Usury by any other name...

The Muslims are laughing at us. Not all Muslims--I'm sure some are just feeling vindicated. What amuses them so? The fact that we've gotten ourselves into this tremendous economic problem. Of course, it all stems from the credit markets. And I don't need to explain to you how large corporations have fallen while others are teetering and already millions of people have lost either or both their house and their job.

What has this to do with Muslims? In Islam, it is a sin to charge interest or pay interest. If you've ever wondered why so many Muslims live two or three families in a house, now you know. Unlike the rest of the world, they can't borrow the money they need to purchase a home. They have, however, come up with various ways to get themselves into expensive propositions like home ownership without using credit.

I'm writing about this because I just heard that some lending institutions are using predatory interest rates as a way of boosting their bottom line. What do I mean when I say "predatory"? Would you believe 30% per annum!?

Do I have any grasp at all on how big finance works? First, they gave money to people who didn't have a snowball's chance in hell of repaying them. Smart move. Then, when those people actually defaulted on their loans and mortgages, the banks almost stopped lending altogether. How did they expect to make money without lending? Now, we hear about exorbitant rates being charged. I'd like to know how many people who can actually afford to pay such high rates are willing to take on more debt considering their job is subject to being lost at any time?

I don't know why, but I keep getting surprised by the moves that the supposedly brightest minds, individually and as a group, keep screwing up the world royally. I should be used to it by now. From CEO's of auto companies to the titans of the financial sector, to presidents of powerful countries, we see ineptitude that dwarfs anything even that of an average person. But I digress...

Before "retiring", I had many friends and colleagues who were Muslim, and one in particular was a very good friend and was also one of the less "westernized" among them. On many aspects of Islam which we discussed at great lengths, I somewhat agreed, if not whole-heartedly, were good practises. The taking and paying of interest I hadn't been sure of, but given the mess that all the brainiacs in the credit markets have put the whole world in, there's now no doubt in my mind that it is a decidedly bad thing. The frenzy of unabated consumption driven by virtually unlimited credit has caused many ills to individuals, society and the environment long before the credit crunch occurred. The true brilliant minds have been warning about it's unsustainability for some time...and as usual, few were listening.

How I feel about bankers.