Religious leaders unite against usary

Conrad

Jonbvn wrote: »

Dear oh dear....

I will not be dictated to by people who believe in fairy tales (IMPO).

Have these people ever heard of risk? I've lent at 18%+ on ZOPA so I am a usurer? Nobody told that to my borrowers who have defaulted.

Why does'nt the Church set up a Bank if it feels it can squander money on high risk applicants where the chance of repayment is marginal.

purch

Will Poly Toignbe & co be lending thier children inheritance at low rates to the poor, given thier truk with Banks?

Memo to self.

Don't type when in a major tizwas !!! :eek:

inspector_monkfish

Conrad wrote: »

Why does'nt the Church set up a Bank if it feels it can squander money on high risk applicants where the chance of repayment is marginal.

vatican has its own Bank

inspector_monkfish

purch wrote: »

Memo to self.

Don't type when in a major tizwas !!! :eek:

cue the phantom flan flinger.....

dopester

Conrad wrote: »

Only Britain was in a hurry to scrap usury laws, ditching them in the 17th century under pressure from – surprise, surprise – the burghers of the City of London, who claimed that they could barely pay for the orphans in their care. For the sake of the poor little waifs, the bankers needed to rack up interest rates. And so began the City's transformation into a commercial universe free from all but the most feeble moral constraints.

In my opinion there was a bit more to it than that.

Borrowing when there were few or no income-producing capital assets, other than land and human labour, tended to be destabilising and militarily dangerous. Military success in antiquity often turned on whether a society retained a significant degree of freeholders. A person with a stake in the society he fought for tended to make a better account of himself than a peasant soldier or an indentured servant.

The trouble, however, was that while yeomen may have been successes at war, war did not tend to make successes of yeomen. Wars tended to impoverish the very freeholders who were the most able and dependable fighters. It sometimes called them from their fields, so they could not tend to their crops. It also drove up taxes. These twin evils were compounded by the occasional drought, which reduced the yield from farming below the break-even point.

Given the high interest rates that are common even today in backward economies, running into debt was rarely a way for a small holder to rescue his livelihood. Generally, when smallholders went into debt they lost their property and their freedom. Sometimes they legally pledged their persons as collateral for a loan. At other times, their bondage was debt bondage. In either case the result was social unrest that destabilised the system.

Muhammad had seen in the Mecca of his own time how a disproportionately large population of the poor, fraught with discontent, could militarily weaken a system. This was not because the poor themselves were able to overthrow the local elite. It was rather that they had no reason to defend the system when it did come under attack. Muhammad exploited such a weakness in taking Mecca.

It was common in antiquity for states to be weakened by dispossessed freeholders and insolvent debtors. This happened in almost every Greek city-state. It was the reason for Solon's reforms in ancient Athens. He found a city simmering no less than Mecca. Solon stabilised the situation by prohibiting lending on the security of a person's body and decreed a general cancellation of debt similar to the Biblical Jubilee.

The injunction against usury was an artificial means of ensuring a wider distribution of property. It was also a roundabout, religious limitation on taxes. By narrowing the availability of credit to finance tax payments, usury discouraged high taxes. They made it relatively easier for small owners to avoid being squeezed off their lands by the oligarchies that both started wars and tended to hog the primary spoils of war.

In late Republican Rome, where there were no prohibitions against usury, the senatorial class effectively dispossessed the small holders. They frequently plunged the country into war, reserving the bounties for themselves, while shifting the costs to the yeomen. A clear example is Sulla's war tax laid in 84 B.C. It was financed by the senatorial elite at interest rates above 50 percent. In due course, most of those who went into debt lost their lands. In effect, the oligarchy got away with more than if they had stolen the lands directly. They laid the tax, pushed the small holders into insolvency, and earned exorbitant returns for financing those who attempted to escape from the snare. To short-circuit this unhappy process, religions, including Islam, made the payment of interest taboo.

In the Christian world the band on usury lingered through the Middle Ages, but was blasted away by the Gunpowder Revolution. Almost immediately after gunpowder weapons came into wide use, Protestant reformers discarded the old taboo. Huldreich Zwingli, the Protestant reformer who set Zurich on the path to becoming a world banking centre, emphatically denied that lending was sinful or contrary to the Bible.

In Sidney Homer's words, Zwingli argued that "the obligation to pay interest flows directly from the commandment to `render to all their due'." Luther and Calvin also disputed that it was also sinful for a Christian to lend money. While the Catholic Church did not fully lift its injunctions against money lending until 1836, capital markets and banks began to function in Western Europe almost as soon as the change in megapolitical conditions made investment on a larger scale possible.

[...continues.. without credit markets, large scale industry is hindered...]

As it happens Islamic societies have indulged in all three but without producing any noticeable successes in industrial competition. During the whole modern period of large scale, smokestack industries, Islamic manufacturers never competed on a world level. It was simply impossible for countries operating under Islamic law, hampered by inflexible restrictions on usury, to invest the large sums of capital as well as nations with efficient banking systems and bond markets.

By a stroke of luck, or perhaps Allah's blessing, much of the wealth of the Western industrial countries has been transferred back into Islamic hands in payment for oil. The more thinly populated and traditional societies on the Arabian peninsula where the Prophet Muhammad lived are awash with oil. The governments that control this oil are among the few creditor countries in an indebted world. It is wealth that makes them attractive to aggressors.

JayScottGreenspan

inspector_monkfish wrote: »

in interbank trading, overnight funding can be borrowed around 0.40% in seriously large amounts, for many high street banks and has been like that for a long time now

3mths around 0.70/0.80
6mths around 1.00
12mths around 1.25

but market is obviously not so liquid out this far

Yeah, SONIA is about 0.4% at the mo'. The others look a little light, but not much in it:
http://www.bankofengland.co.uk/statistics/yieldcurve/ukblc05.xls

Considering the banks would have to pay 4.48% for a 25 year maturity, some of the mortgage deals out there don't strike me as usury.

Masomnia

Generali wrote: »

I thought usary was charging any interest on debt rather than too much talking theologically. Usary meaning too high a rate of interest I thought was C19th.

The word usury is definitely used in the King James Version, so dates back at least to the early 17th Century. I'm pretty sure it referred to any kind of interest though, not just extreme rates, and I think the distinction arose later. Conveniently enough.

Somewhere in the Bible it states that you can't lend money upon usury to your brother, but you can to a stranger, hence Jews were allowed to lend money to Christians, where Christians couldn't lend to each other at interest.

So, do these religious leaders accept interest on their savings? I'm sure they do and that's hypocrisy in my book.

inspector_monkfish

JayScottGreenspan wrote: »

Yeah, SONIA is about 0.4% at the mo'. The others look a little light, but not much in it:
http://www.bankofengland.co.uk/statistics/yieldcurve/ukblc05.xls

Considering the banks would have to pay 4.48% for a 25 year maturity, some of the mortgage deals out there don't strike me as usary.

the others are a bit below LIBOR, but trust me, there is money available around those levels for some Banks. Either straight cash deposits, or abitrage. Not massive amounts though.

Mr_Mumble

As Masomnia and Generali state; I thought usury was charging any interest. Too high is an odd concept because then there will be a bunch of bureaucratic non-jobbers setting barriers for "too high" a rate and no doubt their opinion on too high will differ depending on[STRIKE] how well connected[/STRIKE] the circumstance of the lender along with the borrower.

If someone with a bad credit history and on the breadline invents a widget that'll make millions but can only borrow at 10% should they be told not to? The person making this decision should be those lending the money out - banks, venture capitalists, business angels - not some religious leader or politician.

Anyone who rails against interest/usary is an economic neanderthal. Opportunity cost and time value of money are cornerstones of modern finance because they take into account the one absolute in life - we all die. Telling people to lend to others unprofitably will simply reduce lending - unless forced to lend at gunpoint in a totalitarian regime - ergo we'll all be poorer.

JayScottGreenspan

inspector_monkfish wrote: »

the others are a bit below LIBOR, but trust me, there is money available around those levels for some Banks. Either straight cash deposits, or abitrage. Not massive amounts though.

Interesting. Ta.

Jonbvn wrote: »

I will not be dictated to by people who believe in fairy tales (IMPO).

The Earth was created in six days by an omnipotent beardy bloke approximately 2000 years after the domestication of the chicken. And by the way, here are a few pointers on regulating your financial services industry...

Then again, David Icke would do a better job than the FSA...

:A