Would like to get a list of possible reasons for recent drop. Economics is a science and so there has to be a reasonable explanation for this short-term fluctuation. I don't want people to reply with dumb predictions or talking about the L falling to its real long-term value because those don't explain anything(if it's truly falling to its real long-term value then what is the explanation for a stable L in the past several weeks and then a sudden decrease now?)
So here are some of the possible reasons I came up with, feel free to provide valid ones of your own:
1. Christmas shopping - ppl are spending more and need real cash and therefore are selling more L then usual for their higher demand for real cash.
2. Recent negative Ginko publicity (2 parts) - A. A bunch of ppl pulled their money out of Ginko and are now selling it causing a larger supply of L then demand. B. Fewer people are investing in Ginko so their is less demand for L which produces the same effect as A. where supply has increased more then demand.
These are the 2 possible main reasons I can think of why the L has seen a sudden decrease in value.
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Possible reasons for recent L drop? |
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JIMBO Juergens
Registered User
Join date: 10 Jul 2005
Posts: 33
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11-30-2005 23:47
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
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11-30-2005 23:50
Yeah, I've heard a bunch of people are pulling out of Ginko.
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Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :
"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches." |
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
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11-30-2005 23:51
2. Recent negative Ginko publicity (2 parts) - A. A bunch of ppl pulled their money out of Ginko and are now selling it causing a larger supply of L then demand. This sounds reasonable. _____________________
Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :
"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches." |
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Aaron Levy
Medicated Lately?
Join date: 3 Jun 2004
Posts: 2,147
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12-01-2005 00:22
Actually, #1 is more reasonable than #2, despite what blaze says.
I haven't cashed out yet, but about 80-90% of my family's Christmas gift money this year is coming from my SL earnings. I would imagine there are quite a few people who are doing the same. _____________________
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Kavai Onizuka
Spudzuka Properties
Join date: 23 May 2004
Posts: 452
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12-01-2005 00:34
Why is reason 2 even valid? I mean if people are withdrawing from Ginko, Ginko will still need to buy L$ to cover withdrawls if their current cash reserve depletes.
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blaze Spinnaker
1/2 Serious
Join date: 12 Aug 2004
Posts: 5,898
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12-01-2005 00:54
Ginko has said they don't cover withdraws. They just wait for new accounts to deposit.
_____________________
Taken from The last paragraph on pg. 16 of Cory Ondrejka's paper "Changing Realities: User Creation, Communication, and Innovation in Digital Worlds :
"User-created content takes the idea of leveraging player opinions a step further by allowing them to effectively prototype new ideas and features. Developers can then measure which new concepts most improve the products and incorporate them into the game in future patches." |
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JIMBO Juergens
Registered User
Join date: 10 Jul 2005
Posts: 33
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12-01-2005 01:01
Why is reason 2 even valid? I mean if people are withdrawing from Ginko, Ginko will still need to buy L$ to cover withdrawls if their current cash reserve depletes. Could be valid if: 1. Ginko sells off ingame assets to people who have excess L lying around to fund the reserve so no L is being bought. 2. Though Ginko took a hit, it still gets deposits from people who trust them so instead of only leaving 10% of those deposits in reserve and the rest they invest, they could be taking all of the current deposits and putting them into the reserve. Also if they do make a profit, instead of reinvesting those profits, they can go into the reserve. So no need to buy L, but you did provide a good point so maybe only point 1 properly explains the drop. |
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Shaun Altman
Fund Manager
Join date: 11 Dec 2004
Posts: 1,011
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12-01-2005 05:14
Would like to get a list of possible reasons for recent drop. Economics is a science and so there has to be a reasonable explanation for this short-term fluctuation. I don't want people to reply with dumb predictions or talking about the L falling to its real long-term value because those don't explain anything I was really looking forward to this thread until I read the third sentance. You want to discuss possible reasons for the L$ value decline, but only SOME reasons?  What good is an economic discussion if we're going to put on blinders like this?(if it's truly falling to its real long-term value then what is the explanation for a stable L in the past several weeks and then a sudden decrease now?) I think that one good reason may be the L$ selling limits. LL is now upping more peoples' limits, and thus more people are now able to put LOTS of L$ on the market rather than just a little L$. Combine this with a lack of ability to post a buy order and I think we may have.. well.. a long slide right to the bottom. In other words, LL may be artificially "propping up" the market by limiting the amount of L$ that can realistically appear in a day to somewhere around their avg. daily volume. It would be interesting to see what would happen if selling limits were removed entirely. Of course, this doesn't take into account other factors, like the possible impact of the recent wave-making telehub announcements. _____________________
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Forseti Svarog
ESC
Join date: 2 Nov 2004
Posts: 1,730
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12-01-2005 05:32
Economics is a science This made me laugh. Economics is a mix of fundamental mechanisms, yes, but also HUGE assumptions about human behavior.... which is notoriously irrational and unpredictable. I suppose you could point to theoretical physics and say that it's filled with huge assumptions and very smart people taking opposite stands as well, but anyway my tangent is over  _____________________
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Kris Ritter
paradoxical embolism
Join date: 31 Oct 2003
Posts: 6,627
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12-01-2005 05:33
I din do it!
>.> <.< |
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Shaun Altman
Fund Manager
Join date: 11 Dec 2004
Posts: 1,011
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12-01-2005 05:43
This made me laugh. Economics is a mix of fundamental mechanisms, yes, but also HUGE assumptions about human behavior.... which is notoriously irrational and unpredictable. I suppose you could point to theoretical physics and say that it's filled with huge assumptions and very smart people taking opposite stands as well, but anyway my tangent is over Just imagine the effects that time travel could have on the L$ value! _____________________
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Anshe Chung
Business Girl
Join date: 22 Mar 2004
Posts: 1,615
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12-01-2005 05:44
The reason is IGE stopping to buy L$. They have been hording heavily again.
If many more people withdraw money from Ginko than people deposit there, it would force Ginko to buy L$ at LindeX or declare insolvency. Neither would lead to L$ loose value, rather the opposite. _____________________
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Hiro Queso
503less
Join date: 23 Feb 2005
Posts: 2,753
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12-01-2005 05:52
The reason is IGE stopping to buy L$. They have been hording heavily again. If many more people withdraw money from Ginko than people deposit there, it would force Ginko to buy L$ at LindeX or declare insolvency. Neither would lead to L$ loose value, rather the opposite. Well it's possible Ginko could be buying from IGE to fund the Ginko account holders withdrawals, and the account holders are then listing in Lindex. _____________________
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