Some of the best advice my father ever gave me was to NEVER talk about religion or politics. I have rarely strayed into discussing subjects that had political tones and then only when I could do so from a bipartisan, economic perspective. I have taken his advice on religion and avoid any discussion of it.
This week however, I attended a lecture on Islamic Finance, curious how their perspective is different than our Christian/Capitalistic perspective.
It is apparently a growing market with nearly $2 trillion of assets being managed in accordance with Islamic principles, mostly in Dubai and increasingly in London.
Islamic Finance begins with Five Pillars, which are the basic platitudes that all people are to be treated fairly, yada, yada. Then, they list the prohibitions. Anything not prohibited is permitted.
I already knew that one prohibition is that they are forbidden to pay or receive interest and wondered how they could possibly ever make a loan or issue a bond without somebody paying for it. You can "borrow" money and you don't pay interest but you do pay a percentage of profits, because the loan is called an investment. A duck by any other name is apparently NOT a duck.
An example is getting a car loan. You go to the dealer and negotiate a sales price. Then, you go to the bank and ask them to buy the car from the dealer at this price. After the bank buys the car, they sell it to you at a higher, marked-up price (on a monthly installment plan). Therefore, it is not interest. The bank is merely booking profit from a sale to you, not interest from a loan to you.
Another prohibition is that you cannot sell anything you do not own. Therefore, you cannot invest in options, futures, or certain other derivatives. Getting around this prohibition is overly-complicated, meaning it is seldom done. This is the single biggest disadvantage to being an Islamic investor, but, given my anxiety about the power of unregulated derivatives to destroy capitalism, this is the only advantage that Islamic finance offers the world.
I came away with the impression that the Koran is just another nuisance that Capitalists routinely side-step or work-around, not unlike national regulatory authorities, such as the SEC. Is this the purpose of religion . . . of any religion . . . to get in the way of Capitalism? Is religion . . . any religion . . . trying to empty the Atlantic Ocean with a spoon -- by trying to getting in the way of Capitalism?
Is Capitalism "the one-true religion?" God forbid! Or, is it just more powerful than any religion?
This week however, I attended a lecture on Islamic Finance, curious how their perspective is different than our Christian/Capitalistic perspective.
It is apparently a growing market with nearly $2 trillion of assets being managed in accordance with Islamic principles, mostly in Dubai and increasingly in London.
Islamic Finance begins with Five Pillars, which are the basic platitudes that all people are to be treated fairly, yada, yada. Then, they list the prohibitions. Anything not prohibited is permitted.
I already knew that one prohibition is that they are forbidden to pay or receive interest and wondered how they could possibly ever make a loan or issue a bond without somebody paying for it. You can "borrow" money and you don't pay interest but you do pay a percentage of profits, because the loan is called an investment. A duck by any other name is apparently NOT a duck.
An example is getting a car loan. You go to the dealer and negotiate a sales price. Then, you go to the bank and ask them to buy the car from the dealer at this price. After the bank buys the car, they sell it to you at a higher, marked-up price (on a monthly installment plan). Therefore, it is not interest. The bank is merely booking profit from a sale to you, not interest from a loan to you.
Another prohibition is that you cannot sell anything you do not own. Therefore, you cannot invest in options, futures, or certain other derivatives. Getting around this prohibition is overly-complicated, meaning it is seldom done. This is the single biggest disadvantage to being an Islamic investor, but, given my anxiety about the power of unregulated derivatives to destroy capitalism, this is the only advantage that Islamic finance offers the world.
I came away with the impression that the Koran is just another nuisance that Capitalists routinely side-step or work-around, not unlike national regulatory authorities, such as the SEC. Is this the purpose of religion . . . of any religion . . . to get in the way of Capitalism? Is religion . . . any religion . . . trying to empty the Atlantic Ocean with a spoon -- by trying to getting in the way of Capitalism?
Is Capitalism "the one-true religion?" God forbid! Or, is it just more powerful than any religion?
