Tuesday, April 15, 2008

Exposing Shariah Finance

Ten dollar jihad

Many companies in the United States did business with Germany during the rise of Nazis in the 1930s, and some of them continued to do so even after the USA went to war with Germany in 1941. Banks and other institutions continued to hold Nazi-derived assets and launder money for Hitler’s government. Questionable transactions were concealed and protected by the influence of prominent and well-connected individuals on Wall Street and throughout the business community.

The same is true for Shariah Finance, one of the primary vectors through which the Great Jihad is currently injecting radical Islam into Western culture.

In wartime, it’s inevitable that some people will do business with the enemy — if companies stand to make a lot of money from an activity, then the activity will tend to take place. It’s up to the government to police business activity and punish businesses that profit from dealing with the enemy, because there is little incentive for businesses to police themselves.

However, the situation gets murky when the war is undeclared and the enemy is unnamed.

Banks that offer Islamic financial instruments aren’t trading with the enemy, because the enemy is “terrorism”, and they’re not doing business with “terrorism”, after all. They’re just cutting deals with various Middle Eastern countries who are “our staunch allies in the war on terror”.

The fact that a few wealthy sheikhs with terrorist connections happen to sit on the boards of some of the Shariah Finance institutions — why, that’s no big deal, is it? Business is business.

One can even make the case that the CEO of a corporation has both a moral and a fiduciary obligation to engage in Islamic-compliant transactions. The duty of a corporate officer is to maximize profit for his shareholders, and if there’s one thing for certain, it’s that Shariah Finance stands to make a lot of money for the institutions that engage in it.

The blame for our failure to address this problem can be laid at the feet of our government, particularly the Treasury Department, which has so far declined to act on a deadly serious threat to our national security that has crept into the country through our financial institutions.

A comprehensive look at the issue can be found in today’s Frontpage Magazine, in an interview with Alex Alexiev by Jamie Glazov.

Some excerpts:

Alexiev: …Shariah Finance as a phenomenon, indeed an industry, is already well-established and growing rapidly.

The first thing to note about Shariah-compliant finance (SCF), which is a derivative of Islamic economics, is that both are essentially invented, bogus concepts. Neither one had been practiced or even mentioned much in Muslim history before the 1940s, when the radical Pakistani Islamist Abul Ala Mawdudi made them up. In doing that, his objective was entirely political and had very little to do with either economics or finance, subjects about which he knew nothing. His objective, very simply, was to convince the Muslims that Islam was a complete system of guidance in life in all things temporal or sacral and that the West had nothing useful to offer the Muslims. This was an essential part of his agenda for Islamization, which he pursued vigorously for decades. The fact that the first Islamic bank took thirty years to materialize after that is just another proof of the fabricated nature of the concept.

In theory, SCF is supposed to make it possible for Muslims to conduct financial transactions while observing shariah prohibitions against lending at interest (riba), uncertainty (gharar) and forbidden products and activities such as pork, alcohol, gambling, entertainment etc. In reality, while there are practices in conventional capitalist finance that do not involve interest (venture capital or investment in stocks, for instance) or uncertainty (government bonds), it is simply impossible to have finance and banking that avoid both. So in order to be able to justify peddling conventional products in shariah garb, SCF practitioners and their accomplices, the shariah experts that must bless these transactions, engage in all kinds of more or less transparent legal fictions, ruses, gimmicks and deceptive techniques. Ironically, in doing that, they engage in the age old Islamic practice of legal fictions, known as hiyal, which was originally designed to make it possible to do business transactions while circumventing shariah injunctions, that didn’t make much sense even in the early days of Islam.
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Let me give you just a couple of examples. The most common SCF transaction is called murabaha which is the equivalent of a conventional bank loan to finance a purchase. What makes murabaha ostensibly Islamic is that the bank supposedly purchases the good and takes a degree of risk on while holding it prior to selling it to the customer on repayment terms, including a mark-up (interest) for the service. In practice, both operations happen simultaneously, the client is also asked to purchase insurance and there is zero risk for the bank. In fact, the bank also charges in advance penalties for late payment that are refunded if the loan is paid on time. In everything but name, this is a standard interest loan except that it is invariably more expensive. A similar thing happens with home mortgages where the bank purchases the home and finances it by requiring ‘rental’ payments in a transparent scheme called ‘diminishing musharaka.’

After engaging in semantic acrobatics to deny that what’s involved is interest-based mortgage lending, the bank then turns around and tells its clients to take the interest deduction on their tax return, and the IRS authorities, bless their compassionate hearts, fully oblige them.

FP: This brings us to Wall Street.

Alexiev: Yes. The involvement of Western financial institutions in SCF is both essential for the progress it has made to date and a major reason why it has become a major threat to our capital markets and the nation’s security. It is essential, because shariah finance has not done well among the Muslims.

[…]

And these Western banks jumped into the SCF fray for one reason only and that is the lure of many tens of billions in transaction fees from an industry that currently has near a $1 trillion under management. This is understandable, but what is neither understandable nor excusable is their willingness to close their eyes and not ask any questions about the nature of SCF, let alone do real due diligence on their Middle East partners or the dozens of hard line Islamists they hire as shariah advisors. Unfortunately for Wall Street, SCF is a house of cards no sturdier than the sub-prime mortgage fantasy world and it will come to the same end, once it becomes clear to the investing public to what extent these Western institutions have exposed themselves to huge liabilities ranging from willful non-disclosure and fraudulent misrepresentation to material support for terrorism.

The advent of Shariah Finance in the United States would not be possible without the help of academic institutions, which launder the ideas behind shariah as effectively as banks launder money.

There may be a connection between this assistance and the recent massive endowments lavished on major universities by the Saudis. But it’s also possible that talk-shops like Harvard are only too happy to continue their well-established practice of undermining the institutions of Western Civilization, even if they have to do it for free.

According to Mr. Alexiev:

This coming weekend, for instance, Harvard University is holding a big international conference on shariah finance organized by a center for shariah studies at the law school funded by Saudi money some years back. If you went there, Jamie, you’ll sit through dozens of presentations by well-paid shariah apologists on all imaginable SCF topics, but I’ll bet you $100 to $1 that not a single one will touch on the murderous core teachings of this troglodyte doctrine. This is akin to holding a conference on Nazi ideology and limiting the discussion to their successful programs to eliminate unemployment and build autobahns and kindergartens, without once mentioning that Nazism is first and foremost about genocide.

This is what makes this whole industry reeking of dishonesty or worse. I say worse, because if you start studying it as I have, you get this uncomfortable feeling that you are dealing with something bordering on a conspiracy to prevent the public from really seeing what’s going on. One of the latest trends in SCF, for example, is to stop using the term shariah altogether and replace it with ‘ethical.’ And so now you have various outfits springing up which tell you that they are in the business of ethical investment and you need to look closely to figure out that it is shariah finance that they peddle after all. Even that venerable flagship of free enterprise, the Wall Street Journal, recently co-sponsored a conference on “Islamic Ethical Investment.” Bob Bartley must be turning in his grave.

There’s much more information about Shariah Finance in the rest of the Frontpage Magazine interview.

The only cure for this and so many other jihadic infestations in our culture is to open them up to the light. Ordinary people won’t stand for this kind of infiltration when they become aware of it, so let the sunshine in!

The MSM will never treat the issue truthfully if it mentions it at all, and our government is at least a passive collaborator. So it’s up to the rest of us to do the best we can. Spread the word. Tell a friend. Write your congressman.

Jihad has opened many doors to the West, but this is one that can be closed.


Hat tip: KGS.

14 comments:

OMMAG said...

Just another front in the war on the West.

Difficult for our side to get traction in exposing the traitors.

livfreerdie said...

It was working for a while, until the NYT outed the SWIFT program.

Politics and money usually over-rules common sense and the "little" man.

Tom

Zenster said...

Many companies in the United States did business with Germany during the rise of Nazis in the 1930s, and some of them continued to do so even after the USA went to war with Germany in 1941.

For a chilling example of such collaboration, read “The Sovereign State of ITT” by Anthony Sampson. Far better than any jonesing crackwhore, ITT’s founder, Sothenes Behn, could have been Vladmir Putin’s role model for how to work both sides of the street. In possession of trans-Atlantic telecom cables, Behn cheerfully trafficked Nazi and Allied sigint (signals intelligence) to both sides for a price. He profitably operated factories inside Nazi Germany and then successfully filed for reparations when those manufacturing sites were bombed during Allied air raids.

However, the situation gets murky when the war is undeclared and the enemy is unnamed.

There’s never a better time to trot out the words of Srdja Trifkovic:

The elite class has every intention of continuing to “fight” the war on terrorism without naming the enemy, without revealing his beliefs, without unmasking his intentions, without offending his accomplices, without expelling his fifth columnists, and without ever daring to win. Their crime can and must be stopped. The founders of the United States overthrew the colonial government for offenses far lighter than those of which the traitor class is guilty.
[Emphasis Added]

Alexiev: The first thing to note about Shariah-compliant finance (SCF), which is a derivative of Islamic economics, is that both are essentially invented, bogus concepts.

Nice to see that glaring issue gotten out in the open right off.

Neither one had been practiced or even mentioned much in Muslim history before the 1940s, when the radical Pakistani Islamist Abul Ala Mawdudi made them up.

Sorta like that “jihad is a spiritual quest” kitman thingy, eh?

The fact that the first Islamic bank took thirty years to materialize after that is just another proof of the fabricated nature of the concept.

Ermmm … Is it just me or has anyone else been getting the feeling that Islam in general has been fabricated out of whole cloth?

forbidden products and activities such as pork, alcohol, gambling, entertainment

Don’t pretty much all of us know at least one person whose entire lifestyle can be summed up with the words, “pork, alcohol, gambling, entertainment”?

So in order to be able to justify peddling conventional products in shariah garb, SCF practitioners and their accomplices, the shariah experts that must bless these transactions, engage in all kinds of more or less transparent legal fictions, ruses, gimmicks and deceptive techniques. Ironically, in doing that, they engage in the age old Islamic practice of legal fictions, known as hiyal, which was originally designed to make it possible to do business transactions while circumventing shariah injunctions, that didn’t make much sense even in the early days of Islam.

So, in other words, Muslims use taqiyya—hiyal or whatever—upon themselves in order to gulp down camels and strangle on gnats. Isn’t the day pretty far gone when you must lie to yourself in order to avoid confronting blatant holes in the—already marginal—logic of your creed? Once you’ve begun lying to yourself, the battle is fairly well lost. No one else can lie to you as effectively as yourself. Once that has begun, go ahead and stick a fork in yourself, you’re done.

In everything but name, this is a standard interest loan except that it is invariably more expensive.

Which is in perfect keeping with Islam. Everything is just like the West, only more backward, inefficient, time-consuming, costly, graft-riddled and counterproductive. Other than that, there’s not a whit of difference.

After engaging in semantic acrobatics …

You mean it all ends somewhere? From what I’ve seen, Islam is nothing but incessant “semantic acrobatics”, all trotted out solely for the purpose of rationalizing whatever new injustice, barbarity or atrocity they’ve thought up. NEVER have I seen a culture and people so inclined to distortion, cognitive dissonance and contortionist mental gymnastics so as to avoid the tiniest admission that their whole belief structure is nothing but a house of marked cards.

what is neither understandable nor excusable is their willingness to close their eyes and not ask any questions about the nature of SCF, let alone do real due diligence on their Middle East partners or the dozens of hard line Islamists they hire as shariah advisors

In this era of subprime loans, it’s pretty safe to say that “due diligence” has gone the way of the dinosaur. Michael Milken and his Den of Thieves sped it on its way decades ago and we are only watching it finally drop off of the map.

One of the latest trends in SCF, for example, is to stop using the term shariah altogether and replace it with ‘ethical.’

Anyone capable of the moral inversion required to conflate shari’a law with “ethical” conduct should find a lamp post waiting for them. Orwell himself would get a bellylaugh out of seeing a pig slathered with that much lipstick.

The only cure for this and so many other jihadic infestations in our culture is to open them up to the light. Ordinary people won’t stand for this kind of infiltration when they become aware of it, so let the sunshine in!

As U.S. Supreme Court Justice Louis Brandeis once said, “Sunlight is the best disinfectant,” Sadly, disinfecting evil on such a scale as this may require the assistance of some artificial suns. Fortunately, the industrial West has an adequate supply of them in its inventory.

The Poster Formerly Known as Gordon said...

I don't know where to start in fisking this amazing post from the Baron.

Let's just say it is spectacularly wrong on every major issue that it touches.

The Poster Formerly Known as Gordon said...

For example, there is not one example given by the Baron or by Mr. Alexiev of a Shariah Compliant Legal Transaction that is in any way bogus, criminal, shady, or any other negative adjective you can come up with. "In everything but name, this is a standard interest loan except that it is invariably more expensive." In other words, it is the equivalent of a higher interest loan. And the Bank has thoroughly protected itself, just as it does with a standard interest loan.

And THIS is a threat to the Western Financial system?

In fact, if Shariah Compliant Finance costs a customer more, this will in fact IMPEDE capitalist development in countries that require it, or in individuals who choose to abide by it.

So as long as the rest of the world doesn't REQUIRE Shariah Compliant Finance, its use by Muslim countries and by Muslim individuals actually ensures our victory over them.

I can already hear the next whine, "but the Muslims will MAKE US ALL use Shariah Compliant Finance, so we will all suffer!"

Only in your paranoid fantasies.

ln said...

JUST A TINY PARALELL

"So as long as the rest of the world doesn't REQUIRE Shariah Compliant Finance, its use by Muslim countries and by Muslim individuals actually ensures our victory over them."
- - - - -
"I can already hear the next whine, "but the Muslims will MAKE US ALL use Shariah Compliant Finance, so we will all suffer!"
"Only in your paranoid fantasies."

Did anybody hear the whine from some years ago: but the Muslims will MAKE US ALL eat halal slaughtered meat, so we will all suffer! Not to say anything about the animals.
Today at all (I suppose) Swedish schools only halal food is served. (legislation has been modified to suite!)
How is the situation in the US?
Paranoid, eh?

EMB said...

I see that the nodrog still hasn't
found himself a real life.
Missing LGF much boyo?

The Poster Formerly Known as Gordon said...

If you want to relive the wit and wisdom of the Nodrog in its full, unvarnished glory, then by all means I suggest you visit www.nodrogsgreatesthits.blogspot.com.

On this site, I am here to discuss the issues, to agree at times, to disagree at other times, and to try to be a little less rude than I was on LGF (I admit, it's very hard!).

Natalie said...

Well, 'the poster formerly known as Gordon', it doesn't seem very legal to me that Muslims are allowed to invest with no uncertainty just because of their stupid religion (and I use that term loosely). I don't really know much about money/finance, but I think anyone with common sense can see that this whole 'Shariah-compliant finance' is absolute rubbish. It's just another way that Islam is trying to embed itself in our society, and it's not good.

unaha-closp said...

natalie, I agree with "the poster formerly...".

For starters anyone can invest without risk by purchasing treasury notes or bonds.

An honest western bank could (through the magic of SCF) sell risk free investments to Muslims at a slightly lower rate of return than the interest (unholy riba) provided through government backed securities. The magic consists of a bank paying an Islamic scholar to say that the investment is Islam compliant. The bank then takes some money for risk free investment from a muslim and invests it in the interest bearing treasury security. The bank pockets the difference between the return and the payout. Everyone is happy and the muslim world becomes a small bit poorer.

Also a dishonest bank can do the same thing, only investing the Muslims money in something like a sub-prime mortgage security. In good times this makes much more money for the bank. In bad times these bust and what do you know there was some risk after all - poor Muslim gets told "it was an act of Allah, join the queue with all those kafir unsecured creditors".

Henrik said...

Nogrog doesn't realize that this is not about being technically illegal at the moment, but morally bankrupt and deceptive.

Something clearly discovered by the Muslim Canadian Congress, who openly rejects Sharia financing as a misuse of their religion for the sake of profit and earthly gains.

I think this reference can be very useful in sowing doubt about the 'holy' status of this weird way of calling obscure financial practices 'divinely sanctioned'.

Also Timur Kuran, in Islam and Mammon, investigates the problem extensively. It's a 20th century invention, not traditional Islam.

ENGLISHMAN said...

The discarded cuts from the halal process,go directly into our food chain,there is no doubt that muslims are intent on dominating our whole way of life,including this financial deceit that a child could see through,banks lend money,charge interest to make profit,wether they make thier profit before,during or after it must still be made ,otherwise there is no point in them risking thier money,but when it all falls to pieces, then thier friends the administrations begin to risk mine,or just give it away as we see with northern rock,50 billion so far,when will we the taxpayer get it back,do not hold your breath.

David M said...

The Thunder Run has linked to this post in the - Web Reconnaissance for 04/16/2008 A short recon of what’s out there that might draw your attention, updated throughout the day...so check back often.

DBC said...

While I normally admire the fisking and deconstructing of all manner of subjects, I draw a line here.

Finance, in general, is all about investing and inventing. Your reaction to this form of investor invention seems to border on paranoia. I don't see enough facts in your post to keep me away from my curiosity about the industry.