The Arab's Get it (Islamic Finance)

[Rajiv]

Re: The Arab's Get it (Islamic Finance)

THe following links should explain the difference between "simple interest" and "compound interest"

Simple Interest vs. Compound Interest

Interest

[GRG55]

Re: The Arab's Get it (Islamic Finance)

...You seem to know a lot about the khaleeji happenings, are you from there?

I lived in the GCC, and based my work out of there, between '01 and early '08 [and kept a second residence in London, UK during part of that period].

Even if legislation was passed it doesn't mean much. The Dubai govt was offering 3 year renewable residence visa to whoever bought property in the fancy new developments. However, just after the market had peaked, the government stopped issuing visas . Laws here are changed based on bureaucrats' egos and phases of the moon rather than market or social needs.

I don't know what all the mostly Western expats who bought property here were thinking. Thousands are being laid off nowadays, and they get only a month before their work permits are canceled so they have to leave the country as well.

As during all bubbles, I got a lot of "advice" from some of my expat friends that I was "stupid to waste money" renting a villa. My standard answer to them was that I did not want to own anything in that region that I couldn't put in a box and ship out on short notice.



Not only was the GCC property bubble the creation of a rigged market, but:

• there is no functioning secondary market into which to sell so any so-called capital gains cannot be realized [it is not in the interests of the developers of new projects to allow existing homes to easily compete with them];
• as you pointed out above, the residency rights are illusory;
• the region is perpetually unstable;
• by definition every boom is followed by a bust, and in that region every bust is blamed on foreigners - who are now being shown the door, as you confirmed above.

Thanks for the info. I still have business and personal relationship ties to the region of course, and it's always great to read your posts to hear first hand what's really happening.

[The Outback Oracle]

Re: The Arab's Get it (Islamic Finance)

THe following links should explain the difference between "simple interest" and "compound interest"

Simple Interest vs. Compound Interest

Interest

EXACTLY,,,It is EXACTLY the same thing!

This whole usury/ compound interest argument is tripe.
Interest is interest. If I save a few bob and lend it to you then I deserve a bit of compensation for lending it to you. If you do not pay me the interest and you choose therefore to borrow even more from me and I choose to lend you the extra money, then you should pay interest on that.

The problem with the system is NOT interest. The problem is the creation of too much money out of thin air, which is then lent out at too low an interest rate, resulting in massive debt.