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Prokofy Neva

So the LindEx Guys?

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wherorangi wrote:

ps

Qie, you also mentioned earlier that if it was Supply Linden then LL could have stuffed 100M on the Lindex at 258 and just told us to suck it up

they can't really do this (the big 100M shove) as it would effectively block anyone from cashing for a time, and I think it would have made people really panic. Nobody could know for certain that LL wouldnt do it again

so I think that if I was Minister of the Exchequer I would have my minion doing it in 10M blocks, staggering it down over a period of days ( weeks preferably) 

I think just the opposite. If there were a new, public target set, anybody who wanted to sell could do so at the new target the moment it's announced, no worry, no fuss. They could even give guidance about future rates, in the fashion of the FOMC.

If it really is Supply stringing along the sellers now, it's just death by a thousand cuts, to no end. Not that they'd never screw-up like that, but it would be a screw-up.

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I agree on the main thing that you said, about making a announcement

if I was the Minister of the Exchequer, and required a devaluation to stimulate economic activity amongst my Sovereign's citizens then I would have announced it as a benefit for them

However, if the benefits are reserved only my Sovereign at the expense of the citizens, at my Sovereign's request, then I probably be a bit sneaky about it. Or I might get my head chopped off (:

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Qie Niangao wrote:


I don't know if there's a way they could get what I'd call "significant" income from dumping L$s at the standard buying volume -- and last I checked, volumes have been at or below average through this whole incident. Again, though, even if they do, it's a short term thing that would mean their regular trickle of Supply-originated L$ sales would be stopped dead for months or years, the market consumed by all the regular L$ sales that would be displaced by Supply's one-time sales.

Right! I never said it was a good plan. To me, it looks like LL needs cash now, or looking to supplement their grandfathering, and using the Lindex to do that. Long term, I agree it is a terrible strategy, that can only hurt their reputation and prospects for the future. I'll certainly remember this, and have much less trust in the company. Why would I even be excited about Sansar if I know that this is how the companies thinks it can create wealth for itself, by taking from others?

Creating wealth should be easy for LL. It's mindboggling that they don't understand this. Then again tho, if all their advisors have a Keynesian attitude about the economy, what they are doing is expected Keynesian behavior.

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It definately is supply linden pushing down the price. Look at all the abandoned sell orders. Several hundred million L's worth of past by orders just sitting there. Nobody leaves that amount of money laying around.

 

Here's what is happening: supply linden continually adds big sell orders. These orders stack up until the amount is so big that people get tired of waiting and start selling at 1 linden per dollar more. When enough people start doing this, supply linden notices that his orders aren't selling anymore, so he starts stacking up more big orders at the new price. When enough people get tired of waiting for new price, they jump up again another linden to get their lindens sold. Which makes supply linden notice his orders aren't selling again so he joins the next price, stacking up big orders, again. 

This has been going on for the last several months at an ever accelerating pace. Eventually the price of lindens went down so quickly that traders started getting burned. The prices changed too quickly for them to get a profit from their orders. So it now looks like they have mostly stepped to the side. And the market has completely broken down these last 2 days. Price touched 282 yesterday and touched 291 today. 

I think supply linden has finally stopped putting so many massive sell orders in, because they simply get passed over. 

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Alternative explanation to all the wild conspiracy theories here:  The raise in fees for selling L$ could just have made the people who "flip" lindens ~ buying at 277+ and selling at 249 lose interest in playing that entire game, thus dumping their L$ onto the market full stop.  Eventually they'll run out and the market will settle out at a new ( probably very minorly lower ) price.  Even if it settles out at a 10-15% difference from it's old resting cost, it's easily offset by merchants by just raising our prices 10-15%  The whole entire point of the drop in Land Tier was to offset the costs with microtransaction money.

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Medhue, I understand where your deep, dark suspicions are coming from, but it doesn't make sense for Linden Lab to be behind this. Yes, we know they have Supply Linden. But Supply Linden does not make much cash dollars from selling Lindens, as far as we've been told about this system in the past (maybe it has changed).

Supply Linden either simply writes ("prints") new Linden dollars into the system to be sold, in order to keep the LindEx stable, and takes in those dollar payments OR he deletes X amount out of the money supply and sells them -- we don't know which. Is all selling conversion to dollars? Or is some of it burning? We just don't know.

For Linden to try to make real cash off these printed sales doesn't make sense precisely because it devalues their own currency too far, and then prevents cashouts or starts runs on the bank. Neither of these is in LL's interest. 

What they have made from the LindEx they tell us is barely enough to cover its costs -- remember it's a system that needs constantly maintenance, adjusting, and monitoring for fraud and money-laundering.

@polysail  You don't know any more than anyone else what the cause is. Perhaps its those who used to speculate having to stop but then, that was never some huge number of people anyway. The round trip in fees is such that the margins are small and few people with any significant amount of money would want to make it *this way*.  There's never been any sizeable number of people "playing the LindEx" because it's risky and not rewarding. You'd be better off playing the ruble. To be sure, there might be some wannabees who get a thrill out of crashing the currency of a "country" but then they've got their own currency to get out too, you know?

I'm also singularly unimpressed with your airy notion that you can just jack your Caspervendor up 10-15% to cover "whatever" and not worry. Content creators can do that. Land and home rentals agents cannot do that. It's a big rise when people already are in a buyer's market where many agents are making offerings below their tier costs just to get something in the door. It's not a solution for everyone and to take the attitude that you'll fix it for yourself and others be screwed ultimately will harm you, too. 

There is no "natural" level for the LindEx. It is an artificial machine created as a prop to a fantasy world, to make people feel as if they have a thousand dollars in their hand. Real dollar prices have never been an option for a lot of reasons. The real market (free exchange of GOM and other currency exchanges outside of SL that are now killed off) long ago set the rate of $4.00 to 1000 Lindens, which has fallen to $3.80 or even $3.70 for many years. This idea that it was "once" something lower and therefore "that's ok now" is false because it has never, ever dropped THIS FAST in the history of SL.

What's more likely than one conscious evil source behind the wire at the Lab, or one conscious evil source in world is a cascade of different factors. Only the Lindens can make a reasonable assessments of this, unfortunately.

So they need to be asked to explain this and be transparent.

They need to put in measures to stop it, whether it's shutting down supply Linden, making the deadline for the end of the buydown come sooner, halting Linden denominated auctions, whatever it is that they need to do. But act they must.

The idea that it is the buydown, for the 10th time, makes no sense. We're told Tyche has estimated 1000 buydown sims now grandfathered. That's $600,000 US in fees that supposedly "came out of inworld hording". I don't believe that's possible in so many cases, knowing the actuality of the land business. And even if true, that would have then happened ALREADY and had its effect ALREADY, which would be frankly not such a big deal -- $600,000 is large, but not a killer.

What we had yesterday was $1.2 million US dollars trying to leave -- I'm afraid to look today. That's no buydown, that's a stampede of small businesses or maybe even a few giant ones. Again, we don't know. And instead of speculating and blaming categories of residents for doing this wittingly or unwittingly, we need to demand that the one power that knows and can act -- Linden Lab - do something.

 

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polysail wrote:

Alternative explanation to all the wild conspiracy theories here:  
The raise in fees for selling L$
could just have made the people who "flip" lindens ~ buying at 277+ and selling at 249 lose interest in playing that entire game, thus dumping their L$ onto the market full stop.  Eventually they'll run out and the market will settle out at a new ( probably very minorly lower ) price.  Even if it settles out at a 10-15% difference from it's old resting cost, it's easily offset by merchants by just raising our prices 10-15%  The whole entire point of the drop in Land Tier was to offset the costs with microtransaction money.

There hasn't been a raising of fees for selling L$. The fee was raised for converting L$ into US$ - processing credit.

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Prokofy Neva wrote:

@polysail  You don't know any more than anyone else what the cause is.


Your first statement into this topic (in the other thread) was that it was due to Sansar. You stated it as a fact and you literally dismissed all other ideas. You're learning. Well done :)

Oh, and I wonder what you were looking for in my store yesterday lol

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Prokofy Neva wrote:

Medhue, I understand where your deep, dark suspicions are coming from, but it doesn't make sense for Linden Lab to be behind this. Yes, we know they have Supply Linden. But Supply Linden does not make much cash dollars from selling Lindens, as far as we've been told about this system in the past (maybe it has changed).

Supply Linden either simply writes ("prints") new Linden dollars into the system to be sold, in order to keep the LindEx stable, and takes in those dollar payments OR he deletes X amount out of the money supply and sells them -- we don't know which. Is all selling conversion to dollars? Or is some of it burning? We just don't know.

 

Well, the Federal Reserve devalues the dollar every single year. That is their whole goal. It doesn't make sense for the people, but it does for governments. It's Keynesian economics. Do you think that LL hired a Keynesian economist, or an economist of the Chicago school, or Austrian? My bet is that they are a Keynesian. If they are, then devaluing the linden makes total sense to them. To them, it will spark economic activity if people get more lindens to spend. In their minds, it works even better for LL as land is priced in dollars, not lindens. So, when they devalue the linden, LL still gets the same amount of dollars from people paying tiers.

Of course, none of this makes much sense if you're an economist of the Chicago school, and makes even less sense if you're an Austrian.

The way this all happened looks suspicious. It looks like someone is trying to drive the value down. So, why hasn't Supply Linden stepped in? The value of the linden has remained stable over almost a decade. We've really only seen anything like this maybe once or twice, and I don't remember it happening this quickly. The whole point of Supply Linden is to keep the market stable. Not intervening tells me that this is what LL wants. Enough said.

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Are you kidding? When supply linden sells some lindens, what do you think people buy them with? Fake dollars?

 

EVERY linden supply linden sells is 100% profit. They are created out of nothing and paid for with real money. 

 

As to devalueing the linden, we are seeing that happen right now. For the last several years, supply linden sold just enough lindens to keep up with the demand for them. Thats why you can see the straight line of the price graph. That is up until a few months ago when supply linden went bonkers and put in a **bleep**load of sell orders. We can know this is true because we can see the demand for lindens hasn't changed.

It looks to me that supply linden has vastly curtailed its amount of sell orders from sometime yesterday.. If he keeps this up, order will return to the lindex.

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Maybe it is end of Lindex?  Look Buy orders - how many millions there? 10 or so? I wonder - why. Maybe Lindens want to sell/buy lindens directly from merchants and set rate themselves? For this they dont need Linde[ and if Buyers activity is so low on Lindex - there is also no sense to have Lindex, if main buyer is LL.

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BTW it is funny to see how you can buy lindens on Lindex and sell them immediately with profit :matte-motes-big-grin-squint: I think it is exchange nonsense. Why I need to produce stuff, spend time and efforts if I can only trade on Lindex selling/buying?

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Uvas Umarov wrote:

 

As to devalueing the linden, we are seeing that happen right now. For the last several years, supply linden sold just enough lindens to keep up with the demand for them. Thats why you can see the straight line of the price graph. That is up until a few months ago when supply linden went bonkers and put in a **bleep**load of sell orders. We can know this is true because we can see the demand for lindens hasn't changed.

It looks to me that supply linden has vastly curtailed its amount of sell orders from sometime yesterday.. If he keeps this up, order will return to the lindex.

i just pick on this

it may not be Supply Linden either. A lot of the discussion (me included) has been about what would be the reasoning of LL if it was Supply Linden. That the reasoning might make some limited sense, doesn't mean it is true that it is Supply Linden

 it may be that some resident started this plunge off just by using a trading program to short the L$. Even just for fun, just to see if they could, and maybe make some few hundred dollars out of. Or even to  just end up with a stack of L$ so to have lots of inworld spending money. A stack they wouldn't have got otherwise

it doesn't take a lot of money to create a short, given how people react to abrupt changes on trading exchanges

it takes substantial money to make substantial money from a short. If the person is only in it for a few hundred dollars tho then not so much

in this case then if the Lindex has settled then it may simply be that the resident (or now possibly residents) have been warned off by Enforcer Linden

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But you see, it started moving last September, after years of stability. Then from February to late April it popped up to 251 - and that's when it started to look concerning. Not so much because 251 is a big increase but when anything pops up from a very steady base it is a signal that more might be coming. Traders call it 'break out' and it's a buy signal in the share market (or a sell signal if the sudden change is down) .

If this was resident manipulation then it would have come out of nowhere, but this didn't come out of nowhere. We've had a hint of it for 6 months, and then the big move.

When things change rapidly there are always opportunists looking at ways to gain out of it - hence the traders.

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[EDIT: I was typing this as Iren posted just above. This is kinda redundant now, but oh well.]

So I checked and the L$ was trading under 260 and I was all busy writing a post about how we're just waiting for the "froth" to get out of the market and the rate to return to whatever Supply actually intends for it to be now... and before I posted I thought I better check again, and saw this:



Why a limit sell order at 270, nine points higher than the next?

It's a piddling amount again... maybe started as a L$1 million order. Hanlon's Razer and all: probably just somebody who doesn't understand limit orders, throwing away... let's see, maybe US$150 with a poorly executed trade.

Stuff like this reminds us that it could take a while for the fools to part themselves from all their money and the market get back to normal.

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(:

theres always someone who turns up after everyone else has gone home and goes: hey!! where the party at ?!?

 

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Rya Nitely wrote:

from February to late April it popped up to 251 - and that's when it started to look concerning

...

If this was resident manipulation then it would have come out of nowhere, but this didn't come out of nowhere. We've had a hint of it for 6 months, and then the big move.

When things change rapidly there are always opportunists looking at ways to gain out of it - hence the traders.

yes

is very likely in April somebody (or somebodys) noticed the shift to 251 and went hmm! lets see if we can't make some money out of this

you know [how] the classic textbook short works, as do a lot of other people who are into this kinda stuff

eta: how

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There was a small (15k) sell order in yesterday at 277. I agree with Qie, that it's just the odd person not understanding how it works.

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wherorangi wrote:


yes

is very likely in April somebody (or somebodys) noticed the shift to 251 and went hmm! lets see if we can't make some money out of this

you know [how] the classic textbook short works, as do a lot of other people who are into this kinda stuff

eta: how

I just noticed there is a Currency Trader Limit with a maximum of $US1,280,000. I wonder how one qualifies for that. I didn't know that trading the LindeX was even accepted. I thought Supply Linden kept the L$10 spread to stop traders, since that negates any profit.

But if it is this easy to do then you'd expect it to happen again and again.  Perhaps these people have reached their monthly limit, and are waiting a month before going at it again.

 

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wherorangi wrote:


Uvas Umarov wrote:

 

As to devalueing the linden, we are seeing that happen right now. For the last several years, supply linden sold just enough lindens to keep up with the demand for them. Thats why you can see the straight line of the price graph. That is up until a few months ago when supply linden went bonkers and put in a **bleep**load of sell orders. We can know this is true because we can see the demand for lindens hasn't changed.

It looks to me that supply linden has vastly curtailed its amount of sell orders from sometime yesterday.. If he keeps this up, order will return to the lindex.

i just pick on this

it may not be Supply Linden either. A lot of the discussion (me included) has been about what would be the reasoning of LL if it was Supply Linden. That the reasoning might make some limited sense, doesn't mean it is true that it is Supply Linden

 it may be that some resident started this plunge off just by using a trading program to short the L$. Even just for fun, just to see if they could, and maybe make some few hundred dollars out of. Or even to  just end up with a stack of L$ so to have lots of inworld spending money. A stack they wouldn't have got otherwise

it doesn't take a lot of money to create a short, given how people react to abrupt changes on trading exchanges

it takes substantial money to make substantial money from a short. If the person is only in it for a few hundred dollars tho then not so much

in this case then if the Lindex has settled then it may simply be that the resident (or now possibly residents) have been warned off by Enforcer Linden

How in the world can you "short" lindens?  A short is a derivitive contract where you promise to sell a stock at a certain price. On the Lindex, you can put in a buy order at a certain price, or you can put a sell order in at a certain price. There is no mechanism to allow "shorts".

 

What could happen that a large stampede of residents decided to all sell at once. But this doesn't explain the facts. If it was a mad rush to sell your lindens, when you saw your price has been passed by, you would cancel your order and make another one at a cheaper price. What we do see is 400 million linden's worth of past by sell orders just sitting there. That is like 1.25 million dollars. Only supply linden wouldn't care what happend to 400 million linden sell orders because he just creates them out of nothing. he doesn't pay for them, so it doesn't matter to him if they just sit there.

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Rya Nitely wrote:

I thought Supply Linden kept the L$10 spread to stop traders, since that negates any profit.

I don't think it works like that. Rather, I attribute the usual bid / ask spread to the 3.5% commission on L$ sales, and the fact that markets abhor arbitrage the way nature abhors a vacuum.

The mystery to me is how the spread got so very large during this event: the buyers just vanished from the market. Could a trader have such deep pockets as to sell through all the open (and pending) buys and open a big enough gap to profitably arbitrage enough market buys and sells to cover the enormous cost of those sales? How could they reliably estimate how elastic the buying would be in response to the cheap L$s? It seems hopelessly, insanely risky, but I've never tried to corner a market.

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Uvas Umarov wrote:

How in the world can you "short" lindens?  A short is a derivitive contract where you promise to sell a stock at a certain price. On the Lindex, you can put in a buy order at a certain price, or you can put a sell order in at a certain price. There is no mechanism to allow "shorts"

in this scenario the villain hasnt bought a RL forex short contract. The villain is shorting the whole market

How to short this kinda exchange ? The prerequiste is to notice that the potential for downward movement is there, and a understanding that the bulk of  orders are completed at the moving market average

what the villain does is:

1) buy a a short stack of L$ at current market average or less (we use 250 for this example)

2) place this as sell orders at 251, 252, 253 and 254 (loss leaders)

3) when other people follow these down, then use a big stack to buy at 253 and sell this at 251 (the now new market average) and place a new small sell order at 255. Leading the market down

4) when the market goes bananas (like happened) then is money for jam

the arithmetic per $1,000 total stack

1,000 * 250 = 250,000L - (@50 loss leaders * [1,2,3,4]) = (249,500L)

(249,500L) + (@800 trade * 2) = 252,100L

252,100L / 251 = 1004.382. Potential gain: +$4.38

1 / 251 * 500 = 1.992. Potential loss: -$2.00

The villain has to be really onto it tho

 

 

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I believe the USD has been in the 246-248 range since at least 07/08. The breaking of the 250 barrier is profound in itself. The shift towards 258 is a major game changer considering the margin squeeze has gotten ridiculous already. I figure it will where settle in around 258 once all the holdouts move their orders from high 240's when they run out of USDs to pay their tier.

Way too many donkeys in the 'game' now. Each new major LL policy related to sims opens up the game to more and more donkeys which results in the SL land industy being more and more perverted. The trend started back when LL made it possible to buy single OS/HS instead of 4 at once in 07/08. Keeping the buy-in high keeps the quality and seriousness of the players higher. Now it's total donksville. Glad I sold my estate a couple years ago. Total gongshow now. 

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