Making an example out of Ginko...

Maklin, I'd been very careful to not breathe one word about our conversation because it was private, and of course I won't add anything to what you've said here. But I'd poked around a bit myself, and everything matches your tale exactly.

I'm pretty sure someone will catch the scent and track it down... I can almost hear the dogs and the tallyho's now...

I am seriously debating whether to mention the rest, Desmond. You can discuss what we talked about with folks you know, I'd be glad to speak with them ingame. Gonna run it by the #1 and #2 in that place we discussed and get their opinions on the issue.

Opened up a whole new can of worms, have I ...?

I finally got around to doing this with a department head for fund controlling.

So far, we've been at it for two sessions, since I needed to explain a lot of background on SL and how it works. I based the discussion on introductory reading of the Reuters article from October 2006 and then followed up with material selected from the Virtually Blind site, including a detour to Grameen bank. Next week, we'll finish the discusson by looking at Charles Ponzi.

My pupil seemed to find the topic really interesting, since it allowed him to apply his professional knowledge to a hypothetical situation. Of course, he perfectly doubts the validity of the entire scheme, and when we got to the GPBs, I got a rather loud "They did WHAT???"

All in all, it was a rather good idea to do this!

It probably was for about a week...

What's Grameen got to do with it?

Is this course called Creative Finance 101?

I think it's English for Banker Type People 101

It's advanced conversation practice on banking and financial topics.

After about half a year, it get a bit tiresome to talk about the amazin developments in his department every week, even with the occasional grammar review thrown in.

Grameen Bank was mentioned by Philip Linden as some kind of model for how Ginko could operate, and was mentioned in the Reuters article as such:

“If a bank like Ginko were to borrow money from us as the federal reserve, then they were to presumably charge a higher rate of interest by lending themselves, I actually believe that they could still use something akin to the Grameen model to establish a reasonable credit risk in their lending,” he said in a telephone interview.

That's a bit hard on Grameen! )

I think so, too.

This implies there was some point at which "Nick" DID have to tell someone something about his "bank." With no requirement that he tell anything, no verification of any story he may have told, and in fact with no way to verify his RL identity and no accepted recourse if he didn't tell or what he told wasn't true, I don't see how people "know" much about this whole fiasco at all. For everyone else's part, there has never been any requirement for anyone to deposit money into Ginko or buy Ginko bonds.

I've heard people say, "Nick had good intentions, but the ban on gambling hurt his liquidity so he couldn't meet the demand for withdrawals. This led to a bank run. He had the assets to cover the deposits, but he couldn't liquidate them at a good enough rate to cover withdrawals overnight." Those are unsupported claims. At best they are supported by other claims which are themselves unsupported.

I've heard other people say, "Nick was a clever thief who raked in millions of L$ from his Ponzi scheme. It is so obviously a Ponzi scheme." Those are also unsupported claims, based on other unsupported claims. Of course, they are much more persuasive when prefixed with slanters like "By all accounts..." or "Any idiot can see..."

Given that Ginko was never obligated to reveal anything, I find it misguided to focus on Ginko regarding this problem. The fiasco has illustrated a crucial weakness in the SL economy: There is no way to make an informed evaluation of a financial situation. LL hasn't given us the tools to verify identity, make legal contracts, or keep transparent financial records.

Right now millions of L$ are still being parked in SL banks, stock exchanges, and partnerships. I hope people are investing with their eyes open (and I know many are).