09-12-2017, 06:03 PM | #41 | |
Join Date: Feb 2005
Location: Berkeley, CA
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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09-12-2017, 08:03 PM | #42 | |
Join Date: Aug 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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09-12-2017, 08:49 PM | #43 | |
Join Date: Sep 2011
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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First, there are three separate but interdependent contracts involved. Sharia says it's permissible to have interdependent contracts as long as they don't interact in complex ways to obscure the results. The first contract is a contract of Diminishing Partnership. In this instance, the Bank puts up somewhere between 60% and 80% of the total property value and the home owner as the other partner buys the bank's share of the partnership down to 0% over a period of time. Interest is not charged, instead, the home owner agrees to value the bank's share as the amount the bank put up plus some additional lump sum. In general, the home owner makes equal payments over the life of the contract (in this instance four years) but he is allowed to buy out the Bank's share earlier if he so desires. If the bank has not had its share fully acquired at the end of the four years, the contract of Diminishing Partnership continues in force but another lump sum is assessed against the remaining value of the bank's share of the partnership. The contract of Diminishing Partnership will also cover which partner is responsible for paying administrative fees and stamp duty. Under Sharia law making a profit is assumed to be the reason for going into partnership. If either party finds the partnership is operating at a loss for them, the contract is discharged. Exactly who needs to return money depends on the source of the loss. For example, if the home owner loses his job, the bank will return the full value of his share in the property. If, on the other hand, the home owner sells the property at a loss, since the loss comes from his sale, he has to make good on the full value of the Bank's share in the property. As for any increase in the value of the property between the time the Bank puts up its share and the home owner acquiring that share: the Bank says that any excess value beyond the lump sum added to the purchase price belongs solely to the home owner and is his profit in the partnership. The second contract is a contract of Lease. The Bank owns its share of the property and the home owner leases the use of the Bank's share until the Bank's share diminishes to 0%. In general, the lease would provide for a regular payment of rent and the rent would diminish proportionately with the size of the Bank's share in the property. Thirdly, there is a Contract of Service Agency. This is optional, in the sense that the Bank rather than the home owner could be the Service Agent. The home owner is usually the Service Agent as he has a greater long term interest in the property and it allows the Bank to offer a lower price if it doesn't have that financial responsibility. The Service Agent is responsible for maintenance of the property, paying utilities and property taxes and paying for insurance(s) deemed adequate by the partnership. Something that might be a possible complication for the OP would be the existence of additional laws regarding debt. Judaic law as well as Sharia law forbids usury (in the sense of any interest, rather than exorbitant interest), but also requires the discharge of all debts by the jubilee year (seventh year) and, IIRC, the forgiving of any outstanding debt. So, you might have the complication of being taken to court to discharge a debt (or as much of it as you can) and (if you can't pay much of what is owed) the creditor taking a bath on it. |
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09-12-2017, 09:24 PM | #44 | |
Join Date: Jun 2005
Location: Lawrence, KS
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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The actual situation of "no interest can be charged" would be one where you went to a bank to borrow money, and they could not have you pay back more than the amount you borrowed. And then no bank would lend you money in the first place. You could borrow from a relative, perhaps, but there wouldn't be a commercial loan market. And if that were truly the case, there would be other effects. For example, if you had gold, or federal reserve notes, you would have no reason to lend them. You could bury them in the back yard, like the servant in the parable of the talents, or stuff your mattress with them, or put them in a secure warehouse and pay a regular fee for storage. Or you could buy durable goods like works of art. But there wouldn't be what we call "capitalism." (The late nineteenth century individualist anarchist Benjamin Tucker envisioned something like this. Among other things, he wanted to do away with rent, by having no protection for ownership of land that a person was not actually occupying and using.)
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09-12-2017, 09:39 PM | #45 | |
Join Date: Jul 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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09-12-2017, 10:41 PM | #46 | |
Join Date: Jun 2005
Location: Lawrence, KS
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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Bill Stoddard I don't think we're in Oz any more. |
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09-12-2017, 10:52 PM | #47 | |
Join Date: Sep 2011
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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While there were banks of a sort before modern banking began in 14th-century Italy, it would appear that non-usurious loans were made by moneylenders (who amounted to the commercial loan market) so I don't think it's a deal-breaker, though the banking industry may have been smaller. |
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09-13-2017, 12:00 AM | #48 |
Join Date: Jul 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
Can startups usually borrow much money when they've typically got no revenue and next to no assets? That quibble aside, yes, borrowing (and hence lending) is important to typical business operation in modern economies.
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09-13-2017, 12:44 AM | #49 |
Join Date: Aug 2008
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
At its heart, interest is a fee. It is the fee charged for use of money. It happens to be paid over time, and the lender isn't garaunteed full payment of the fee. But it remains a fee for the use of money.
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09-13-2017, 02:41 AM | #50 | ||
GURPS FAQ Keeper
Join Date: Mar 2006
Location: Kyïv, Ukraine
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Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases
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You're aware of the revised definition. But since I'm looking at something that developed in parallel for multiple TLs, essentially a divergent techpath in economics of the setting which happened at TL2-TL4 (unlike ours, where the divergence happened at TL7-TL8!), I'm looking at a definition closer to the original one. That is: Charging interest on money over time in a way that it compounds over and over and over again the longer it is not paid off. The cultural reasoning is the population's wariness of 'dept pits' (i.e. situations where one becomes indebted, then loses the source of income that was meant to pay off the dept, resulting in the dept growing and growing, eventually bankrupting the indebted person). Other concerns for wariness include fear of inflation for the indebted people (will be commented on below), and the fact that in our techpath, banks can basically wash their hands off in case something goes wrong, and thus are incentivized to give credits even to people who aren't all that likely to be able to handle them which in turn leads to bad stuff. As discussed by others, when there's reduced demand for alternative ways of financing, of which two seem more easy to handle while avoiding use of interest:
What I'm interested the most are:
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Let's say a person (a wealthy businessman) earns enough to have 8,000 spare dinars a year. Said person takes a loan in jade talents (a hard currency), in such a way as to pay half a talent a year (about 4,000 dinars) until the debt is paid off in 10 years. Hard currency loans tend to have lower interest rates, after all, so it's very tempting! Over the course of the fifth and sixth year, the situation on the international market changes, and now 1 jade talent costs 24,000 dinars, so the wealthy merchant now has to pay 12,000 dinars a year, which bankrupts him by the end of the 10-year period. It's even worse if it's not a business that can be abandoned, but rather a person's only dwelling. While the specific example is fictional, the overall pattern isn't, and it keeps reoccurring even in modernity. Had the merchant took a loan in an inflating currency, things would probably have been softer, especially with a capped/fixed/etc. interest rate. What I'm saying is: inflation is a complicated matter; it's not easily avoided as a factor to be considered with 'mainstream' methods but requires active counters; it's also not usually handled in GURPS, as the GURP$ is considered static. |
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financing, islamic banking, spaceships, usury |
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