Funny Munny
This week proved that the Linden Dollar is just for pretend.
First the “World Stock Exchange” is robbed of L$3.2 Million which, while not a significant number from an economy-wide perspective, severely damaged confidence in the WSE. There was a cover-up, possibly with help from Zee Linden, which is pretty much the exact opposite of how exchanges are supposed to handle these things. Four IPOs de-listed themselves. That was hushed up too.
After that, Linden Lab banned gambling in Second Life entirely. Panic panic panic, and a flush of islands go up for sale in an already saturated land market.
A run on “Ginko Financial” followed. It’s one of the largest and most influential in-world banks. They couldn’t cover the withdrawals. From the sound of it, they may never be able to. Also, there are stories of conflict of interest, poor management, and a lack of any assets of any kind… and really poor public relations, yet again.
There’s also the fact that over the last few days there have been grid-wide problems that prevented anybody from spending anything.
Looking at the above charts, however, everything is just fine. All of these recent events caused a tiny little bump in the Linden Dollar market value, and that was it. So…? What am I missing here? Shouldn’t the value of the L$ tank?
Insert “OMG THE L$ IS A LIE” rant here, but there’s more. Things are not what they seem.
This chart on the right appeared in the Herald today. It comes courtesy of Reuters who generate the charts live, although unfortunately they aren’t offering an archive data service. From the 26th to the 30th spending was cut in half… scandalous. More rant fodder, but, wait. Hang on a second.
Compare the chart on the right to the blue bars for “Volume” above. The last four bars there coincide with the chart on the right. It does that every week.
I said above “This week proved that the Linden Dollar is just for pretend” because, on the surface, everything went to hell and yet the Linden Dollar didn’t move. That makes it look like the economy is a total lie and the value of the Linden Dollar is completely arbitrarily manipulated by Linden Lab. This might be one of those things, however, that only seems obvious because the conclusion is so easy to jump to and makes the reader feel smart.
You could argue the exact opposite. If you look at the Volume numbers, the actual amount of money being traded back and forth on the LindeX every day, the fluctuations are consistent, stable, and show confidence in the economy. If anything this data shows that the WSE, Ginko, and Casinos have nothing to do with the big picture at all and are mere drops in the bucket. Even stability issues barely affect the Second Life economy at this point; after all, there have always been stability issues!
You know what? Nobody knows anything about this economy. How can we know which is the truth? We only know what Linden Lab tells us, and the rumor is that Zee Linden is the type to hide stuff. That might be a lie, and it might be true, but we don’t know.
The difficulty, of course, is that reporters are paid to report things, not shrug their shoulders and say: “this might be news, or it might not”. We need stories. So you gather up the data, pick a side, and lay it out there. People will agree, they’ll disagree, and regardless they’ll read your stuff in the future. Being inconclusive about anything is a career-killer, even when there’s no solid conclusion that can be drawn.
Hmmm… I’m a small-time land owner (wee part of a sim just for fun), a low-ish level consumer (5 – 10kL$ a month), I don’t gamble and I don’t sell things, so on the face of it the economy crashing wouldn’t seem to be a huge problem to me.
But if it does, where does that leave the world itself? If the land prices crash causing the people who directly contribute to the Linden coffers to vanish, will we see a great shrinking in the world as Linden scale back their support? Will there be hyperinflation making even the most basic of event too expensive to run? Will Linden have to rethink their charging policy just to make it all pay?
Being dumb in such matters, I’ve no idea but I guess without the fiddling that may (or may not) go on we’d be in danger of finding out sooner rather than later. Maybe this young world is not yet ready for an open and transparent economy.
Very good summary, Caleb. They do artificially keep the Linden stable by selling Lindens in larger or smaller amounts, of course.
The question is, do they put in more sinks, i.e. denominate land in Lindens instead of dollars when they can? Don’t see much of that any more!
And where can we look for the real story?
Well, I think these markers, if people could get really good at reading them AND making flow charts to follow them (if someone could get obsessive enough to bother):
o premium accounts
o number of people with land for sale
o number of people who spent more than $1 that month
o log-ons for last 30 days
o volume — yes this is key — but I’ll be damned if I can make sense of it. Yes, it is lower for these “crash dates” but then…it goes up and down so much you cannot make sense of it
o dates of severe outages
If we can show that more and more people are putting their land up for sale though prices are dropping (so that may be a signal of unhappiness); if less and less are buying stuff; if less sign up; if less buy premiums; etc. maybe we can get some discontent quotient.