Not Very Accomodative Islamists

There's an interesting op-ed in the WSJ today by a gentleman named Sadanand Dhume. He is writing about the American hotel bombing in Indonesia. Specifically, he makes the case that American hotels are signs of Western influence that Islamists want destroyed. The writer makes the refreshing argument that Islamists' preference for attacking Western hotels is based on deeper premises than the sheer practicality of sneaking weapons into a place designed to be accomodating. He writes:

For Islamic radicals, who seek to order all aspects of 21st century life—from banking to burqas—by the medieval precepts enshrined in Shariah law, the secular nature of a hotel is galling enough. But perhaps this would not matter as much if it weren’t appealing to local elites. In a place like Peshawar or Kabul, and to a large degree even in Jakarta or Mumbai, a five-star hotel represents an island of order and prosperity in a sea of squalor. It hints at the prosperity promised by free markets and a culture of individual liberty. It is living proof that the worldly can successfully be split from the divine.

I'd say that's pretty much on the dot. He also discusses the necessarily secular nature of hotels, as they cannot display any religious preference, lest they lose a sizeable chunk of international clientele to competition.

Here is another example of how globalization is bringing the civility of capitalism to the Muslim world. At the same time, however, the dark ages philosophy prevalent in those societies is growing more and more violent in its resistance.

Shabbos Banker

Here's an interesting little story I noticed some time ago in the Economist. Apparently this gentleman, Adnan Yousif, has great ambitions for his particular brand of financial innovation. He is trying to rock the Arab financial world with what is currently only a niche industry. "People never thought big here, never thought globally," he says. Sounds good, right? Guess what this innovative service is...

Islamic Finance.

Now, you may be asking, as I did, what makes finance Islamic? According to the article:

Mr Yousif’s ambitions date to the founding of modern Islamic finance. During the 1970s oil boom the Gulf’s Muslim elite needed to put their new-found wealth somewhere, and American government bonds seemed the safest option. Yet Islam prohibits the charging of interest. So some sheikhs bought bonds but let their Western banks keep the interest, in the casual manner of a customer leaving change on a restaurant table. To Mr Yousif, then a young banker at American Express in his native Bahrain, this made no sense. At a time when Muslim countries had imposed an oil embargo over America’s support for Israel why, he wondered, refuse the Americans oil but give them billions of dollars?

So, nominally Islamic finance is about handling money without interest. Really, it's answering the question "How do we stick it to the Americans more efficiently?"

This concept of Islamic Finance--which seems to be simply replacing evil, unholy interest with "fees" and other equally silly price mechanism substitutions--reminds me of the Jewish concept of the Shabbos Goy.

For those of you unacquainted with the endearing habits of the Children of Israel, and please remember I am not making this up, "goy" is Yiddish slang for a gentile. Shabbos is the sabbath. In Jewish law, you are not allowed to do any work on the sabbath, including, but not limited to, turning on lights, starting a car, and even ripping paper (Yes, that includes wiping your ass, unless you have pre-ripped your sheets.

This poses a great problem for modern observant Jews. While, back in the good ol' second century b.c., one could easily avoid turning on lights or ripping toilet paper, such actions have become, to say the least, ubiquitous today. So what's a poor Jew to do? Why, hire a goy to do it for you, of course. Hence the term "Shabbos goy," a gentile who you hire to do all your sinful car starting for you on the sabbath. (Of course, you must pay the goy during the week, because handling money is also forbidden.

Returning to Islamic Finance, then, I find the practice funny--and sad--as it is simply a way for the faithful to pretend they're obeying God's ridiculous edicts, while still getting everything they want. They missed the whole point of being religious, which is the ample amount of suffering God wants you to endure.

In all, this is probably a good development, as the more integrated backwards religions get with civilized life, the more people decide, "you know what? This is stupid," and just junk the whole process. That's what happened to me when I attempted to keep kosher when I was young and naive. I thank God I grew out of that. If it weren't for him, I might never have turned atheist.

Voldemort, Feng Shui, and A Not-That-Terrible Idea from the White House

Three note-worthy stories that made the WSJ's front page today:

The first concerns Voldemort, by which I of course mean General Motors. Just when we thought GM couldn't get slimier, this story breaks out. Apparently, Voldemort is still reeling, despite the government's attempt to reverse overwhelming wisdom. (Damn, and I really thought it would work this time.) It seems that people really just don't want to pay for cars made with $70/hr labor and subjected to ludicrously costly CAFE standards. Go figure. Anyway, rather than sell of pieces of the company or close up shop, this indispensable American institution has determined that the obvious solution to its problems is...you guessed it: more bailout money.

But asking for more money would be difficult in the current anti-big business climate, so GM's brilliant plan around this hurdle is to become even "too big to fail"-er. Yes, that's right, GM wants to take back part of Delphi, the auto parts manufacturer it spun off several years ago, in an effort to convince the U.S. to pony up more dough. This is the state of business today, if you're a failing corporation, don't downsize, don't attempt to return to profitability; just acquire an even worse company, a bankrupt company, in the hope that you'll look even needier and more pathetic. This is the shortest of short-range perspectives. How taking on Delphi's burdens and getting a few extra worthless federal handouts will carry GM more than an extra week eludes me. American corporatist myopia has reached a new low.

On the other side of the world, mysticism is thriving in one of the world's freest cities as the threat of financial insecurity turns wealthy investors into quivering sheep at the foot of the nearest witch doctor. Today's featured school of voodoo: feng shui. Yes, the masters of wind and water are making a killing on scared, stupid, and scared stupid investors. Some of the most delightful insights

"The incoming U.S. president and [Treasury] secretary were both born in the Year of the Ox," said one client. "Is that a problem?"
Mr. Yeo's answer: Yes. The pair of oxen in charge of the U.S. economy could be an accident waiting to happen. Hold out until after January 2010 before investing in the U.S., he advised.

"This year, with the economy and the stock market so bad, I wanted to come and ask about the future," said Mr. Lee, who says he still has substantial holdings in the stock market. "It can't hurt to hear another opinion, right?"

"Investors used to trust banks and mutual funds," says Liu Qiao, a professor at Hong Kong University who studies behavioral finance. "Now, people see professional bankers making very stupid mistakes, and I think that explains why so many people are going in different directions, to see feng shui masters or pray at temples."

So let me get this straight. Investors lost money because of irrational expectations about the future, so now they are consulting the stars to tell them which stocks to pick? Forgive me father, for I have invested in Fannie and Freddie. How do you feel about biotech?

I suppose I shouldn't be surprised. In times of crisis, the weak and desperate cling to their favorite rabbit's foot, praying that it will do their thinking for them. That said, I must say I enjoy the characterization of Obama and Geithner as oxen.

Finally, I cannot at this time unequivocally declare my hatred for the Obama administration's financial system bailout plan. Geithner will present the specifics tomorrow, but it looks like the government is planning to use a private-sector partnership to buy banks troubled assets. Normally, I would be against a private-public partnership (see: Fannie Mae and Freddie Mac), however, considering all the other horrible measures the government has in its arsenal, this seems fairly tame. It would provide a market for bad assets (albeit a distorted one) and banks and investors would reach an equilibrium for which assets would leave banks' balance sheets and which would stay, and at what price they would sell.

More important, however, is the big difference between Obama and Bush in the bailout department. Bush's ad hoc approach to the financial services industry made the market apopleptic. As Amity Shlaes poins out in her excellent history of the Great Depression, The Forgotten Man, what did more to prolong the Depression than any other measure was Roosevelt's haphazard experimenting with the market. Markets like to know what the government is going to do even more than they like it to stay the hell out of their business. The O-ministration seems to understand this, and has taken some time to present one plan (the last, with any luck) that is supposedly comprehensive. If they keep their word, the market can price in all the changes, and our economy can finally start to move forward with new investment. That's a big "if," though.