Sharia banking goes bankrupt

[ozymandias]

It's actually more than that - it's "opportunity cost"

ie. If I didn't lend that sum of money to you, I could have done something else with it to benefit myself. But because I'm lending that money to you, I'm foregoing other opportunities.

Good catch.

I tend to lump that into risks, though, as by tying my money up in a loan, I risk having to forgo additional opportunities in the future, and not just the current opportunity costs.

[ozymandias]

Let's also not forget that business loans are only a small piece of the puzzle. Sharing profits and losses works for some loans -- which is why they occur even when interest is allowed, but it is terrible for other types of loans. How do you share the profit of me getting an education? Or me getting a car? Or me getting a home? It's difficult, if not impossible to share the profits/losses in those cases, which means it would be near impossible to get a loan on those terms.

[akbarkhan]

But there is a risk, and cost to that as well. There is no guarantee, for instance, that a house will be worth the same in 25 years as now. What if the market crashes? Or the biggest employers leave an area? Or the occupant does not maintain it? Not to mention the fact that the lender is taking a risk by tying up their assets. They are risking that no better investment will come along for them.

There is no risk brother, not at all. Even if the market crashes the property has intrinsic value which pays off at the end of economic cycle.

So you are not allowed to make safe investments? That's silly.

You can as long as it is safe for both parties.

In fact allowing loans and investments is the best way to do so, as any person with a good idea will have access to funding to act on it, no matter how poor they are to begin with.

True, that is why Islam encourages joint enterprise.

Economics can easily show that interest is a good thing, and drives an economy.

Go and say that to people of Greece.

[akbarkhan]

Let's also not forget that business loans are only a small piece of the puzzle. Sharing profits and losses works for some loans -- which is why they occur even when interest is allowed, but it is terrible for other types of loans. How do you share the profit of me getting an education? Or me getting a car? Or me getting a home? It's difficult, if not impossible to share the profits/losses in those cases, which means it would be near impossible to get a loan on those terms.

In a Islamic state the state should fund everyone's education from Bayt-ul-mal.

Islam encourages us to live within our means, therefore most of my friends who drive around in expensive Mercedes cars looking all cool - knowing that they don't have enough money to fund it hence borrowing to look rich is discouraged.

You can buy a house based on Ijara or a JV contract.

Brother, where is a will there is a way. There is no doubt that Ribba is good for some people - you only have to look at the elite to know this but for the majority of fellow human beings it is a burden.

[ozymandias]

There is no risk brother, not at all. Even if the market crashes the property has intrinsic value which pays off at the end of economic cycle.

Not true. If the market crashes, the property will have *some* value, but there is no guarantee it will be enough to cover the costs of obtaining that property from the borrower, and then reselling that property.

You can as long as it is safe for both parties.

That's up to the two parties to agree on what is safe.

True, that is why Islam encourages joint enterprise.





Go and say that to people of Greece.

Ok. Just because they screwed up does not mean that interest is a bad thing.

[Soldat_Amir]

Its a well known fact, the Greek people are reluctant to pay taxes.

[ozymandias]

In a Islamic state the state should fund everyone's education from Bayt-ul-mal.

Not all educations cost the same. A doctor attending 2-3 times as many years of school is not entitled to the same funding from the government as someone attending a shorter program. They are clearly getting different costs of education. Not to mention that a doctor typically has a higher earning potential, and thus is better suited to funding their own way.

Furthermore, some are going to be willing to pay extra to attend more prestigious schools and raise their expected income. Why should this not be allowed?

Islam encourages us to live within our means, therefore most of my friends who drive around in expensive Mercedes cars looking all cool - knowing that they don't have enough money to fund it hence borrowing to look rich is discouraged.

That's not the only time you can need a car loan. You can use a car loan to buy reasonable vehicles.

You can buy a house based on Ijara or a JV contract.

Ijara appears to be a modifed interest bearing loan -- where the borrower does not gain incremental ownership of the good.

Brother, where is a will there is a way. There is no doubt that Ribba is good for some people - you only have to look at the elite to know this but for the majority of fellow human beings it is a burden.

Then why are they *willingly* entering these contracts? You are assuming that you know the cases of all people on earth, and I have already cited 3 *personal* examples where I am better off for a loan.