Homeless Hotel in Gothenburg

Faktum Hotels
Despite having a highly developed economy, the world’s eighth highest per capita income, ranking 7th in the United Nation’s Human Develoment Index and being the second most competitive country according to the World Economic Forum, homeless figures are increasing across Sweden. It is not only drug addicts who end up in the streets, now there are also people who lost their homes when their businesses collapsed during the economic crisis. Nationally, the figure is estimated to be approximately 34,000. It’s a problem no one really likes to aknowledge, especially in cities like Gothenburg, Sweden’s second city, where there are more than 3,000 homeless. In Malmö, more than half of the people without a home are women and children.
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Faktum Hotels offers a unique experience. Guests get to be homeless for a night to get an idea of what it is to sleep with fear, out in the open and in the cold. The options include sleeping on a filthy mattress under a bridge by the junction of the Säve and Göta rivers, a sleeping bag in the park, or simply lying down on some cardboard boxes and newspapers at an abandoned paper mill. Each site, or “room”, has been chosen by a member of the homeless population that collaborates with Faktum, but of course there is no way to guarantee the availability of the rooms. They could actually disappear with no prior notice.

Many people have tried the idea, 1000 rooms so far have already been booked, but most can only stand a few hours.You can also book for a friend. The concept, which is part social commentary and part installation, helps fund Faktum’s non-profit organization and has the objective of raising awareness of the plight and situation of homeless people.

It is always difficult for non-profits to get people to donate money to causes, so they have to be increasingly creative to get the message across to a population desensitised, accustomed to watching the news as entertainment. Faktum has found a way of provoking thought using a format not too different from an artist’s. Below, a picture of an exhibition on Faktum in Gothemburg.

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Faktum started as a street newspaper, it was founded in 2001 and is sold by people who are homeless in Gothemburg.

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To visit the sites, environmental sound included, go to their website Faktum Hotels.

The Zuck

The day everyone has been waiting for is coming. Facebook’s $11.8 billion initial public offering will make Mark Zuckerberg, who is only 27 years old, one of the world’s richest men, apart from one of the most influential. The social network he created when he was just 19 is today one of the most valuable companies in the US and the world.

The IPO will be the biggest of any Internet company ever since Google’s in 2004, and could raise up to $10 billion. The price per share will likely be somewhere around $28-35 dollars. The final price will be set the night before the day it begins trading, probably May 18th. He has announced he plans to sell 30.2 million shares, which would net him around $1 billion. He will be richer than Steve Ballmer, Microsoft’s CEO, if the company prices at the top of its range.

In the end, Facebook will trade in the Nasdaq, which also lists companies like Apple and Google. Nasdaq and the New York Stock Exchange compete fiercely over listings. Although the NYSE continues to lead in the number and value of company debuts, this deal gives Nasdaq one of the most coveted deals ever and is an important win because it increases its reputation as being the exchange of choice for technology companies. It opened an office in Silicon Valley 20 years ago.

Today it is clear that Facebook is by far the world’s most succesful social network. Not only has it become popular for staying connected with friends and family, it has also given all of us a voice to express ourselves and has taught us that we are all brands. It has transformed the way we socialize and the way we receive information.

Revolutions taking place today -from the Arab Spring to the Occupy Wall Street movement- owe a great deal to Facebook, which has enabled people to communicate with each other, even when official and mass media were censuring the events and the news.

Mark Zuckerberg -The Zuck- has resisted taking his company public for years, obssessed with building something authentic, which would be both very personal and also appealing for millions of people everywhere -more than 900 million today- across all cultures, from Harvard to Tahrir Square. He has also aggresively innovated, being famous for introducing new products quickly. In doing so he has become a visionary, without even setting out to become one.

Zuckerberg will still retain about 57 percent of the voting power after the offering, making sure that Facebook will remain as much his as ours when it goes public.  

-To read the original article in PDF: The Zuck.

Islamic Banking

During the Islamic Golden Age, which spanned approximately 500 years, between the 8th and 13th centuries, some early forms of capitalism and freemarkets existed. The dinar brought together previously economically independent regions. Before Islam, the city of Mecca was already a center of trade in Arabia, a place where not only goods but also ideas were exchanged. Islamic civilization grew thanks to its merchant economy. It was commerce, not holy war, that expanded the Muslim faith to Asia.

Islamic banking is based on the teachings of Prophet Mohammed, himself a merchant. During its heyday, shariah was the world’s most vibrant body of commercial law, its contracts recognized from the Arabian peninsula to the Iberian peninsula. The shariah issued fatwas or opinions on which transactions were Islamically acceptable and which were forbidden. Shariah prohibits the payment or acceptance of interest fees for loans of money, a principle as old as money itself and basic to Western banking. However, charging high interest rates to lend money is repeatedly condemned in the Bible, Aristotle denounced it, the Romans limited it, and it was prohibited by the early Christian church.

Back in the days of Mohammed, the reasons for rejecting interest were pretty obvious: loan-sharking was common and not paying a loan could result in slavery. By outlawing interest, Islam encouraged an economy based on risk-sharing, fair dealing, and equity. The reason for prohibiting interest is to keep everybody spending according to his limit, so inevitably this system involves more prudent lending. Western consumerism society is the result of a banking system that encourages buying today and paying tomorrow. For advocates of Islamic banking, Western capitalism is synonymous with speculation, volatility, inequality, large corporations and usury. Not that they are entirely wrong.

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. There are no additional penalties for late payment. To protect itself against default, the bank requires a strict collateral. Some transactions, look a lot like interest, but any late fees must be donated to charity, and the bank cannot penalize a borrower who is genuinely broke. Financiers share borrowers’ risks and depositors are treated more like shareholders, earning a portion of profits. Financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Interest-free banking as a financial concept is pretty recent. The earliest references to the reorganisation of banking on the basis of profit sharing rather than interest are found in the 40’s. But it wasn’t until the oil boom of the 1970s that it became a movement. Nostalgia for the lost golden era of Muslim power, when Islamic economy covered half the world, has been a strong impetus for Islamic banking. The region’s millenium-long material decline has been blamed both on moral decay and on colonialism, which imposed Western-style banking, a cause for resentment still today. However, the only countries that have officially Islamicized their entire banking systems, are Iran, Pakistan, and Sudan.

After the collapse of Wall Street institutions and a global recession, Islamic banking is seriously being considered a possible alternative to conventional banking. The biggest support has surprisingly come from the Vatican itself, which has been very critical of the destructive excesses of the interest-based conventional financial system. Two authors of L’Osservatore Romano, the Vatican’s official newspaper, have said that the ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark financial services. After all, the Bible denounces that “the love of money is a root of all kinds of evil” (1 Timothy 6:10).

Islamic Banking experiences a healthy growth of 10-15% per year. According to The Economist there are over US$822 billion shariah-compliant assets worldwide. Most international big banks now (JP Morgan, Deutsche Bank)  have Islamic banking operations and they employ shariah scholars, expert in both scriptures and in financial theory. These scholars are so rare, many have to sit on several boards. Ancient texts don’t address specific matters like derivatives, bonds, futures, warrants, stock options or day trading, so a delicate and very sophisticated form of extrapolation ensures transactions comply with the spirit of the writings in holy books.

Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc. If a company makes 2% of its money from selling pork rinds, an investor must give away 2% of his dividends to charity, a process known as “portfolio purification.” Buying and selling stock is fine, because it represents real assets, and they can be traded safely today using the Dow Jones Islamic Index.

Islamic banking is not entirely free of guilt or suspicion, of course. With 60% of Muslims living in poverty, Islamic banking is perceived by some to be of little benefit to the general population. It has had its share of scandals too, like one Malaysian bank who apparently invested the majority of its Islamic funds in the gaming industry, something totally unethical and prohibited under Islamic principles. Goldman Sachs’ $2 billion Islamic bond program came under scrutiny after it was discovered that the scholars who were supposed to approve the operations had not even seen the prospectus. Islamic banking has also been accused of serving as a channel for financing terrorists. However it does seem that Islamic banking has important ethical principles well worth imitating, and proponents of Islamic banking say any socially conscious investor can agree with most limits, standards and criteria of Islamic banking, whether they are Muslim or not. 

-Still want more? Here’s an article in Fortune magazine

-The photographs of the Al-Quran and the Astrolabe were taken from this blog

To read my article in its original PDF form, go to: Islamic Banking