Let's face it. The economy is pretty scary. The real test will come this week (April 29/30, 2008) with the FOMC meeting. If they continue to drop the Fed Funds rate that will indicate that the credit crisis is still a major hazard on the horizon. If they keep them the same or raise them it will indicate that they are on to the major inflation problem that has emerged both in the US and around the world. That is the future. What about the past?
The dot.com crash of 2000 (ff @ 5.75%), 9/11/01, and the Enron/telecom crash of 2002 freaked out Chairman Greenspan and the Fed took the Fed Funds rate to 1% in 2003. 1%!! The housing market boomed with low interest rates and speculation hype as everybody and their mother began to feel they had to buy a house or lose out. Add a new credit chain that bypassed the traditional S&Ls and channeled mortgages into commercial bonds that were then sold internationally through unregulated OTC markets.
We can thank the repeal of Glass-Steagall, the benchmark regulation of the New Deal that separated brokerages from banks, for this new credit system as it allowed investment banks into the mortgage business. OK, that was done during the Clinton administration. Commercial lenders such as Citigroup began to underwrite and trade these mortgage-backed securities and collateralized debt obligations. Becoming ultimately a $45 trillion dollar business!
Sunday, April 27, 2008
Friday, April 18, 2008
Dystopian Political Economies in Second Life
I gave a talk last night (April 17, 2008) about Second Life, the online virtual world popular on the World Wide Web. It gave me a moment to reminisce about my PhD dissertation, Symbolic Economies and the Politics of Global Cyberspaces (1993) as well as begin the wrapping up of a year-long project on Second Life in our NYU curriculum and particularly as it related to my class, the Political Economy of Digital Media.
The talk was held in downtown NYC at the Woolworth Building, known as the "Cathedral of Commerce" when it was built in 1913. I went back to my dissertation because it looked at money in fictional virtual worlds, particularly William Gibson's cyberspace trilogy, and his classic Neuromancer (1984) as well as the later Neal Stephanson's Snow Crash (1994). At the time I was looking for a progressive political stance in the wake of the fall of the USSR and I decided to compare these cyberspace subgenre (characterized by the 4 Cs: Corporations, Criminality, Corporeality, and of course Computers or Cyberspace) novels with the utopian genre. Sir Thomas More's Utopia (1516) was imagined primarily as a place WITHOUT MONEY. So I used the notion of symbolic thirds from Jean-Joseph Goux to analyze the political economy of utopias and the "dys"topias of these cyberpunk genre novels. Now, some 15 years later I decided to revisit my old work to examine Second Life.
I had a particularly useful bridge, work of Cory Ondrejka, a Second Life co-founder and until recently, the Chief Technical Officer for Linden Labs, the developer of Second Life. His "Escaping the Gilded Cage: User Created Content and Building the Metaverse" also used the cyberpunk genre as a point of departure. One of his inspirations was the Mystery of Capital by Hernando De Soto, a very popular economist throughout the "Third World", who focused on capitalism being a system of representations and rights. Connecting poor people to property via a system of legal representations was the most effective way to empower them to build wealth. You could say it was a more effective presentation of what President Bush would call the "ownership society". Keep in mind the issue here is more along the lines of what the Communist China leader Deng Xiaoping once referred to as "distributing wealth rather than distributing poverty". Remember my concern here is a progressive political economy rather than an apology for capitalism and its tendencies towards monopoly and excess. But lets get back to Second Life.
Ondrejka identified four problems with creating content in virtual worlds like Second Life and even in creating video games. They were the difficulties in: 1) creating first-class art; 2) the lengthy development cycles needed; 2) the hours of gameplay that had to be produced; 3) the many players that needed to be accommodated, and 4) the large teams that had to be hired and managed effectively to create digital content. Creating virtual worlds by the traditional model of a single group producing it is highly unlikely. User-created content is the key.
He suggested that online virtual worlds are really only possible if: 1) Its users are given the power to collaboratively create the content within it; 2) each of those users receive broad rights to their creations. These would be primarily property rights over virtual land, in-world games, avatar clothes, etc.; 3) they also need to convert those creations into real world capital and wealth. Online virtual worlds need a system of incentives and symbolic currencies to propel them.
Player created content is not entirely new to digital games. id Software, the small Texas-based company used the ego-centric perspective to create the first person shooter (FPS) game, Wolfenstein, in May of 1991. id followed with the extraordinarily successful DOOM in December 1994. DOOM combined a shareware business model with the nascent distribution capabilities of the Internet. Just two months after Netscape introduced its first browser as freeware over the Web, DOOM enthusiasts by the droves were downloading the game by FTP to their PCs, many of them with a 14.4 kb modem. In a prescient move, id decided to make DOOM’s source code available to its users. Making the code available allowed new modifications of the game called “mods”. This innovation allowed their fans to create their own 2.5D (not quite 3-D) levels and distribute them to other players. A popular one involved the using the characters from the Simpsons’ animated TV show running around the DOOM environment with Homer Simpson able to renew his health by finding and eating donuts. The US military created a version called Marine DOOM designed to desensitize soldiers to the idea of killing. Many of the company’s new employees were recruited because of the excellence of their mods and the extra help allowed them to create the next stage of their innovative online gameplay, QUAKE.
Second Life was born in June 2003. It offered users the ability create content using built-in tools. They could develop objects and their scripted behaviors (ie a tree and its leaves swaying in the wind). They could create their own avatar (representation of themselves or an entirely fictitious persona). They could buy and sell land and any of the other objects they created because they sought to protect intellectual property. Some 99% of the new world was user created and no permits, pre-approval processes, or separate submission were required. The key was the ability to perform transactions and maintain rights to property.
The dynamism of virtual worlds depends on the ability for players to sell items to each other for in-game virtual currency, or barter for such items. The purchase of in-game items for real-world currency is also crucial as is the exchange markets to convert virtual currencies for real-world currencies and vice-versa. It will be interesting to watch these dystopian virtual worlds emerge.
The talk was held in downtown NYC at the Woolworth Building, known as the "Cathedral of Commerce" when it was built in 1913. I went back to my dissertation because it looked at money in fictional virtual worlds, particularly William Gibson's cyberspace trilogy, and his classic Neuromancer (1984) as well as the later Neal Stephanson's Snow Crash (1994). At the time I was looking for a progressive political stance in the wake of the fall of the USSR and I decided to compare these cyberspace subgenre (characterized by the 4 Cs: Corporations, Criminality, Corporeality, and of course Computers or Cyberspace) novels with the utopian genre. Sir Thomas More's Utopia (1516) was imagined primarily as a place WITHOUT MONEY. So I used the notion of symbolic thirds from Jean-Joseph Goux to analyze the political economy of utopias and the "dys"topias of these cyberpunk genre novels. Now, some 15 years later I decided to revisit my old work to examine Second Life.
I had a particularly useful bridge, work of Cory Ondrejka, a Second Life co-founder and until recently, the Chief Technical Officer for Linden Labs, the developer of Second Life. His "Escaping the Gilded Cage: User Created Content and Building the Metaverse" also used the cyberpunk genre as a point of departure. One of his inspirations was the Mystery of Capital by Hernando De Soto, a very popular economist throughout the "Third World", who focused on capitalism being a system of representations and rights. Connecting poor people to property via a system of legal representations was the most effective way to empower them to build wealth. You could say it was a more effective presentation of what President Bush would call the "ownership society". Keep in mind the issue here is more along the lines of what the Communist China leader Deng Xiaoping once referred to as "distributing wealth rather than distributing poverty". Remember my concern here is a progressive political economy rather than an apology for capitalism and its tendencies towards monopoly and excess. But lets get back to Second Life.
Ondrejka identified four problems with creating content in virtual worlds like Second Life and even in creating video games. They were the difficulties in: 1) creating first-class art; 2) the lengthy development cycles needed; 2) the hours of gameplay that had to be produced; 3) the many players that needed to be accommodated, and 4) the large teams that had to be hired and managed effectively to create digital content. Creating virtual worlds by the traditional model of a single group producing it is highly unlikely. User-created content is the key.
He suggested that online virtual worlds are really only possible if: 1) Its users are given the power to collaboratively create the content within it; 2) each of those users receive broad rights to their creations. These would be primarily property rights over virtual land, in-world games, avatar clothes, etc.; 3) they also need to convert those creations into real world capital and wealth. Online virtual worlds need a system of incentives and symbolic currencies to propel them.
Player created content is not entirely new to digital games. id Software, the small Texas-based company used the ego-centric perspective to create the first person shooter (FPS) game, Wolfenstein, in May of 1991. id followed with the extraordinarily successful DOOM in December 1994. DOOM combined a shareware business model with the nascent distribution capabilities of the Internet. Just two months after Netscape introduced its first browser as freeware over the Web, DOOM enthusiasts by the droves were downloading the game by FTP to their PCs, many of them with a 14.4 kb modem. In a prescient move, id decided to make DOOM’s source code available to its users. Making the code available allowed new modifications of the game called “mods”. This innovation allowed their fans to create their own 2.5D (not quite 3-D) levels and distribute them to other players. A popular one involved the using the characters from the Simpsons’ animated TV show running around the DOOM environment with Homer Simpson able to renew his health by finding and eating donuts. The US military created a version called Marine DOOM designed to desensitize soldiers to the idea of killing. Many of the company’s new employees were recruited because of the excellence of their mods and the extra help allowed them to create the next stage of their innovative online gameplay, QUAKE.
Second Life was born in June 2003. It offered users the ability create content using built-in tools. They could develop objects and their scripted behaviors (ie a tree and its leaves swaying in the wind). They could create their own avatar (representation of themselves or an entirely fictitious persona). They could buy and sell land and any of the other objects they created because they sought to protect intellectual property. Some 99% of the new world was user created and no permits, pre-approval processes, or separate submission were required. The key was the ability to perform transactions and maintain rights to property.
The dynamism of virtual worlds depends on the ability for players to sell items to each other for in-game virtual currency, or barter for such items. The purchase of in-game items for real-world currency is also crucial as is the exchange markets to convert virtual currencies for real-world currencies and vice-versa. It will be interesting to watch these dystopian virtual worlds emerge.
Wednesday, April 16, 2008
How the Rich Get Richer - BCS
The good news - The University of Hawaii received $4.4 million today for its participation in the BCS Sugar Bowl football game on January 1, 2008.
The bad news - damn, the big schools pull this type of money down every year, and Georgia (which beat Hawaii) got nearly $17 million dollars for itself and its SEC brethen.
Thus the BCS (Big Cash System) pumps money into a few select schools and conferences. Restraint of trade?
Hawaii - the exception that proves the rule.
The bad news - damn, the big schools pull this type of money down every year, and Georgia (which beat Hawaii) got nearly $17 million dollars for itself and its SEC brethen.
Thus the BCS (Big Cash System) pumps money into a few select schools and conferences. Restraint of trade?
Hawaii - the exception that proves the rule.
Tuesday, April 15, 2008
Barach Obama's Full "Bitter" Quote
"So, it depends on where you are, but I think it's fair to say that the places where we are going to have to do the most work are the places where people feel most cynical about government. The people are mis-appre...I think they're misunderstanding why the demographics in our, in this contest have broken out as they are. Because everybody just ascribes it to 'white working-class don't wanna work -- don't wanna vote for the black guy.' That's...there were intimations of that in an article in the Sunday New York Times today - kind of implies that it's sort of a race thing.
Here's how it is: in a lot of these communities in big industrial states like Ohio and Pennsylvania, people have been beaten down so long, and they feel so betrayed by government, and when they hear a pitch that is premised on not being cynical about government, then a part of them just doesn't buy it. And when it's delivered by -- it's true that when it's delivered by a 46-year-old black man named Barack Obama (laugher), then that adds another layer of skepticism (laughter).
But -- so the questions you're most likely to get about me, 'Well, what is this guy going to do for me? What's the concrete thing?' What they wanna hear is -- so, we'll give you talking points about what we're proposing -- close tax loopholes, roll back, you know, the tax cuts for the top 1 percent. Obama's gonna give tax breaks to middle-class folks and we're gonna provide health care for every American. So we'll go down a series of talking points.
But the truth is, is that, our challenge is to get people persuaded that we can make progress when there's not evidence of that in their daily lives. You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. So it's not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.
Um, now these are in some communities, you know. I think what you'll find is, is that people of every background -- there are gonna be a mix of people, you can go in the toughest neighborhoods, you know working-class lunch-pail folks, you'll find Obama enthusiasts. And you can go into places where you think I'd be very strong and people will just be skeptical. The important thing is that you show up and you're doing what you're doing."
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