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GPszith
Gallente Gypsy Productions
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Posted - 2008.09.30 03:04:00 -
[1]
Hey all,
Just for a fun discussion my thoughts are:
1. It would be a little like losing the margin skill and EVE bank as well as an end of IPOs.
2. Only the most famous players (best credit rating) would be able to launch bonds or other IPO projects.
3. Is this a little like people starting bad IPOs and then selling them to EVE bank?
Other thoughts? What have I missed? -------------------------------------------------- -GPszith
wtb a sig |
Frenden Dax
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Posted - 2008.09.30 05:10:00 -
[2]
Edited by: Frenden Dax on 30/09/2008 05:10:28 Interesting idea to compare the two.
As I see it, all the collapses are equivalent to a bunch of perceived scams going down simultaneously, with the shares being bought for cheap by speculators. All the original shareholders are pretty much wiped out, and the speculators (read: US Gov, JP Morgan Chase, etc) are making bank if the IPOs (failed banks/firms/whatever) survive. |
Kazuo Ishiguro
House of Marbles Zzz
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Posted - 2008.09.30 08:49:00 -
[3]
We don't yet have anything like the amount of lending that led to the current financial crisis. With the total lack of consequences in EVE for defaulting, it's hard to imagine a situation where the vast majority of pilots take out loans to finance their core purchases. |
Hexxx
Minmatar
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Posted - 2008.09.30 12:21:00 -
[4]
Originally by: GPszith Hey all,
Just for a fun discussion my thoughts are:
1. It would be a little like losing the margin skill and EVE bank as well as an end of IPOs.
2. Only the most famous players (best credit rating) would be able to launch bonds or other IPO projects.
3. Is this a little like people starting bad IPOs and then selling them to EVE bank?
Other thoughts? What have I missed?
The nearest analog would be the removal of the margin skill in trade.
A word about what's happening in the RL markets. A few years ago Banks decided to securitize their loans (mortgages) and sell them off. This removed the risk from the Bank and passed it to the investor.
Mortgages were seen as very safe at that point (who would ever want to foreclose on their home) and since home values were appreciating rapidly, people could always sell for a profit if they really had to.
Once the foreclosures started happening it was a double whammy; 1) house values began to correct (house values were the result of a Bubble), plummeting and preventing people from simply selling their home as they did in the past 2) investors realized that what they thought was a low-risk, good return security....maybe wasn't. further; they had no idea how to value these collatorized debt objects (CDO's)
The housing issue is the root of the problem, linking loans to securities with unknown risk. Banks sold these things to EVERYONE. To make matters worse, now Banks are extremely sensitive to being well capitalized and have started to stop lending to one another. This has frozen credit markets, preventing NEW buyers from buying homes and taking them off the old home owners.
There is one word to describe the situation;
FUBAR
Chairman of the Board of Directors | www.eve-bank.net
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DayVV4lkEr
Liga Freier Terraner Veritas Immortalis
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Posted - 2008.09.30 12:24:00 -
[5]
Edited by: DayVV4lkEr on 30/09/2008 12:28:20
There is no state in EVE that pumps 700b into your bank, if you are done in eve then you are done.
Pretty good that it's pretty unlikly that something like this can happen in EVE:
1. To less Players 2. There are no Jobs that need protection if a Bank fails then that are only few Players that loose money.
Originally by: Hexxx
Originally by: GPszith
Hey all, To make matters worse, now Banks are extremely sensitive to being well capitalized and have started to stop lending to one another. This has frozen credit markets, preventing NEW buyers from buying homes and taking them off the old home owners.
That is not totaly true. There exists a Bank in Germany that lend an american Bank 320 m $ altough everyone knew that american bank was/is/will be done.
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Confuzer
Volition Cult The Volition Cult
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Posted - 2008.09.30 13:01:00 -
[6]
I imagine, that the GTC prices would rise alot ----------------- Destiny is not a matter of chance. It is a matter of choice. It's not a thing to be waited for - it is a thing to be achieved. |
Lutien
Caldari z-inc.
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Posted - 2008.09.30 14:03:00 -
[7]
First of all bank in rl can not be conpared to bank like e bank.
Ebank can only loan out the isk that they realy have, a bank in rl can borrow out 12x that much. That right for every dollar/euro/yen ect. you have in your bank account the bank can loan out 12 dollars. This works out fine if people can pay back there loans. Witch means banks in rl can create money out of thin air, ebank can not (unless they have a army of marco's harvesting there isk)
Ipo's can be compared with rl ipo since in eve you have no clue what will happen with your isk, in rl this seams to be the same. There is in the world of eve no overside of ipo's by any inpartial people again a striking similarty with the real world.
The key word in both world is trust and in both world that is absent.
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Lutien
Caldari z-inc.
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Posted - 2008.09.30 14:27:00 -
[8]
Edited by: Lutien on 30/09/2008 14:29:58 But to anwser your questions
1. losing the margin skill would work as a isk sink for the heavy traders, you will sea a lot less market speculation and trade. When ebank fails to bad lot of people will lose there isk (the def/goverment will not bail them out). But will that end all ipo's NO, simply because there is to much isk in the world of eve so you can alway's find a friend or corp buddy ect. to invest.
2. only the most famous players would be able to lauch bonds? well first the most famous people in what? The most succesfull ipo's i saw where the one's who gave the most details: investment details, turn over, profit margin ect.
3. well no, it's more like ebank will buy all ipo's in eve some of them are bad or even scam some of the are not so good and need to be liqudated most of them are sound investment and will make a decent proffit. Same as in the usa some of the loans will be bad and need to be liqudated some of the will continu to pay the loan. The trick in both cases would be seperating the good from the bad.
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Tasko Pal
Heron Corporation
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Posted - 2008.09.30 15:23:00 -
[9]
My take is that it takes considerable infrastructure and delusion to build up the degree of trust and leverage present in real life markets. What I think happened is that the infrastructure in the developed world, just like a poorly repaired bridge or dam, has started to fall apart due to inadequate maintenance and poorly placed expectations.
The infrastructure in Eve is vastly different. Yes, it is a low trust environment, though it has extremely reliable and low cost markets (contracts and the standard market). That means leverage is hard to come by, but one can trade reliably. Also, it is a very productive environment, due in part to the ease of training for the various manufacturable products and the ease of raising funds. There simply isn't the same need for capital as in a real world economy.
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Iosue
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Posted - 2008.09.30 16:14:00 -
[10]
Edited by: Iosue on 30/09/2008 16:24:37 Just thought IĘd chime in with my .02 isk:
Originally by: Hexxx A word about what's happening in the RL markets. A few years ago Banks decided to securitize their loans (mortgages) and sell them off. This removed the risk from the Bank and passed it to the investor.
Firstly, I think a distinction should be made here; investment banks were the ones securitizing these loans, not traditional lending institutions. While traditional banks, mortgage companies, credit unions, etc. can originate and sell-off loan portfolios, it falls to the investment banks to actually turn those into securities. However, while the risk was transferred to investors, the story does not end there.
In order to protect themselves from risk associated with these sub-prime securities, investors (especially large institutional investors such as hedge funds, investment banks, etc.) purchased credit derivatives (default swaps) which generally act as an insurance against non-performing debts/investments. The institutions offering these derivatives were making a lot of $$ by guaranteeing payments for debts/investments but not properly accruing for potential losses that could have been incurred. The risk assessments and underwriting standards used by these institutions were meant to be competitive, and in doing so, overlooked many possible scenarios which should have been addressed (including housing bubble burst and recession). Of course, addressing these issues would have resulted in higher premiums and a less competitive bid. In order to further protect themselves, derivative offering institutions purchased credit derivatives from other institutions which were also not properly accruing loss reserves.
Finally we have the current subprime mortgage crisis hit, (which by itself is cause for concern, but not global economic meltdown). However, because all this risk has been essentially passed on numerous times between any number of financial companies thru securities and derivatives, the impact reaches far beyond the institutions and investors actually holding the notes. When $700B is being claimed in defaulted obligations and the credit derivative companies offering protection have only been accruing $5B in losses a piece (due to shoddy risk assessments meant to be competitive at the time of underwriting), they in-turn must claim on their derivates and potentially prepare for bankruptcy. This is why AIG ultimately failed and why the US Gov so quickly intervened. With the global derivatives market estimated at being around $62 TRILLION, the domino effect caused by the current sub-prime crisis has the ability to affect the global economy on a massive scale.
Edited: added paragraphs
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Iosue
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Posted - 2008.09.30 16:53:00 -
[11]
Originally by: Hexxx The housing issue is the root of the problem, linking loans to securities with unknown risk. Banks sold these things to EVERYONE. To make matters worse, now Banks are extremely sensitive to being well capitalized and have started to stop lending to one another. This has frozen credit markets, preventing NEW buyers from buying homes and taking them off the old home owners.
There is one word to describe the situation;
FUBAR
I agree that housing is a big problem, the catalyst of our current situation. However, as detailed in my previous post, the reason our current situation may affect the rest of the world and our own nation to a larger degree than it should is a different matter. We have little regulation on credit derivatives unlike insurance, even though they act as insurance-like products. Having stricter regulation on these contracts, especially regarding loss reserves and underwriting standards would help reduce risk they pose to the global economy and might prevent us from having to bail-out companies in the first place. |
Ray McCormack
hirr
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Posted - 2008.09.30 16:57:00 -
[12]
What problems?
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Athre
Minmatar The Higher Standard
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Posted - 2008.09.30 22:56:00 -
[13]
Originally by: Ray McCormack What problems?
USA Banking/Dow Jones nosedive
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c4 t
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Posted - 2008.10.01 01:03:00 -
[14]
Edited by: c4 t on 01/10/2008 01:03:32 exponentially increasing mission running isk payout while lowering tax, lowering cost of necessary npc goods and uhh, well whatever other isk sinks im not thinking of.
mostly harmless |
John Holt
Caldari ANZAC ALLIANCE Southern Cross Alliance
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Posted - 2008.10.01 02:49:00 -
[15]
Edited by: John Holt on 01/10/2008 02:55:27
Originally by: GPszith Hey all,
Just for a fun discussion my thoughts are:
1. It would be a little like losing the margin skill and EVE bank as well as an end of IPOs.
2. Only the most famous players (best credit rating) would be able to launch bonds or other IPO projects.
3. Is this a little like people starting bad IPOs and then selling them to EVE bank?
Other thoughts? What have I missed?
No, actually its like several people starting banks and loaning to everyone and his brother recklessly. Then, when the loans aren't paid back, CCP decides to bail them out by taxing all other players and giving the isk to them. They in turn would make more bad loans and the system would continue until all players are taxed at 100%. At that point the game ends in socialism--no one owns anything or can get a loan.
John Holt My Personal Eve Site
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Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.10.01 04:10:00 -
[16]
Originally by: Athre
Originally by: Ray McCormack What problems?
USA Banking/Dow Jones nosedive
pffftt That wasnt a problem that was a buying opportunity :) --
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Ray McCormack
hirr
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Posted - 2008.10.01 05:14:00 -
[17]
Originally by: Treelox pffftt That wasnt a problem that was a buying opportunity :)
Tree, I can't believe it. You stole my line.
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Shadarle
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Posted - 2008.10.01 05:37:00 -
[18]
Margin Trading skill is really over-rated. Any good trader should be able to attain enough money to make it irrelevant within a few months anyhow.
I've never once used it nor needed it and while it may help the poor traders, good traders shouldn't be poor for long enough for it to have any major impact on the markets.
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Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.10.01 06:26:00 -
[19]
Originally by: Ray McCormack
Originally by: Treelox pffftt That wasnt a problem that was a buying opportunity :)
Tree, I can't believe it. You stole my line.
Sorry Ray, I was just expressing what I did in real life. There are days where I seriously consider become a Day Trader in RL. Yesterday was good, although I plan on holding most of my new bonds/stocks/etfs for the long haul. --
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Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.10.01 06:27:00 -
[20]
Originally by: Shadarle Margin Trading skill is really over-rated. Any good trader should be able to attain enough money to make it irrelevant within a few months anyhow.
I've never once used it nor needed it and while it may help the poor traders, good traders shouldn't be poor for long enough for it to have any major impact on the markets.
I trained it long ago, and most times these days I wish I could turn it off. --
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Rho'varo
Minmatar Diversified Operational Services
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Posted - 2008.10.01 08:30:00 -
[21]
Originally by: Treelox I trained it long ago, and most times these days I wish I could turn it off.
There may be some legacy technical problem standing in the way of making margin trading optional (e.g., market escrow not recorded per order, which also leads to negative ISK to cover amounts?), but it does seems silly that traders are required to trade on margin after learning the skill.
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c4 t
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Posted - 2008.10.01 17:48:00 -
[22]
Originally by: Treelox
Originally by: Shadarle Margin Trading skill is really over-rated. Any good trader should be able to attain enough money to make it irrelevant within a few months anyhow.
I've never once used it nor needed it and while it may help the poor traders, good traders shouldn't be poor for long enough for it to have any major impact on the markets.
I trained it long ago, and most times these days I wish I could turn it off.
thanks, im not going to bother training this skill now as i can see how it could become very annoying.
mostly harmless |
Treelox
Amarr Market Jihadist Revolutionary Party
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Posted - 2008.10.01 18:10:00 -
[23]
Originally by: c4 t
Originally by: Treelox
Originally by: Shadarle Margin Trading skill is really over-rated. Any good trader should be able to attain enough money to make it irrelevant within a few months anyhow.
I've never once used it nor needed it and while it may help the poor traders, good traders shouldn't be poor for long enough for it to have any major impact on the markets.
I trained it long ago, and most times these days I wish I could turn it off.
thanks, im not going to bother training this skill now as i can see how it could become very annoying.
Dont get me wrong there are times when it is a GREAT skill to have trained up, but for me most of the time it is more a burden than it is worth.
I have yet to ever have the problem where I run out of isk to cover my margin, but I can see how this can be a problem for those that are not as liquid as I am prone to be.
Like I mentioned I wish it was something I could turn on and off at the order screen, just like the tick box for corp wallet, but I am not going to bother the devs with this since there are about a million other things I would like them to address first. --
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Athre
Minmatar The Higher Standard
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Posted - 2008.10.01 22:21:00 -
[24]
Originally by: Treelox
Originally by: Ray McCormack
Originally by: Treelox pffftt That wasnt a problem that was a buying opportunity :)
Tree, I can't believe it. You stole my line.
Sorry Ray, I was just expressing what I did in real life. There are days where I seriously consider become a Day Trader in RL. Yesterday was good, although I plan on holding most of my new bonds/stocks/etfs for the long haul.
Actually I did say this to someone - "Isnt it time to BUY when they are low?" yes yes it is.
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Jinx Barker
GFB Scientific
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Posted - 2008.10.01 23:20:00 -
[25]
The same way the problems in Earth Financial Markets would affect Alpha Centauri Civilization.
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Tasko Pal
Heron Corporation
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Posted - 2008.10.01 23:38:00 -
[26]
I suppose I must deviate. I find the margin trading skill very useful. Meanwhile I haven't bothered to pick up retail 5 yet. Always have plenty of spare orders and if I get margin called, it's only because I made some great trades.
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Karanth
Gallente Eve's Brothers of Destiny FOUNDATI0N
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Posted - 2008.10.02 14:56:00 -
[27]
I wish I had a shop of the Iraqi Information Minister saying, "There are no problems with our stock markets!" or something.
1. Not trained Margin Trading, so can't say how I'd be affected by its removal, but it would most likely cancel itself out.
2. Unless someone respected vouches for them, it's basically like that now.
3. If EBank was the main source of financial stability throughout the cluster, it would be. EBank fails, it sucks for anyone directly involved, but I doubt it would cascade outwards ,since, IIRC, IPO failures are the results of implosions, not explosions.
---
Wheel of Whineage |
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