasty stuff just by avoiding middle eastern banks.
https://www.rollingstone.com/politics/politics-news/outrageo...
Re: Why non-Muslims are converting to sharia finance
#138Earlier quoted context omitted.
It seems if you save money at the bank they will actually loose money for you since their interest rate is lower than inflation. The financial market is such a clusterfuck lmao
I'm not going to claim that finance isn't a clusterfuck - but paying people to store things securely isn't exactly strange. If anything the amazing thing was that people would pay us to look after our money in the first place!
Except they don't store all of it, they loan it out to other people and pocket the interest
Re: Why non-Muslims are converting to sharia finance
#139Earlier quoted context omitted.
It seems if you save money at the bank they will actually loose money for you since their interest rate is lower than inflation. The financial market is such a clusterfuck lmao
That’s kind of the point of low interest rates isn’t it? The idea is that this encourages money to move around the economy instead of sitting there accumulating interest.
During QE, the Federal Reserve bought huge amounts of toxic assets from the big banks, and flooded the banks' accounts with new money, but then paid the banks a higher rate of interest NOT to lend that money out (at least this is my understanding). That's a contributor to the slow "recovery" (which is really just slowly reinflating the credit bubble). The reason they would do this is to prevent high inflation from the massive increase in the monetary base. Effectively, QE just made the big banks balance sheets show "Red == Black" by having the Fed take the red onto itself.
So, normally you would be correct about the point of low interest, but in this new world, post-QE, low interest rates are really just there to keep the economy limping along by hiding the massive structural issues, instead of encouraging credit growth.
That's why the whole narrative about the Fed heroically saving the economy after 2008 crisis is pretty much nonsense, IMO. The problem still exists and it's worse than ever. Who knows what the next can-kicking solution will be, if there even is one?
Re: Why non-Muslims are converting to sharia finance
#140I had the opportunity to translate technical documents for both conventional and sharia financial products a few years ago, and I find the market fascination of them mind-boggling. These products seemed to incorporate convoluted jargon and concepts which dramatically increased complexity but at the same time, produced no extra utility for end-users. On top of that, the addition of ongoing shariah-compliance introduce…
This is my take: Interest is just another term for the time value of money. The time value of money is a fact of life as long as there are opportunities in the world to invest in something that is productive. Therein lies the problem: you can't explicitly charge interest, but you are still subject to the time value of money. The only option is to describe/disguise the time value of money in terms that don't bring up…
Basically, you're right, but thinking thinking in terms of "money" is missing a more general point. A loan doesn't have to involve money at all. There are various reasons why the price of credit isn't zero.
One reason is that most humans have a "preference for the present", i.e. given the choice they would rather have something now that the same thing at some point in the future. As a result, most people are not willing to give something away now, unless they have an expectation that they will get something more valuable in the future.
Another reason is that there is always risk involved in lending. The borrower might not be able to fulfil their obligations, whereas the lender might find a better use for whatever it is they're lending. Therefore, it generally is better to keep something, than to lend it at an interest rate of zero.