Second Life bank crash foretold financial crisis | Hacker News Reader

Second Life bank crash foretold financial crisis

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24 pointstlrobinson21 comments

What isn't wrong with this logic? Any scam calling itself a bank that went badly now parallels real life?

There is no parallel whatsoever; the crisis and these scams have no commonality.

Agreed. From the sound of it, this Ginko "bank" was just a poorly disguised Ponzi scheme. This type of scam is already regulated in the real world, for the good reason that it always blows up if allowed.

The article is somewhat interesting but the points it makes are all dangerously, fatally flawed.

Poorly disguised Ponzi scheme... That reminds me of another certain banking system...

Iceland?

I was thinking fractional reserve banking in general, but that is certainly true.

I asked a few people in Second Life how Ginko worked about a year ago and no one had any idea. Between that and the fact that there is no kind of deposit insurance mechanism, I wasn't going to touch one of those terminals.

When the cry is "less regulation" at some point you end up with zero regulation. I think looking at eve-online is a great example of zero regulation at work. There are high returns on investment but high risk and the lack of trusted institutions slows the economy.

Hindsight is always 20/20... Their point would have been greatly enhanced had they written this same article BEFORE the financial crisis.

Yes, but then someone would go and claim that it'd never happen in real life because "it's just a game."

True... and then reality would prove them wrong. Maybe they would listen next time. This way, nobody will.

Some talking head complaining, "But they don't have rules or regulations... It's a completely different scenario!"

Heh. I remember, four months ago, looking at the GM financials, and telling my cofounder; you know, this Volt business, it's all moot. It doesn't even look like they'll make it.

I definitely didn't put my money where mouth was on that one...

This was a regular old bank run, nothing new here. There was a financial collapse in the game and in real life, but the parallels seem to end there.

Peter Schiff was actually forecasting the whole thing since 2006: http://www.youtube.com/watch?v=2I0QN-FYkpw

The really scary part is when you find his current predictions for the next few years: http://www.youtube.com/watch?v=pGHODRNJqRo

I'm seriously worried now.

His podcast is even scarier:

http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcas...

His predictions are so extreme I have a hard time taking it seriously. But that's the exact same thing that happened to him 1-2 years ago...

Is it a case of a broken clock etc... or someone who always predicts downturns will eventually be right?

Hi seems pretty sensible in that other clip though. The US has to make and export "stuff" so that "other stuff" can be consumed from the rest of the world.

For me it's a case of "we've discussed this stuff among friends, but housing kept going up so what do we know?" and then finding out some serious guy has the same opinion and we were right. I guess I could be a broken clock too. :)

All the stuff on the old video is fundamental economics stuff. It was also a heresy in that no one dared to think about it, much less talk. It makes sense and it did make sense to me back then. Of course I was also doubting my perception because everyone was like "Eehaw! Party!" for a few years.

Listen to the last video - what he says is outrageous. He is not talking about recession, he talks about the end of the American domaination by way of overspending. It's heresy of unimaginable magnitude. It also makes a lot sense. It's truly frightening.

Well I just assume I have no idea what I am talking about or what is going on. In the past that has proved to be true.

Yes it kinda is heresy - but he says you have to make stuff - which I think is (long term) really an optimistic thing to say. You can tell he really wants the US to return to a country that makes stuff, that produces things that make it wealthy, not meta-stuff (which I guess it is now). He specifically mentions manufacturing.

Someone once wrote a book on this sort of thing: http://en.wikipedia.org/wiki/The_Rise_and_Fall_of_the_Great_...

Can you summarize?

submarine story?

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