Thursday, December 25, 2008
As I have previously written, the Islamic banking system may survive the financial crisis better than the Western system because it forbids usury and the buying and selling of debt
The Associated Press has just covered the story:
Islamic banks, which avoided much of the damage from the subprime mortgage crisis by following strict principles laid out in the Quran.***
A November report by Moody's shows that Islamic banks have been fairly resilient.***
Interest payments, short selling and contracts considered excessively risky are also prohibited. That rules out some of the products that got Western finance into so much trouble such as subprime mortgages, collateralized debt obligations or credit default swaps.***
"Islamic banking is saying we are close to our clients and we're only going to do genuine transactions where we can see the asset, we understand the asset, we can make an assessment of that asset: whether it's financing a ship or an aircraft they will go and have a look at the business. It's giving guidance as to what banking should be."
So is the Islamic financial system superior to Western banking?
Well, as Michael Rivero of WhatReallyHappened points out in a brilliant comment to the AP story, the Bible also prohibits usury, but Western nations have abandoned that principal:
Western bankers have made themselves demigods with a combination of usury and legalized state-sanctioned counterfeiting. They attack anyone who represents any threat ot their enslavement of others, whether it is the Islamic system of lending or the re-introduction of fixed worth monetary systems.
And, contrary to the popular myth promulgated by the "Clash of Civilization" aficionados, the prohibition against usury (compound interest) is not confined to the Quran, but is found in the Bible itself. The following are taken from the King James version of the Bible (and I'll bet your pastors never read these to you from the pulpit!)
25 " If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest.
26 "If you ever take your neighbor's garment as a pledge, you shall return it to him before the sun goes down.
27 "For that is his only covering, it is his garment for his skin. What will he sleep in? And it will be that when he cries to Me, I will hear, for I am gracious. (Exodus 22:25-27)
36 'Take no usury or interest from him; but fear your God, that your brother may live with you.
37 'You shall not lend him your money for usury, nor lend him your food at a profit. (Leviticus 25:36-37)
19 " You shall not charge interest to your brother -- interest on money or food or anything that is lent out at interest.
10 Woe is me, my mother, That you have borne me, A man of strife and a man of contention to the whole earth! I have neither lent for interest, Nor have men lent to me for interest. Every one of them curses me. (Jeremiah 15:10)
7 If he has not oppressed anyone, But has restored to the debtor his pledge; Has robbed no one by violence, But has given his bread to the hungry And covered the naked with clothing;
8 If he has not exacted usury Nor taken any increase, But has withdrawn his hand from iniquity And executed true judgment between man and man;
9 If he has walked in My statutes And kept My judgments faithfully -- He is just; He shall surely live!" Says the Lord GOD. (Ezekiel 18:7-9)
13 If he has exacted usury Or taken increase -- Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. (Ezekiel 18:13)
17 Who has withdrawn his hand from the poor And not received usury or increase, But has executed My judgments And walked in My statutes -- He shall not die for the iniquity of his father; He shall surely live! (Ezekiel 18:17)
12 "In you they take bribes to shed blood; you take usury and increase; you have made profit from your neighbors by extortion, and have forgotten Me," says the Lord GOD. (Ezekiel 22:12)
So the question is whether there is any wisdom in the traditional religous prohibition against usury. I think the answer is yes.
And Islamic bankers apparently follow that prohibition much more faithfully than Western bankers.
See also this.
Note: I despise fundamentalist Muslims as much as fundamentalists of any religion. So I'm not talking about fundamentalists, but moderate Muslim bankers.
And rather than being an issue of superiority of the Muslim faith, I merely see this as the Judeo-Christian traditions losing their way, and religious leaders distorting the truth.
Banking isn't the only area in which Western nations have lost their ethical foundation. Torturing innocent people and launching wars based on lies are also contrary to the teachings of the Bible.