Muslims and Modern Banking: A Rejoinder

Masadi,

Hamid mian doesnt think that USA is a failed system so he stays on. You think that it is a failed system so you should move out as fast as you can.

Regards

Masadi= Research reveals that there are 37 million in the US that don`t get enough to eat

Damn fool hamidm2 = They are eating cheetos and drinking pop

Masadi= Research shows that they are dying at three times the rate

Damn fool hamidm2= They can walk to an emergency room and not die

Masadi= This system has failed when millions are homeless amidst extreme wealth

Damn fool hamidm2= Why are you living in a failed system

Masadi= What does my living or leaving have to do with the fact that millions are suffereing in this system of hypocrisy?

Damn fool hamidm2= Why are you living in a failed system

Masadi= will you accept that it is a failed system if I were to get up and leave?

Damn fool hamidm2= yes

Masadi= Well if you accept its a failed system what are you doing here? Let`s both get up and leave

Damn fool hamidm2= No, I wont accept its a failed system even if you leave.

Masadi= then you acknowledge that my leaving or not leaving has nothing to do with it being a failed system. Your argument is in tatters.

Dear Masadi sahib,

Thanks for pointing out the obvious that USA is a failed society. However the poor have a choice they can migrate to Pakistan/ North Korea and enjoy the pleasures of a perfect society.

Regards

mullah masadi,

......... you glibly state: `` No failure of any system can match the failure of this capitalistic heaven.``......... let me ask you a very simple question which, in my opinion, deserves a very simple answer :``if you hate this system so much, then why are you here ?``............ we have been asking our other resident mullah, urstruly, the same question for many years and still haven`t received a straight answer ...... what is your pitiful excuse ?

........... and stop repeating the hippie nonsense about people dying in the us because they couldn`t get proper medical care ....... any bum can walk into the emergency room with a brown bag and wet pants and walk out with a quadruple by-pass if he needs one ........ the poor are not dying of hunger, they are dying because they eat too damn much and then sit around watching tv all day while you and i pay for their cheetos and pop ............ and if you are feeling sorry for welfare moms why don`t you marry four of them instead of complaining about it - it will make you feel better .... jazak allah khair ...........

.... by the way, did you read the economist article on philanthropy in the us or were you too busy reading the koran (again)?............ do you realize how much pop and cheetos 250 billion dollars can buy ?

#91 writes <<< I shall end this discussion with my final impression that whatever system you are espousing is dangerously close to communism (in terms of economic/financial system) and as with communism, it is bound to fail.. >>>

No ``failiure`` of any system can be worse than the fact that in this capitalistic heaven 1% of the population controls more wealth than the rest of the 99% combined. No failure can be more complete than the fact that in the wealthiest country on earth over 82 million people at any point during two years, if they suffer catastrophic illness will die because they do not have health care. No failure can be as obvious as the fact that where farmers are paid to destroy food products for the sake of price and where tens of millions of tons of food are wasted every year there exist over 37 million that suffer from chronic malnutrition. No failure can be more obvious than the fact that in a nation where the rich own several million dollar homes, there are over 7 million roaming the streets in the dead of winter as homeless and not finding shelter. No failure of any system can match the failure of this capitalistic heaven. I rest my case.

Re: # 89

masadi,

For some of my points, your response looks like a repetition. There is no point in continuing it further..

But you made your philosophy clear about whether lenders deserve a `fair` return or any return. Glad to know that, though I completely disagree with it,

I shall end this discussion with my final impression that whatever system you are espousing is dangerously close to communism (in terms of economic/financial system) and as with communism, it is bound to fail..

Thanks,

#67.Masadi
You said: “In a just society, in a moral society, extreme surplus and extreme deprivation should not exist side by side”.
#15 I had anticipated such a response, and that is why I had asked ‘Please ignore the social and emotional implications involved in the Bread or Chapatees!!
The responsibility(s) of the State in ensuring equitable distribution of naan-nutfaa/daal-roti is a separate issue. Although it is an important issue for it touches upon what the so called Muslim world and the wealthy wold is doing with the NATURAL wealth of the world, but this is not what is being discussded here.
Is the answer still NO? If so on what basis?
Rashid

In response to #87, avkrishna

what I wrote earlier => ````Uncertainty, we dealt with that also, it flourishes and is perpetuated in a capitalist system, you cannot isolate one part of a system from the whole. I am against the whole damn setup.````

His response => As long as there is no viable alternative, the existing system to evaluate uncertainty stands..

My response => And who says there is no viable alternative. Just because the powers that be have clout in this institutional setup and they get their way, does not mean there is no ``viable`` alternative and it does not mean that the rest of society should condone this evil.

````
what I wrote earlier = >Further interest or a higher rate of interest is no guarantee against default whatsoever. Like I said, taking the example of credit cards, the people paying the higher rates of interest, default more often. ````

His response = > You are flipping the logic here. Certain groups of people have to pay higher interest rates because they have a high risk of default not vice versa. Now one can argue whether interest itself is a contributing factor for default. There is a merit to the argument and certain regulation needs to be in place to prevent loan sharking or excessive compounding of interest. And the consumer activist groups, Fed and the Congress in USA, at least, do a reasonable job for US consumers.

My response = > No flipping going on here. The people who are charged the ``higher`` rate are usually the ones whose demand for debt money is quite inelastic so they pay a higher premium, mostly the needy. Those that have many substitutes available are offered a better rate to make borrowing more attractive. Interest related to default is a mere legitimation tool for outrageous profits made by those that lend for interest. Like I said show me the data, is it acheiving that end or is it not and most certainly it is not.

what I wrote earlier = >```` And in any case it is up to the lender whether he wishes to lend or not. He or she however in a moral society does not have the authority to fleece people who have genuine needs just because their ``credit rating`` is bad.````

His response = > This is again a reverse argument. Lender should have the freedom to set rates within a reasonable limit. It is up to the borrower whether he wants to enter into that agreement. As long as free markets do the job they are supposed to do, every borrower gets a rate which he `deserves`.

My response = > Not at all, the lender has a surplus, he already enjoys a hundered points of advantage in a society based upon buying power. He now wants to use that surplus to fleece the needy, that is immoral and outrageous. If he wants to make that surplus grow by undertaking genuine trade, more power to him but he must face the risks that go with that. Only when this happens will wealth flow more equitably in a society.

What he wrote = > Also framing the argument in terms of `certain groups having authority to fleece people` is a rhetorical one. Why this focus only on the `genuine` needs of borrower? What about the security for the lender? How do they get a `fair` return?

My response = > What ``fair`` return. They already have a surplus in a society where most have zero net worth, that is beyond fair. No surplus is ever ``fair`` when a large percentage of a society do not even have their basic needs met. Who can lay claim to owning the earth when it is equally provided, except that some have managed to usurp its benefits from the vast majority of humanity, claiming that they have ``worked`` for it, that is total BS.

He wrote = > I appreciate your empathy towards the poor and disenfranchised. However, in your zeal towards protecting the borrower at any cost, you are taking away the incentive for the lenders to enter the market. Unless they do so, whether it is Communism or Islamic financial system, it will be a sub-optimal economic system and is bound to fail.

My response = > Absolutely not. Capitalism is where your ``lenders`` are maximizing profits and enslaving mankind. Under other systems, where production is geared more towards human need fulfillment rather than profit maximization, there is potential for unlimited growth. It has to do with the mindset of people, yes thieves will have no place in such an economic system, let them exit the market with their capital, we don`t need them. But whatever surplus exists, when it is used for need fulfilment, only the return of the principal is justified, when used for profit making, partnership and sharing of risks.

He wrote = > Thanks,
Avkrishna

My response= > No problem.

#86 write MNIPhir writes says <<<

MAsadi:
Now you are in a rant mode. :)

To put your own rejoinder to you, I did not ask what you think is moral or immoral, or part of the capitalist system. I asked you if Islam outlaws insurance. Please explain where it is outlawed; what kind of insurance is outlawed; and why. Allah`s opinion -- not your own -- is relevant.

I will wait for your enlightened response. Thanks. >>>>

When I talk about what I think is ``immoral``, I do not pull out my morality out of thin air. The Quran can talk of things from which you can deduce whether insurance is justified or not. Take the case of the medical insurance industry. It is kept alive by fear of illness and high medical costs, and their relentless lobbying makes sure that over 47 million in America will have no health insurance and there will be no guaranteed health care for all. Many die every year as a result. Is that moral? Is that allowed Quranically? Of course not. There are verses in the Quran where it quotes the ``shaitan`` offereing people false hopes and assurances that he will be their guardian, and such assurances are condemned by the Quran. Specifically consider this verse, one out of several that exists, about fear that keeps this industry and the capitalist system going:





[3:175] It is the Shaitan`s way to instill fear into people of those that keep its affairs. Do not fear them and fear Me instead, if you are believers.

There are others that deal with such ``fear`` as well, like the fear of poverty etc. That said, this paper was not about insurance, but about interest. When I write one about insurance, we can discuss it.

Re: # 68 zeemax {``...I stand gratefully corrected. I`ll certainly keep it in mind next time I trade pork belly futures...``}

CBOT and CME on La Salle are as distinct as Mecca and Medina. Every Hajji knows the distinction. Clearly, you leave the nitty gritty of futures trading to your underlings, or else you wouldn’t have mixed up the two. The jaunty generals of finance, such as your esteemed personage, have the luxury to be cavalier about hard facts, where as we, the poor private guerillas, do not. We cannot survive by merely beating the benchmark and pretending success. We must generate absolute returns otherwise our children starve. But then you command vast financial resources of public monies, running into the billions, whereas we only nurture our meager private accounts.

While we are on the subject, let me recall our contentious conversation four years ago, back in 2002, vis-à-vis the US Dollar and Gold… At that time, the US Dollar Index was above 120 while gold was in the $280’s… Today, if I may be so bold as to draw your attention, and update the picture where the US Dollar Index is near 90 (up recently from a low of lower 80’s, thanks largely to the one-time tax holiday of 2005 for US corporations to repatriate their foreign profits at a concessionary rate of 5% as opposed to the normal 35%) while gold is well north of $550 (having retracted somewhat from a recent high of $576)… I want here to once again go on record and speculate further that in another four years while we’ll still be having the same debate, where many an expert will expound the virtues of the US Dollar, the USD Index will be south of 70 while gold will be north of $800… As they say in your Peshawer, “da guz o da zameen”…

Perhaps then you’ll want to reconsider offering me that supervisory job (profit percentage based, of course) trading your various funds and worrying about the markets while you focus on hob-nobbing with the big wigs and rubbing shoulders with the fat cats.

And speaking of big wigs, please consider attending this year’s Grant’s Investment Conference on March 29, (8:30 am to 4:30 pm) held at The St. Regis in Manhattan. “Central banker for the world: challenges ahead” is the title of the lead-off speech. The speaker is none other than Paul A. Volker, the nonpareil central banker. I’ve been a fairly regular attendee since 1999 and the experience is well worth it. In addition to Mr. Volker, the line up this year includes luminaries like: J. Christopher Flowers, Nassim N. Taleb, Sean J. Egan, Larry A. Goldstone, Paul Isaac, Michael Katz, Kennedy Richardson and Jeremy Mindich. You probably know of them already, but if not, look them up.

I’ll try to take out time and answer your other post where you accuse me of being ” a closeted proponent of the orthodox Islamic school in disguise…”

Right now it’s time for ishah I must go and vuzoo

…SR

Re: # 67

```` It`s topic was the Quran, interest and modern banking, that is all. It does deal with the time value of money; you simply haven`t read it closely enough. Compensation for that is just and allowed. ````

You did address the time value of money. Thanks for providing that.

````Uncertainty, we dealt with that also, it flourishes and is perpetuated in a capitalist system, you cannot isolate one part of a system from the whole. I am against the whole damn setup.````

As long as there is no viable alternative, the existing system to evaluate uncertainty stands..

````
Further interest or a higher rate of interest is no guarantee against default whatsoever. Like I said, taking the example of credit cards, the people paying the higher rates of interest, default more often. ````

You are flipping the logic here. Certain groups of people have to pay higher interest rates because they have a high risk of default not vice versa. Now one can argue whether interest itself is a contributing factor for default. There is a merit to the argument and certain regulation needs to be in place to prevent loan sharking or excessive compounding of interest. And the consumer activist groups, Fed and the Congress in USA, at least, do a reasonable job for US consumers.

```` And in any case it is up to the lender whether he wishes to lend or not. He or she however in a moral society does not have the authority to fleece people who have genuine needs just because their ``credit rating`` is bad.````

This is again a reverse argument. Lender should have the freedom to set rates within a reasonable limit. It is up to the borrower whether he wants to enter into that agreement. As long as free markets do the job they are supposed to do, every borrower gets a rate which he `deserves`.

Also framing the argument in terms of `certain groups having authority to fleece people` is a rhetorical one. Why this focus only on the `genuine` needs of borrower? What about the security for the lender? How do they get a `fair` return?

I appreciate your empathy towards the poor and disenfranchised. However, in your zeal towards protecting the borrower at any cost, you are taking away the incentive for the lenders to enter the market. Unless they do so, whether it is Communism or Islamic financial system, it will be a sub-optimal economic system and is bound to fail.


Thanks,
Avkrishna

#82, Insurance, and profitability that feeds on people`s fears and uncertainty is immoral in my opinion, and part and parcel of this same capitalist system. You cannot detach one part of an immoral system and then ask for a judgment on it.

---

MAsadi:
Now you are in a rant mode. :)

To put your own rejoinder to you, I did not ask what you think is moral or immoral, or part of the capitalist system. I asked you if Islam outlaws insurance. Please explain where it is outlawed; what kind of insurance is outlawed; and why. Allah`s opinion -- not your own -- is relevant.

I will wait for your enlightened response. Thanks.

#77 burpinder, keep up with the trickery, until you show me the data, your words are meaningless. Go drive around poor neighbourhoods in the US, modern loan sharks that charge enormous rates of interest have opened shop there and they do not charge the high rates of interest (like the IMF and World Bank charge the poor countries) for the sake of protection of their principal. They charge it for fleecing and surplus extraction.

#78, the Quran was what was conveyed by the prophet, you want to MIX with that items that by hook or crook were labelled ``sunnah`` (that in the earliest date from over 200 years after the prophet) and thereby distort the message by bringing in traditions that were canonized for ulterior motives all through the history of Islam and attributed to the prophet. That is not what the Quran or Islam is about. Which verse in those verses is not clear to you? Any damn fool, except the ones blinded by the Mullah`s traditions can make out what those verses are saying. When Allah is saying in the Quran that this book is clear, why do traditionalist Muslims (note I refer to those labelled Muslims here) say that Allah is lying and we need Imans, and scholars to explain it to us? Tell me this? If you are giving the lie to Allah than whatever the hell you are, you are not a Muslim. You want me to explain to you what ``hello`` means and you claim it has 5 different meanings which you claim regardless of any context- that is how the Mullahs distort the Quran. The meaning of riba is what is understood and the context elaborates on it. It does not have 35 meanings, it can have forms which the context in which it is used elaborates.

#82, Insurance, and profitability that feeds on people`s fears and uncertainty is immoral in my opinion, and part and parcel of this same capitalist system. You cannot detach one part of an immoral system and then ask for a judgment on it.

#84, as their arguments suggest and as your bs suggests, you all have not a claim that holds against the Quran`s just stand on interest. And for your info, I also happen to possess an honors degree in Economics.

Hey, stop being so hard on Asadi; after all, the man is only a sociologist. He can`t be expected to understand concept such as the time value of money or differential credit risks.

I thought of writing a long rejoinder about Islamic Banking but gave it up as a bad waste of time. I`ve already written a couple of them on Chowk (if any one is interested, go through my old posts) and I assure you that you will learn why Islamic Banking is BS. And I speak from personal experience, having spent a couple of years as a Corporate Banker in the Glorious Islamic Republic!

I think rf786 is quite on the mark when talking about the late Maulana Fazlur Rahman`s work on riba. Its clear that the Koran is banning a particular preIslamic practise, the doubling and redoubling (not tripling) of a defaulter`s debt and then selling him and his family into slavery when he couldn`t make payment. THAT is usury with a vengeance!

BTW, Asadi, I hope you realize that ALL primitive societies have the sam ban on interest that one finds in the Koran, and for much the same reasons. Its only the Catholic Church and Islamic fundamentalists who insist on trying to impose a ban on interest in reasonably advanced societies.

Re: # 82

MNI,

.... a dear friend of mine after forty plus years of a fairly normal life suddenly found religion and was told that insurance was haram .... so he went ahead and cancelled his life insurance ........... less than a month later he was in a car accident and died leaving behind a wife and three little children to fend for themselves - he might have gone to heaven but they are living through hell on earth .............. i think the poor man was ill-advised, irresponsible and downright stupid ...........

Re: # 74
MAsadi:

Is purchase of insurance allowed in Islam? Please share your thoughts.



HP:
Somewhere I think you mentioned that interest is halal but compounding is not halal. What I do not understand is, how banning compounding of interest will solve anything.

I think that in order to have a useful discussion we have to isolate the issue of ``unfair lending practice`` from the issue of interest itself. When people talk about IMF, Credit Card Companies, Mortgage issuers, they are really talking about ``loan sharking``.