Islamic Finance and Economics

[ABG]

Bro i am surprised my reply to that Bohol trading post was ignored,

i dropped some golden nuggets, i informed them how combining a loan and a sale was haraam, i told them how short selling was haraam and how naked short selling is even worse,

i told them spread betting and CFDs- contracts for differences were all haraam and so is derivatives,

in islam you can only sell something you own or someone tells you to sell it on his behalf and share the profits, he must own it though,

i have seen muslims just trade the financial markets wallahi with no idea what they are doing, investing in firms buying shares, short selling shares- even if the company doesn't make or sell haraam things like riba bank/qamro etc these firms have been financed with loans,

get me a company floated on the stock markets of the world with out a loan financed bu riba and i will eat my caghdeer shoes,

i am not just an economist, i am one of the foremost knowledgeable people on earth when it comes to Riba/Interest and islamic economics/finance, i dare any man to debate me , this is my field,

I study the axioms and praxeologies, i am not interested in two minute quick analysis, i study why islam has banned them and what negatives they have on society,

wallahi the more you study islam the more you will be amazed how our Nabi SAW has warned us about what causes financial booms and bust, economic depressions,

the nabi SAW even spoke about Futures trading, noting new, first practice by the ancient Sumner and Babylons, its allowed in islam, a farmer tilling today wants buyers in 9 months time, the biscuits manufacturer buyer has supplier, the farmer has a customer, all done deal, but they took it too far with derivatives, man trade now with out using it or owning it, or needing it,

forex is a grey area, if you use 100% of your own money its fine, and short selling is fine because naturally when you buy one currency by logic you must sell another, but short selling oil, gold, stocks etc you dont own is haraam,


but no one took heed or notice, they carry on trading with crypto with forex,

i was a former forex trader, and traded German Bunds, S&P 500, E-minis and oil contracts,

atleast close your accounts before 10 pm if you are using leverage, for after 10 PM in forex trading, you are charged interest, close before that deadline and no riba is charged on the Libor markets rates, or euribor,

too kids are clueless and will trade anything, good luck chaps,

any one who needs advise and needs help about this let me know,

keep in mind 97% of you retail traders will lose money, focus focus focus on your risk to reward ration,

profit take 2%, your Loss R should be 1%, dont be too greedy, slow and study is better

Terri Alpha, I was wondering if you can recommend me books and research material, that I can use to have a stronger grasp of Islamic Finance

 

[Farjano-Walad]

Terri Alpha, I was wondering if you can recommend me books and research material, that I can use to have a stronger grasp of Islamic Finance

sure bro, let me come back from my meeting later in a few hours and i will send you a list of amazing books,

self education is the art of kings my friend, well done, be curious

 

[ABG]

sure bro, let me come back from my meeting later in a few hours and i will send you a list of amazing books,

self education is the art of kings my friend, well done, be curious

Jazakumullahu khairan brother, I appreciate your assistance

 

[Ras]

Never understood the difference between conventional and Islamic loans.

@Teeri-Alpha you might be able to clear some stuff up for me.

Get back to me whenever. Not in a rush to get a murabaha mortgage anytime soon.

In murabaha financing the lender pays for the item the borrower wants and resells it to them at a higher price.

The borrower then pays the lender on an agreed set of monthly or annual installments.

What makes this different from a conventional fixed rate loan other than the wording?

Also with Islamic financing you can't request a refinance and early repayments are not permitted.

There's no competitive market for the fees (i.e. called interest rate by normal banks) and you might end up paying a lot more.

Also since there's no variable interest rate how does the lender deal with inflation? Especially in long duration loans like mortgages?

Do they package up your loans and sell them on to investors like conventional lenders?

Do they own the titles to property while you repay them? If they go down do you lose your property?

 

[Farjano-Walad]

Terri Alpha, I was wondering if you can recommend me books and research material, that I can use to have a stronger grasp of Islamic Finance

Ugaas i am so sorry bro, wallahi forgot bro, pardon,

this is the best book i can recommend

The Problem With Interest Paperback – 18 Oct 2010
by Tarek El Diwany (Author)

i met him, he is the only one i can recommend, lots of books out there but to be fair most do not deal with deep islamic issues, they just seem to attack western systems with out giving real solutions,

he is a former trader, and consultant,

he also runs

http://islamic-finance.com/indexnew.htm

his dad is Egyptian and his mum cadaan, he was a former derivative trader, raised and born in UK,


anything else let me know,

 

[ABG]

Ugaas i am so sorry bro, wallahi forgot bro, pardon,

this is the best book i can recommend

The Problem With Interest Paperback – 18 Oct 2010
by Tarek El Diwany (Author)

i met him, he is the only one i can recommend, lots of books out there but to be fair most do not deal with deep islamic issues, they just seem to attack western systems with out giving real solutions,

he is a former trader, and consultant,

he also runs

http://islamic-finance.com/indexnew.htm

his dad is Egyptian and his mum cadaan, he was a former derivative trader, raised and born in UK,


anything else let me know,

waad mahadsantahay sheikho

 

[Farjano-Walad]

Never understood the difference between conventional and Islamic loans.

@Teeri-Alpha you might be able to clear some stuff up for me.

Get back to me whenever. Not in a rush to get a murabaha mortgage anytime soon.

In murabaha financing the lender pays for the item the borrower wants and resells it to them at a higher price.

The borrower then pays the lender on an agreed set of monthly or annual installments.

What makes this different from a conventional fixed rate loan other than the wording?

Also with Islamic financing you can't request a refinance and early repayments are not permitted.

There's no competitive market for the fees (i.e. called interest rate by normal banks) and you might end up paying a lot more.

Also since there's no variable interest rate how does the lender deal with inflation? Especially in long duration loans like mortgages?

Do they package up your loans and sell them on to investors like conventional lenders?

Do they own the titles to property while you repay them? If they go down do you lose your property?

i will answer your questions Ugaas, sorry for the delay

 

[Farjano-Walad]

Never understood the difference between conventional and Islamic loans.

@Teeri-Alpha you might be able to clear some stuff up for me.

Get back to me whenever. Not in a rush to get a murabaha mortgage anytime soon.

In murabaha financing the lender pays for the item the borrower wants and resells it to them at a higher price.

The borrower then pays the lender on an agreed set of monthly or annual installments.

What makes this different from a conventional fixed rate loan other than the wording?

Also with Islamic financing you can't request a refinance and early repayments are not permitted.

There's no competitive market for the fees (i.e. called interest rate by normal banks) and you might end up paying a lot more.

Also since there's no variable interest rate how does the lender deal with inflation? Especially in long duration loans like mortgages?

Do they package up your loans and sell them on to investors like conventional lenders?

Do they own the titles to property while you repay them? If they go down do you lose your property?

in order to use mudarba or murabaha, they must own it, the letter of the law says they must own it in full possession before they can resell it, they must take the risk, own it then re sell at an agreed price,

some exploit this in my opinion, i could be wrong, they buy it then turn around and re sell to you, but only buy it when they know some one is looking for it, its a grey area for me, for me the issue is banks like Islamic bank of Britain renamed alrayaan bank where they buy it and charge you what is really interest where repayments fluctuate monthly in a non fixed repayment,

but any repayment must be fixed, no increases allowed, if it changes from one month to the next its riba, no iffs,

if they buy then re sell to you and keep the monthly repayments fixed, it must be the same through out the entire contract length,

there will be competition in Islamic market, one bank can charge you less re sell price then the next etc, one can offer 30 year repayment compared to another with 25 years etc, innovation can exist in a free market,

in terms of inflation, let me say this, inflation exist because of riba, if there is no riba and the money used is gold/silver as God ordered us muslims, then there will be no inflation, in fact over time your money will have more value as the money supply increases less than the available goods, gold is fixed, no human history of over 5000 years has gold supply increased more than 15 for one year, so as long as the economy grows more than that there is no inflation, the classic definition of inflation is the increase in money supply, fiat money, in fact you must print money in order to keep paying the interest on the money supply as today fiat money is debt, money is only created as debt, so its a vicious cycle, you can never pay all the interest on the debt with out printing money, hence inflation is the grandson of riba, the seed is riba,


no point of repacking these loans like they did with sub prime loans as the new investor will not enjoy from increasing monthly repayment,


the title deed will belong to asli investor/financing firm or person till fully paid, if an equity increase and the buyer cannot pay the rent anymore then he or she will get the share if the loan is complete, example if he has paid 505 off then he will get a share of any extra profits/equity if the house is sold for a pofit due to an increase in equity,

hope that helps, ask or feel free to ask if you need more answers,

 

[Farjano-Walad]

i have devised a system where a lender can lend a loan and still benefit financially with out riba, it will change many paradigms, but we need gold and silver based economy for it to work,

 

[Ras]

, if an equity increase and the buyer cannot pay the rent anymore then he or she will get the share if the loan is complete

Thanks for getting back to me.

So instead of a variable rate they hedge their risk with appreciation gains?

Question here is whether you as a buyer would only be able to profit from the appreciation of the equity you already own.

Also would you start paying of the principal from the first payment?

Conventional loans first get you to first pay of the interests first before you start paying of the principal.

So let's say you paid of 50% of a 500k loan and the house price goes up by 20% then does that mean your value of the share you already paid for increases by 20% (250k+50k ≈ 20%)?

Or am I reading this wrong and the bank owns 100% of the equity of the property and they gain 100% of the appreciation gains until you pay it off fully?

That might work for owner-occupiers if the fee is reasonable but not for investors who leverage equity to go out to buy more assets.

 

[Farjano-Walad]

oh by the way i forgot, as far as i know there is no refinance allowed as you cannot mix a loan with a sale, since the property is already owned by another entity, who will own it if you borrow or refinance from another entity? and since you cannot mix a loan with a sale this is not allowed, its to avoid riba or what we call qaraar, confusion,

for a business maybe you can get another loan since it can be paid off through profit, but who will own the refinance of the property in case its refinance by a different company? it creates a clash,

 

[riyaale]

this thread is amazing

thx to @ABG , @Teeri-Alpha , @RasCanjero and all who contribute.

 

[Ras]

oh by the way i forgot, as far as i know there is no refinance allowed as you cannot mix a loan with a sale, since the property is already owned by another entity, who will own it if you borrow or refinance from another entity? and since you cannot mix a loan with a sale this is not allowed, its to avoid riba or what we call qaraar, confusion,

for a business maybe you can get another loan since it can be paid off through profit, but who will own the refinance of the property in case its refinance by a different company? it creates a clash,

Seems like there's a lot of space for development in these financial products.

I guess they work for the essential service of making properties affordable to the masses but the bigger opportunity here is catering to investors.

I want to be able to put my money into halal rental property investments but I'll be priced out of most deals since the rental income alone isn't enough to make it worthwhile.

Also I can't grow my portfolio as fast if I can't leverage or refinance.

 

[Macalin M]

What’s the ruling on interest - at the rate of inflation?