by Calculated Risk on 12/01/2009 12:07:00 AM

Ok, one more post on Dubai before all the U.S. economic news this week ...

A couple of articles from the NY Times: Dubai Crisis Tests Laws of Islamic Financing

Shariah-compliant investments prohibit lenders from earning interest, and effectively place lenders and borrowers into a form of partnership. Yet there are no consistent rules about who gets repaid first if a company defaults on such debt, said Zaher Barakat, a professor of Islamic finance at Cass Business School in London.

And Andrew Ross Sorkin describes a recent trip to Dubai: A Financial Mirage in the Desert

One discussion was led by a British banker from Barclays who had moved to the region to create an entire Shariah-compliance team. He shared tips about various ways to create “structured products” that would pass muster with Muslim investors. (To me, the investments looked like bonds, walked like bonds and talked like bonds — but he never called them that.) Some of the bonds that Dubai World is in jeopardy of defaulting on, by the way, are Shariah-compliant sukuk. Just don’t call them bonds.

Oh great, more "structured products".