Economy and All That

[Usama2]

Brothers,

I'm reminded of the origins of Islamic banking from both the Muslim and kufar angles.
Primary advocates of Islamic banking, Islamic finance, etc. are the Muslim elites of the Gulf, Egypt, Pakistan, who have access to wealth through the capitalist system. Saleh Abdullah Kamel of Saudia is a billionaire with assets in Egypt and the Gulf, and wanted to incorporate various aspects of Islam into his dealings. If I recall, he founded a purely capitalist bank in Egypt decades ago, but he wanted to incorporate Islam into financing.

Kufar became interested in "Islamic financing" because they saw that Muslims in general avoided the capitalist financing system, leaving 100s of billions of dollars of personal wealth untapped.

So who did the kufar and "Muslims" invent Islamic financing and Islamic capitalism?
By certain Usul ul Fiqh adoptions, setting the principle foundation.

One such adoption : that transactions are permissible unless text otherwise renders them impermissible.

More later :insha:

[Maripat]

Lets us assume that Kuffar invented Islamic banking and finance to tap Muslim assets.
Let us assume that Muslims invented Islamic banking to legitimize their ill gotten wealth.
This still leaves with the basic problem : how to conduct our economic, business and financial affairs without falling into haraam practices of Riba and usury and how to separate ourselves from forbidden business like pork related business, alcohol related business and casino related business and so on.

Of course it will be good to get a perspective on the two aspects that you have mentioned - waiting for that.

[imran1976]

Brothers,

I'm reminded of the origins of Islamic banking from both the Muslim and kufar angles.
Primary advocates of Islamic banking, Islamic finance, etc. are the Muslim elites of the Gulf, Egypt, Pakistan, who have access to wealth through the capitalist system. Saleh Abdullah Kamel of Saudia is a billionaire with assets in Egypt and the Gulf, and wanted to incorporate various aspects of Islam into his dealings. If I recall, he founded a purely capitalist bank in Egypt decades ago, but he wanted to incorporate Islam into financing.

Kufar became interested in "Islamic financing" because they saw that Muslims in general avoided the capitalist financing system, leaving 100s of billions of dollars of personal wealth untapped.

So who did the kufar and "Muslims" invent Islamic financing and Islamic capitalism?
By certain Usul ul Fiqh adoptions, setting the principle foundation.

One such adoption : that transactions are permissible unless text otherwise renders them impermissible.

More later :insha:

but isn't it our Islamic Scholarship who gave the legitimacy to this Islamic banking -- why blame others?

anyone having the knowledge of origin/nature/working/history of the banking system would easily recognize that this system has no place in Islam . So instead of raising voice against this system, what we do is cosmetic surgery and present Islamic Banking.

This is just another typical way of providing solution (which is not even a solution) from within the status quo system which is purely based on shirk.

[imran1976]

Lets us assume that Kuffar invented Islamic banking and finance to tap Muslim assets.
Let us assume that Muslims invented Islamic banking to legitimize their ill gotten wealth.
This still leaves with the basic problem : how to conduct our economic, business and financial affairs without falling into haraam practices of Riba and usury and how to separate ourselves from forbidden business like pork related business, alcohol related business and casino related business and so on.

Of course it will be good to get a perspective on the two aspects that you have mentioned - waiting for that.

we need Islamic Revolution, we don't have anyone to lead the Muslim Ummat & we don't have courageous Scholarship to stand up against this setup.

The minimum our Scholarship can do is to not give legitimacy to these systems like banking with the word Islamic -- No such thing exists, name me one bank where i can get interest free loan from any Islamic bank in Pakistan -- they all will show me the exit gate and will see me as a majnun for asking interest free loan.

[Maripat]

The word revolution gives me the willies.
I prefer easing into Islamic system.
I know brother Usama will get alerted on this but I'll just stand on the sideline while the revolutionaries are delivering the goods.

So brother Imran tell us what Islamic institutions will be created after the revolution.

[imran1976]

The word revolution gives me the willies.
I prefer easing into Islamic system.
I know brother Usama will get alerted on this but I'll just stand on the sideline while the revolutionaries are delivering the goods.

So brother Imran tell us what Islamic institutions will be created after the revolution.

this is the problem brother , we are not ready to recognize the word Revolution even in our minds -- Our minds are stuck with providing solutions from within the system like Islamic democracy, Islamic banking etc., it seems that when we don't want to get out of the system (based on shirk) , the easy thing is to add the word "Islamic" to anything.

[transitory]

I agree to some of the points raised about the Islamic financing atleast here in US. Its mostly for those who can comfortably afford financing through other channels such as BofA, Wells Fargo etc. I have yet to see anyone subprime able to get an Islamic financing.

What are the rules for leverage, debt, AR, etc, to make a particular stock investment halaal? What does Sharia says on how to evaluate a potential investment? It would almost impossible to find any security on Wall Street that does not take debt in some form.

In graduate business school, which I attended many years ago, we used to use DCF (discounted cash flows), DDM (dividend discount), etc to evaluate an investment, but as far as I remember they all will use the risk free rate of return, which is nothing but 10-year T-bills yeild etc. For portfolio diversification, and hedging there is something called the optimally risky portfolio (Markowitz portfolio seletion model). How can one diversify their portfolio in a way that is consistent with Islamic principle (from what I heard is that options are haraam, what about investment sukuk? etc etc).

Does anyone know of any Islamic financing book/research paper that deals on how to perform an investment valuations?

The problem with the books (honestly,I have not read many though) that I have read written by Islamic scholars on this topic is that they are not written from investment point of view of the mordern times. We need folks who have understanding of both mordern investment theories and Sharia rules pertaining to financing and investments, to start modelling the mordern thoeries to Islamic rules, or change the model so that it can work with Sharia rules.

[transitory]

this is the problem brother , we are not ready to recognize the word Revolution even in our minds -- Our minds are stuck with providing solutions from within the system like Islamic democracy, Islamic banking etc., it seems that when we don't want to get out of the system (based on shirk) , the easy thing is to add the word "Islamic" to anything.

We need more honest, hard working and religious minded Muslims to attain both Islamic and modern (business and scientific) education. These scholars can contribute more to Islamic society than any revolution. The Muslim society is not ready for Sharia rule, it can only be slowly phased in than forcebly enforced.

[Maripat]

this is the problem brother , we are not ready to recognize the word Revolution even in our minds -- Our minds are stuck with providing solutions from within the system like Islamic democracy, Islamic banking etc., it seems that when we don't want to get out of the system (based on shirk) , the easy thing is to add the word "Islamic" to anything.

You can think of me as a retired revolutionary. So do not get disheartened.

Does anyone know of any Islamic financing book/research paper that deals on how to perform an investment valuations?

The problem with the books (honestly,I have not read many though) that I have read written by Islamic scholars on this topic is that they are not written from investment point of view of the mordern times. We need folks who have understanding of both mordern investment theories and Sharia rules pertaining to financing and investments, to start modelling the mordern thoeries to Islamic rules, or change the model so that it can work with Sharia rules.

These are the precisely the questions that I would like to know the answers of. I started this thread for the same purpose. Let us explore the things together. My personal impression is that theoretical answers to all the questions will be very simple. I say this because Deen is supposed to be simple. Implementation of it all will be the part where the crunch lies. But that too should not be impossible. At very low level we do have an example. In our localities we should have Pathans (many times from Afghanistan) who would do only money lending business with Ribah. Now I do not see them.

And I agree with your comment about books, though economics is not my field. For example in travelogues of Mufti Taqi Usman Sahab (DB) there are frequent references about this subject but every time the issue under focus is such that you do not really go into the flesh and blood of economic, financial and business problems.

[imran1976]

We need more honest, hard working and religious minded Muslims to attain both Islamic and modern (business and scientific) education. These scholars can contribute more to Islamic society than any revolution. The Muslim society is not ready for Sharia rule, it can only be slowly phased in than forcebly enforced.

Brother!
i never said that we should be out there on the streets with guns to enforce Shariat. At the moment, I humbly ask two things:

a) at least we should be clear in our minds that the present system is based on kufr/shirk and that we need a Revolution. Any other formula (as we been trying for decades now) will not work.

b) if we can't provide solutions , why give legitimacy to things coming out of this system (i am referring to our Scholarship here)

e.g. How can one legitimize the fake fraudulent paper currency is beyond my understanding.