Tag Archives: Alternative Economy

Northern Rock bank crash: what happens when trust ends?

Telegraph’s article “Restoring the savers’ trust” (about UK bank Northern Rock huge credit problems, see below for the story) is extremely interesting to read.

Investors can make happen what they least want to happen. The viability of any bank is dependent on the confidence of the people who trust it with their money. When that confidence goes, there is a run on the bank, and the bank fails. If the contagion spreads from one bank to others, then the system itself becomes liable to collapse, with catastrophic economic consequences for everyone. That is what happened in America in 1929.

First the story, as usual from Wikipedia (the article is of course currently under wikirage)

On 13 September 2007, Northern Rock asked the Bank of England, as lender of last resort in the United Kingdom, for emergency funds due to problems in raising funds in the money market. The problems arose from difficulties banks faced over the Summer 2007 in raising funds in the money markets, caused by the subprime crisis in the United States. The bank is solvent but has a liquidity problem because a large part of the bank’s assets are held in mortgages, and are not accessible quickly.
On 14 September, the first day branches opened following the news, many customers queued outside branches to withdraw their savings (a run on the bank). It was estimated that £1 billion was withdrawn by customers that day, about 5% of the total bank deposits held by the Northern Rock. In one incident, police were called to the branch in Cheltenham, Gloucestershire when two joint account holders barricaded the bank manager in her office after she refused to let them withdraw £1 million from their account. Their money was held in an internet only account, which became inaccessible after the Northern Rock website became inaccessible due to the volume of customers trying to log on
On 17 September, as worried savers continued to flock to some Northern Rock bank branches to withdraw their savings, it was reported that an estimated £2 billion had been withdrawn since the bank applied to the Bank of England for emergency funds. By early afternoon in London Northern Rock’s shares, which had lost 32% on the previous Friday, fell a further 40% from 438 pence to 263 pence.

Well, to put it shortly, money does not exist, it is a social creation, it exists as long as the large majority of people think it exists. But figure out this, what will happen if tomorrow all the people in the world will go to their banks to withdraw all their money in cash? Well, it is not hard to figure, that money does not exist so it will happen something interesting, and violent for sure.
Now, do I want that most of the people realize that money don’t exist? Well, I don’t know. Maybe yes, possibly in a slow, non emotive, rational way, just like all the people in the world have enough free time to reason and discuss on how the economics system works and how it could be changed (read ripple it). But this is unlikely to happen, probably what is more likely to happen is a big crash, caused by impulsive reactions like the ones are happening about Northern Rock. It would be easy to think like Cypher (in Matrix): You know, I know this steak doesn’t exist. I know that when I put it in my mouth, the Matrix is telling my brain that it is juicy and delicious. After nine years, you know what I realize? Ignorance is bliss.
Similarly, money doesn’t exist. But Ignorance is bliss. Lot of people prefer to remain “plugged” into the system.

I also suggest you to read the book “The Great Crash, 1929” by John Kenneth Galbraith (1954). It is an economic history of the lead-up to the Wall Street Crash of 1929. It is inspiring to read the declarations of authorities and politicians which become more and more unreal as the time passes. The worst the situation becomes, the more politicians insist on “There is no problem, everything is going well and this small second of crisis is already ended, tomorrow the economy starts to grow again, don’t be afraid”. Now of course politicians and economics authorities must say so, I would do the same if I were the chief of the central Bank or the Prime Minister but the fact we all know this means that nobody (really?) trusts their words and the more they say “there is nothing to worry about” the more people start to worry. There is an interesting comment by Stephen King (not the writer) on the Independent titled When reassuring words aren’t enough which compares the words spoken today by UK authorities and the words spoken in 1928 by US authorities. Check the differences if you wish.

Again, ripple might solve some of these problems (introducing new problems of course or shoud I say new opportunities?). Understanding how the economics (social) system works is something we all can no more postpone, I think.

Festival of Economics in Trento, be welcome!

From 30 May to 3 June, Trento will host the 2nd Festival of Economics. This time the topic is “Human capital, social capital”. Thirty thousand people are expected. So if you want to come to Trento, be welcome! Contact me via CouchSurfing and I’ll be delighted to host you, but please read the campaign for a more open CouchSurfing and sign the petition.
The festival will be open by a talk of Partha Dasgupta of Cambridge about “Social capital as an economic institution” and will be closed by the Nobel prize-winner Gary Becker. Have a look at the entire Festival of Economy program, there are many big names. I have to say I’m not satisfied at all with the program. It is very boring and institutional, while the topic of social capital and relationship-based economy is so interesting, exciting and intellectually challenging. And there are a lot of ministers (6, with the Prime Minister Romano Prodi) and a lot of ex-ministers (5, plus many more politicians). It seems much more the festival of the politics than the festival of the economics.
Anyway, at least there will be the Minister of University and Research Fabio Mussi, the Minister for Public Administration Reform and Innovation, Luigi Nicolais and the Chairman of Microsoft Italia and Vice Chairman of the Microsoft Corporation Umberto Paolucci. So that we will be able to ask them about the monstrous deal between Microsoft and Italy (signed by the 2 previously mentioned ministers). More information about the still-secret deal are available thanks to Associazione per il Software Libero: Spunti di riflessione sulle politiche d’innovazione nel settore ICT and Uno studio approfondito sui recenti accordi tra Governo e Microsoft.

The attention economy as MMORPG

I don’t like too much the concept “Attention Economy”. I prefer focus my attention on grasping concepts such as Reputation Economy and Gift Economy. Nevertheless I loved the following definition from “The Real Nature of the Emerging Attention Economy” 2006 Etech by Michael H. Goldhaber (slides in PDF).

An Economy, Most Generally…..
• is a massively multiplayer
• that involves some kind of passing of
• scarce entities
• between players
• so as to knit all players intricately together

So, don’t you think it is time we all level up together? Maybe not just one but two or three levels?

Money as Debt

Money is money only because people think it is money, and hence accept it as money. In reality money does not exist, it is just a piece of paper or some bits stored somewhere. So, are there better systems to regulate humans social interactions? You bet there are!
For now just start thinking about the questions that emerge from the following video, would you?
Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it is being created.

Terrific GapMinder talk: preconcepts and myth about development, visualized!

I highly recommend you to watch the presentation Hans Rosling gave at TED. It is inspiring and passionate, funny and moving, it is the kind of presentation I would like to be able to give, one day. I suggest you to download the file (zipped MP4) and watch it full screen (I did it already at least 5 times!) or just click on the play button here below.

Rosling is founder of Gapminder, a non-profit that brings vital global data to life. In this presentation, with the drama and urgency of a sportscaster, he debunks a few myths about the “developing” world. [Recorded February, 2006 in Monterey, CA. Duration: 20:34] (from TED blog).
If you want to create yourself graphs like the ones you saw in the video, you can do it with the GapMinder tool (hosted by Google). Explore the data and find even more preconcepts you hold.
[via bruno [via ethan]]

World Social Forum 2007 WebTV

My friends of Ymir are currently in Nairobi (Kenya) operating the WebTV of the World Social Forum 2007. Thanks to their work, it is possible to get an idea of what is going on in Nairobi.
The original idea was to broadcast the entire Forum live but they are having great problems in getting an ASDL connections, even if all the agreements were ready before they left for Nairobi. So at the moment you can watch a lot of recorded interviews. They are still working for getting an ASDL connection or more. And don’t worry, most of the videos are in English and just a few are in Italian. It is a pity they decided to use QuickTime format so that I’m having troubles watching the video on my Ubuntu Linux box but, as I said, they had more basic problems to think about until now such as the connection. So, don’t wait, go to www.worldsocialforum.tv.
[via Trentino Cooperazione]

Apple products will be 100% recyclable

Maybe you have missed the part of Steve Jobs speech in which he announces that all Apple products will be 100% recyclable and Apple will take back no longer wanted products so that they don’t get dumped in Asia as e-waste poisoning people and lands. If you have missed this part, press the play button in the video below or go to the youtube page.

GP is simply great! [via Houtlog]

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Craigslist CEO isn’t nuts … but it would have been just few years ago

Reading the long thread discussion on CouchSurfing titled “how’s the money flow?”, I found Irv Thomas’s contribution that summarizes an article of Forbes about Craiglist. The article is delicious: it is so good that Internet has been able to make reasonable and possible something that would have sounded totally unreasonable just few years ago.
Excerpts from the article below (by the way, I would love to be able to write in English half as well as this article …):

Craigslist President and Chief Executive Jim Buckmaster isn’t nuts. He just sounds that way, particularly to anyone who thinks that the point of running a business is, you know, to make money.
And that was enough to make his appearance last week at the UBS Global Media & Communications Conference feel like a dizzying trip through Lewis Carroll’s looking glass.
Speaking in an unflappable, near-monotone, Buckmaster calmly discussed with UBS analyst Ben Schachter a business model which, by any rational standard, is completely insane.
OK, so Craigslist boasts a huge potential to make money, but isn’t really interested in generating big profits. Given that combination, why not raise funds through equity investments or advertising and then give the money away to charity, Schachter asked.
“I think it’s a valid argument and one that we don’t necessarily have a persuasive answer for,” Buckmaster said. “That is a proven model for doing good in the world. It just doesn’t happen to be our model. Ours is to try to be as philanthropic in our core business as we can be and leave all the money out there in the hands of users.”
We now return you to your regularly scheduled reality, already in progress.

Hospitality found in Trieste! Thanks to HospitalityClub

As I was saying few days ago, I’ll be in Trieste at the ICTP for the School and Workshop on Structure and Function of Complex Networks for the following 2 weeks. The school is free (UNESCO funded) but I’m on my budget for the accomodation and meal so I tried HospitalityClub and CouchSurfing. On Monday 9 May (evening), I searched for people offering hospitality in Trieste and sent a message to all of them (almost 20). The morning after I got several replies (all on HospitalityClub), all of them very kind offering help and one of them offering me hospitality for the entire period (16-28 May). Incredible!!! Actually as truesmile told me in one of the following emails: “no, non e’ incredebile che ci sia brava gente al mondo, e’ incredebile che non ci crediamo piu!!!” (“no, it is not incredible that there are decent people in the world, it is incredible that we don’t believe this anymore”). So I’ll stay in robby‘s house for the following 12 days! truesmile will lend me her bike and I will meet a lot of new “friends”: rocana, alessia1305, igmaru! Sweet!
User Interface note: There are much more users on HospitalityClub than CouchSurfing and this is incredible because CS is a great site, very usable, good looking and perfect, while HC is unusable, with a poor graphics. I didn’t investigate the reasons but I might guess that HC’s code is written by users themselves that feel HC as a creature of them, while CS is perceived as a great (commercial) tool created by someone else: it is not so, CS’s creator is a great guy and one of the CS users but maybe this is how it is perceived.
Can it be the case that, on social software sites (for non web programmers), crappy graphics and lack of usability is a feature?
Anyway, if you are a Web designer, would you like to give some advise on how to improve HC’s graphics and usability?