If you've been reading my blogs, you know that I have slammed the "true blievers" among Muslims ever since I started blogging. I have written about Muslim scriptures calling for "death to the infidels" and the terrorism that spawns, their hatred of Jews, Christians and liberal Western life-styles, and their vows to exterminate the State of Israel. But, yoh and behold, I've got to give the devil his due.
Faiza Saleh Ambah had an article in the Washington Post about "Islamic Banking" and its complience with Sharia (religious) law. The current world-wide economic crisis would probably not have happened had Western banks followed the practices of Islamic banks in Saudi Arabia and the Arab Emirates.
Sharia law bans banks from taking excessive risks, charging interest and trading in debt. That means no trading in derivatives like the credit default swaps which are at the root of our economic crisis.
Ambah reported that "though the trillion-dollar Islamic banking industry faces challenges with the slump in real estate and stock prices, advocates say the system has built-in protection from the kind of runaway collapse that has afflicted so many institutions" - banks, insurance companies and investment firms. Islamic scriptures hold that the collection of interest is a form of usury, the practice of which is banned. Thus, money cannot be used to generate more money.
Ambah quoted Amr al-Faisal, a board member of a holding company that owns several Islamic banks and other financial institutions, as saying: "In Islamic finance you cannot make money out of thin air. Our dealings have to be tied to actual economic activity, like an asset or a service. You cannot make money off of money."
Islamic banks do not lend money to a home buyer and collect interest. Instead, a bank will buy the property and then lease it to the buyer for the duration of the loan. The buyer pays a set amount to the bank each month and attains full ownership when the loan is paid off. The payments cover the cost of the house and a profit margin for the bank.
It would appear that Islamic banking practices can be a prescription for financial stability. Had our banks subscribed to those practices, there would have been no sub-prime mortgages, no housing market collapse, no credit default swaps, no financial market collapse, no credit crunch and no global economic crisis. We can only hope that by the time this crisis is finally over, our banks will have taken a page out of Islamic banking. Will they do that? I seriously doubt it.
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