Ginko vis-a-vis Northern Rock

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.

Northern Rock was a bank that made some bad investments. Ginko was a ponzi scheme that was never designed to pay back its "investors".

------------------------------------

In hindsight would it have been better for Linden to bite the bullet and bail out Ginko to avoid loss of confidence within the SL economy?



Interesting times, views anyone?

Northern Rock was a bank that made some bad investments. Ginko was a ponzi scheme that was never designed to pay back its "investors".

VR economies mirror RL there is no escaping that one

Too bad Carl didn't lose a dime... as you would know if you read any of his previous posts on the subject.

So what? Are we supposed to be pleased that fellow residents got ganked? Ok Dzonatas. I'm pleased you got ganked.

Either way - I was just stopping you from talking out of your ass again about something you knew nothing about.

No. What were supposed to do is be so upset they lost money well encourage them to start up a new Ponzi to recoup their losses.

Ah.... actually, I think it's to encourage us to throw good money after bad and bail them out! *smacks forehead* how silly of me.

Same thing.

Same, if you were actually involved to know. You already stated you haven't suffered any loss. You claim Carl hasn't suffered any. Only people I see here complaining about Ginko is those that are disinterested.

Au contraire.

I'm a land baron, with hundreds of residents. Many who only keep a week or less of time on their parcel meters, to (understandably) limit their liability in the event of trouble. So guess what happened when Ginko collapsed.

This isn't purely theoretical for me, in the *least*.

I don't talk about what private arrangements I've made, but I tell you what, no 'banker' or 'investment' guy is ever going to be welcome in the Caledon sims.

Yes, but you said a new ponzi... I mean giving our money to Nick.

You claim that you are an interested person somehow because of the residents on your land had to make private arrangements with you.

You did not claim if you actually held any GPB or made deposits. The ones that do would be an interested person.

Nevertheless, you bring up an excellent point of how this economy takes its turns at each other. I tried to point out exactly what you said but maybe in a different way. You are indirectly affected.

You aren't the only one indirectly affected.

read his post again.

Hes renters used Ginko - and this he had to make private araingements when they could get to their money.

No shit, Colette.

Read my post again

They say that virtual reality emulates real life and in the last few days there is now a real life direct comparison between SL and RL banks via Northern Rock.

Northern Rock (epic code NRK) is a major UK clearing bank, although NOT in the big 4/5 that are central to the UK/US economy. NRK's business model was to source funding via third party securitisation to fund longer-term UK house mortgages. More than 75% of funds to source new mortgages were dependent on this business model, only around 25% or less was funded by conventional UK deposits from retail clients.

This BB post is not intended as financial advice BUT it would appear NRK is essentially broke, do a Google on it for background news but in the last few days it has been bailed out by the UK government as a real life bank run started following an emergency injection of funds by the Bank of England.

The core reason why it is technically insolvent (without BOE funding) is the CDO/CLO issues the started in the USA on sub prime mortgages. In short banks will not currently lend to one another.

There is a lot of uncertainty over NRK's actual assets - in short it is difficult to value

-------------------------------

Ginko as we now know suffered a similar problem after Linden Labs banned gambling. It now appears a core part of Ginko's business model was based on revenue from gaming thus sustaining the interest rate paid to deposit holders.

When that was removed Ginko defaulted.

Unlike the UK Government and the Bank of England with NRK, Linden Labs allowed Ginko to fail.

Currently within SL there now appears to be a depression on land values. This in part may be attributed to the fall out after Ginko. This may impact on Linden via a suspension of actions on new servers and people abandoning land

------------------------------------

In hindsight would it have been better for Linden to bite the bullet and bail out Ginko to avoid loss of confidence within the SL economy?

Clearly (and at present) the real life markets have rebounded following on from the UK Governments actions re NRK and other banks. Time will tell if this was the correct action to take.

SL (as I said earlier) is suffering financial fall out

Finally Ginko was not deemed to be central to the SL general economy AND NRK is not deemed to be central to the UK/US economy.

Interesting times, views anyone?

Biggest difference between the two is that Northern rock has a sustainable INCOME. All those mortgages and loans which caused the problem by overstretching the banks capital are paying in money, monthly, at a rate higher than the banks overheads and thus if people would stop taking money out the bank would probably recover without a problem.

The capital injection from the BoE is essentially I'm guessing because they know this and thus just want to allow investors to withdraw if they wish but ultimatly if you do not withdraw now currently I don't believe there are any indications you won't be able to in the future.

Ginko is on the other hand using a flawed business model where all the cash it get's was savings. If your income from savings dries up your in trouble, you don't have any contractually guaranteed income (unlike a loan/mortgage) as such Ginko was doomed to failure.

The longer-term effects of Ginkos default affected other parts of the SL economy, in the same way that Northern Rocks problems will impact on the UK/US markets.

One difference I guess is that LL wants land prices to fall whereas no-one in the UK wants a house pricing crash.