Ginko vis-a-vis Northern Rock

AGREE!

Please....

Not only did you link the identical comment twice, but now you're posting links to /. COMMENTS?!? Especially one where someone reiterates his side of the same old ITSAGAME!/ITSNOTAGAME! debate. You could have saved everyone the trouble and just posted your own version of the same phrase.

I like /.; I have been a user there for a very long time (userid in the low 5 digs), but even I know that the vast majority of comments posted in articles over there aren't even worth the electrons to render them. Kinda like here, now that I think about it.

That is fixable:

http://games.slashdot.org/comments.pl?sid=302203&cid=20666425




Nah, because people can't tell me I'm wrong this way. They'll have to post their own slashdot comment and...



well, you make your own merit.

I agree. I dont think LL shoudl bail out Ginko. Im just saying they could without coming up with any real USD$

the real USD$ would come from everyone else, as the inflation hits those who sell Lindens.

Like half of your comments this one has me thinking



but in a bad way

What would be the good way?

that'd be where you still dont make sense but didnt seem so wrong.

SC did have a reason to close. People wanted it continue, but the effort was to make a certain affair just end.

Thread lock?

Scams, Ponzi schemes and theft are bad for the economy in several ways. One very huge one is people not trusting they can spend money in SL.

Since there is no way to prevent a unregulated financial system from churning out scam after scam ...

And there is no way LL is going to regulate it or even could.

Then it stands to reason in the long run not having these "investments" around at all would be more beneficial to the economy overall.

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Short run there'd be serious issues, becuase likely these fund managers would take the money and run. Which, in and of itself, is very telling.

I think the only reason LL ever should have considered "bailing out" Ginko was if the SL economy was suffering recession (perhaps even deflation) due to loss of the L$s that everyone thought were in the economy but had been stolen by Ginko Guy (or lost through sloppy external investments, or spent on hookers... whatever). In that scenario, the "inflationary pressure" wouldn't have existed, since all that would be happening is replacing L$ that the depositors thought were there all along.

And it wouldn't have had to be the L$ equivalent of all US$750K. It would only have made sense in combination with both a stern reformulation of policy toward in-world financial services, and confiscation of all in-world assets held by Ginko officers and transaction-traceable alts (which should have happened anyway), followed by their liquidation to partially fund the "bail out."

As for the depositors, well, it's a hard lesson, but their pain wouldn't have justified a bail-out (at least given LL's current policy about financial services--one could imagine a different regulatory policy in which LL could indeed act as FDIC or BoE in event of collapse--but that's not the situation). Only the good of the overall economy could have warranted such an extraordinary measure. As it stands, the current economic malaise could be attributed to so many factors it's hard to identify what if any share might be due to the Ginko failure.

This attribution problem also applies to the Ginko collapse itself: We hear from Ginko Guy that the "bank run" was the result of publicity, and the "bank's" liquidity problems due to the gambling ban. I'd be reluctant to place much faith in claims from that source.

I think a steep increase in US fuel prices had a much bigger impact on the SL economy than Gambling or Ginko.

I think the grid stability issues that occured for months had a bigger impact on the SL economy than Gambling or Ginko

And I KNOW the flooding of Sims onto the land market had a MUCH bigger impact on the economy than gambling or Ginko.

gambling and ginko are big economic losses, sure - but they are more islolated than those other things.

I has bizness Planz

u give me $L I pay u 64% a yr

I don't say wut plan iz

dont woree!

if u all do it

LL bail u out bai printing moar moneh




ya rite

The small claims arbitration is one step. That could be quite an expensive step for LL, but not as expensive as to bail-out everybody that thinks they have been scammed by some business.

We can't say that LL is doing nothing about it!



The virtual world as we know it as being control by LL is going to be less and less controlled by LL, as it expands into the bigger picture of a huge grid being run by many businesses besides just LL. Those businesses may want their portion of the grid solely for financial services. What you have asked to prevent financial services would be to also ask to not allow SL to connect to anybody that wants to do business as a financial service. The intended openness of the grid can not regulate that. You can make the personal choice to avoid those sectors, however.

The arbitration claims is a smokescreen to stop people from calling their lawyers when they lose money in various shady ways in SL. I do not think for one minute it is about regulating personal disputes between Residents.

Its all about LL not wanting to get named in lawsuits, the $10,000 is NOT small claims in the US. Small claims in most juristictions tops out at $1000. The $10,000 amount was very chosen becuase 99.9% of residents dont have more than $10,000 wrapped up in SL.

LL simply doesnt want to get added on as a co-defendent in every lawsuit that would come out of SL. It would cost THEM more money to defend themselves than to arbitrate.

LL already HAD an arbitration policy they tried to use it with Bragg. This is just another step in that direction.



When the virtual world really matures to the point it really needs a finaincial system - they have one, The one in the real world.

Simply put - Once it matures past a certain point. Governments will no longer waive their juristiction. Becuase they will eventually understand where their juristicion lies or else legislate to ensure it.

The msot obvious early example being this Gambling law.

LL started the Linden economy so any attempt will be called a smokescreen, but we don't see just any government get the same said smokescreen pinned on them due to their resident not being smart enough to handle money.

The $10,000 is small claims in a limited civil case. $1,000 would be smalls claims as in traffic court or, better yet, People's Court.



For BoE to bail out NR, that was one way to ensure it.

The only real world money that exists is exemplified by the bartter system. Printed money came after. Now, they just don't print the money anymore.

LL is NOT a government. They are wholey under the juristiction of the Country, State and Municipality in which they operate from.



Evidently you havent ever had to go to small claims court.



This has Nothing to do with my post whatsoever. The origin of money is a non relative tangent since SL and the internet do not exist within a vacuum.

Geez effing Louise, John, look what you've started!

I wholeheartedly agree with Des' sentiments. Bailing out a scam is just asking for more to crop up. It's like buying 16m plots at extortionist prices - the problem doesn't go away, it replicates and perpetuates because others see that they can get away with it.

The scourge of financial fraud needs to end, and the most effective way to do it is to ban the financial industry, or regulate it (and we know THAT ain't gonna happen).

They are.... Incorporated.



Ya, the people did away with that and the municipalities they were under years ago. Now the only form that exists is arbitration, like what LL now supports, but you called it a smokescreen.



Ya, they are... real.

Time to just let you be wrong again.

Have a good day.

Time for another thread lock...

Why does the thread have to be locked becuase I refuse to debate with you on a topic you wont stick to?

It's a bit insulting to compare a real life financial institution that many people depend upon for sustenance to a Ponzi scheme that benefits only one person. I still can't believe that people think Ginko was in any remote way legitimate.

Well asside from the fact both companies suffered a loss of investor confidence and a run on the bank, they have nothing in common.

Pick anything from the rates of interest offered, to the types of investments made, to the level of bonding and there is really no commonality.

Personally I am of the opinion that neither should be bailed out. To do so incurs a high degree of moral hazzard. Bottom line, if companies know they will be bailed out any time they get into trouble, they will make unwise or speculative investments. History has shown this to be the case.

For a good perspective on the NR rescue go to:

http://www.economist.com/daily/news/displaystory.cfm?story_id=9826009

First of all folks calm down -

Having got that out the way.....

Northern Rock is not central to the UK economy and Ginko was not central to the SL economy but in both cases the potential failure risk caused mass panic. In SL I personally saw the queues on Ginko Island and other places, and in real life many of us within the UK saw similar on the TV/papers etc. Same thing.

The feeling on this thread is (by and large) you cannot afford to underwrite bad business/scams etc. Hence Linden (as the effective SL authority) has declined to assist Ginko (to date) in any meaningful way.

In RL the UK Gov has underwritten Northern Rock, and by doing so has deemed to offer the same unlimited support to all other UK banks. The potential cost, billions of pounds sterling.

Is it prudent to run a bank that is dependent on other banks lending it money to finance mortgage business, without due care to depositors, that is an unknown factor at present.

In Ginko's case it was dependent on deposits, there is very little or no interbank lending within SL, the deposits dried up and (due to factors) it failed.
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For those who say Ginko was a scam I would ask you to think about this one, is it good business to offer mass sub prime mortgages to credit impaired people AND package up the debt and sell it on as AAA rated corporate bonds......... -
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When you are a banker there is a fine line between being respected and loved by a community, or being hated. What is true in VR is also true in RL. There IS no difference.

As it happens, I THINK Linden Labs made the right decision, after all as in RL if they supported Ginko they would have to offer the same to all other "virtual" banks. We will more or less know in a year or so's time providing Linden and SL are here.

In RL the UK Gov has chosen the opposite. And if they are wrong it is me (and all other UK taxpayers that could face the fall out.

VR economies mirror RL there is no escaping that one

There are those that have been able to manage the value of the Linden economy in a way to create some sort of living off it. It's a bit insulting, likewise, to compare parts of it for which those truly have put forth hard work.