Subprime Mortgage Crisis Hits Second Life

Netizens of Second Life had a real loss of US$ 750.000,00
when a virtual investment bank, Ginko Financial, filed bankruptcy in August 2007. Ginko Financial offered a 40% annual interest rate to its investors.

In Second Life, there are plenty of investment banks offering hyper-real interest rates, much higher than Brazil and Turkey in the real world. Since January 8^th, Linden Lab has prohibited virtual financial institutions to offer interest rates not compatible with their asset capability, be that in Linden Dollars or in any real currencies.

It is a known fact that Linden Dollars can be converted into US$ Dollars and Euro. This very fact makes Second Life’s virtual economy as real as the New York Stock Exchange.

Money, be it virtual or real, is virtual anyway. It represents goods and services that the real economy has to offer, so that you will not be buying your next meal or car, in exchange for doing the dishes or trading your house for the car.

So, Second Life economy is something virtual of something already virtual.

Any virtual mechanism (money and financial institutions) that affects the real economy (goods and services) must be regulated in such a way that will not plunder the real economy. When virtual mechanisms (money) become more real than real economy itself, by selling virtual products (bonds and stocks), financial mishaps are certainly to occur, like the present subprime mortgage crisis and Second Life’s bankruptcies.

Brief and to the Point:

You do not need to participate in Second Life if you already own bonds and stocks; you are already in one virtual world.

Better stick to your basic social networking needs, in the real or the virtual world, for certainly you are not likely to lose all your retirement savings!!

Subprime Mortgage Crisis Hits Second Life