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How I Used Eve Online to Predict the Great Recession (2013)

164 points by omnibrain 9y ago

mjevans 9y ago
I like the idea of a hot potato effect caused by taxes that match the 'real' value of an asset. This should apply not just to real assets (like houses) but the current commodity value of a 'future' in any other value. I had desired such a tool relative to speculation on the stock markets (and at the time postulated that requiring whoever 'owned' a future __must__ receive it when it comes due); however the idea of taxing that invested value while it is held seems to be an even cleaner way of handling the problem.
- thedirt0115 9y ago
  Who determines the 'real' value of an asset, and how?
  - wetpaws 9y ago
    Market correction does :)
    - thedirt0115 9y ago
      Well yeah, in practice, we can say an asset's value is what the buyer and seller agreed upon for the price, but I'm asking about valuing it while it's being held for taxation purposes. This is easy for stocks, etc, which are homogenous units that have other sales going on all the time, but for a house, for example? Comparisons are hard in practice! No house I've bought/sold has come in at the government's valuation.
      - mjevans 9y ago
        In the case of real-estate or other location dependent properties, there's often an assessment process of some sort. As a simple means the government could also act as the 'auction house' for properties and entertain prospective bids on a property. The median of those bids could be used to set the asking price if it's higher than the last public valuation of the property (this is mostly to discourage front companies down-bidding to cheat taxes). For more fungible items the current market valuation seems much more obvious.
        sokoloff 9y ago
        I've long felt that the appeals process for a real estate tax appraisal should include the owner's option of, "Deal! I'll sell it to you [the city/town/county] for 90% of the value you just appraised it for, subject only to being eligible for a Certificate of Occupancy [which cannot be unreasonably withheld]." Optionally, add a provision that, if the town objects, the owner names a new price for the appraisal that the town can either accept as a valid appraisal or purchase the property for 111% of the owner's figure.
        nikanj 9y ago
        In Vancouver we have the opposite: realtors call you weekly and promise you 1.4 million cash on the spot, while the tax value is 600k. Can’t raise taxable values to be realistic, as a lot of older folk are sitting on fixed income in multi-million dollar homes.
        sokoloff 9y ago
        It seems that when prices move in this direction, you could raise the taxable value and simultaneously lower the millage rate so that the overall tax receipts are what the city needs. This way, people whose properties have skyrocketed in value relative to the rest of the city would have their taxes go up slightly, those whose values have gone up but gone up by a relatively lower amount would see a reduction in taxes, and the city still gets all its revenue for operations. If everyone's value has doubled (as an example), it would seem better to raise everyone's assessments by 100% and cut the millage rate by 50% than to have some weird half-Prop13 situation where 123 Main St is assessed at half of 125 Main St because 123 last sold in 1984 and 125 sold last week for $1.4MM in cash.
        photojosh 9y ago
        We don't have a land value tax in Australia. But I think we should. > Can’t raise taxable values to be realistic, as a lot of older folk are sitting on fixed income in multi-million dollar homes. In this situation, maybe we should allow retired/older folks to defer taxes until the sale of the property (kind of a government-based reverse mortgage). Would be messy to administer though.
      - Qwertious 9y ago
        >Well yeah, in practice, we can say an asset's value is what the buyer and seller agreed upon for the price, but I'm asking about valuing it while it's being held for taxation purposes Hah, it's kind of zen - if a house isn't being offered for sale, does it really have a selling-price? As a hypothetical, you could mandate that people put a value on their house, and then say "you must accept offers more than Nx that price - so say, if N=2 and you value your house at $1million, then if someone offers $2mil, you automatically sell. Then, charge them tax based on their own evaluation. If they value it way too low for the purposes of tax fraud, then someone will just buy their house for said stupidly-low price and sell it at market-price for a profit. I mean, there are all sorts of social problems with it (that might well sink it), but it seems like a pretty nifty solution to the problem.
        thedirt0115 9y ago
        Oh man, tell me that wouldn't start a wave of ML startups scouring the tax valuation listings for houses to flip!
    - ianai 9y ago
      and composite utility. Ie location, size, amenities, etc. A home near a good school will always have a higher value. Aka hedonic regression and valuation.
  - wyager 9y ago
    Probably the best way to do this that would actually be fair and as accurate as plausible would be to auction some sort of contractual instrument that pays out or charges the bearer depending on the difference between the sale price (whenever the land happens to sell again, if ever) and a predicted price (set by the auction). The land would be taxed at the rate established by the auction, and the instrument would be configured such that manipulating the auction on your own property is economically unfavorable. This would allow people with expertise in accurate land pricing to make (a bit of) money and remove any arbitrary or unfair pricing from a tax assessor.
  - aidenn0 9y ago
    For easily traded assets, it's easy; the owner sets the value and must accept any offers to buy above that value. There are obvious issues doing this with residences though.
    - RHSeeger 9y ago
      That ignores sentimental value, though. I wouldn't want to be taxed a huge amount for my father's watch.. but neither would I be interested in selling it for less than a huge amount. It's certainly not worth that huge amount to anyone but my family.
      - aidenn0 9y ago
        That's why I qualified with "easily traded." I have seen people argue for it still working for other forms of property (most notably houses; I don't want to be forced out of my home) with the argument that if people set a value e.g. 2x what the property is worth, that will deter forced selling and then the tax rate can be lowered slightly to be revenue neutral. I'm less convinced.
- ricardobeat 9y ago
  In the Netherlands (and probably other countries too) this effect is used the other way around - there is a large tax on savings, from 1.6% to 5% depending on the assets, that actually incentivizes moving cash to more speculative investments. Regarding futures, I was under the impression that's how it works - if a contract expires on your hand, you have to take delivery. There are a few funny stories around of that happening accidentally to paper traders.
  - taneq 9y ago
    This seems like it's basically a sustainable way to achieve the same effects that inflation is typically used to achieve in western economies.
    - naeem 9y ago
      The Netherlands is a Western economy
    - JBReefer 9y ago
      The Dutch more or less invented the Western economic model.
  - perl4ever 9y ago
    If you don't take delivery, you've just lost the entire value of the contract, so I don't understand why we would need a deterrent for that case.
  - phillium 9y ago
    Many futures contracts settle to or have the option to settle to cash now so this is no longer really a problem
  - olympus 9y ago
    I believe this works in the Netherlands because they have a robust pension system. Disincentivizing savings without having a good system in place for retirement would break a country in a single generation.
- darawk 9y ago
  https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Indeed, that is the basis of the One True Tax.
  - aaronblohowiak 9y ago
    Pigovian taxes have a place, too.
    - darawk 9y ago
      Totally agree. Thanks for pointing that out.
- erikb 9y ago
  For me it's really hard to say actually. On the one hand, as a person with relatively few assets I'd say it would be clearly in my advantage that there are no assets and all value needs to be produced by labor. But at the same time it is also a natural desire that you build up something that you can use when you are old and tired. And that shouldn't necessarily be a lot, lot worse than what you are used to in your prime time. So in some regards we also need assets. Both sides have good reasons.
nwah1 9y ago
Yet another piece of evidence for why we should implement Land Value Taxation.
- bufordsharkley 9y ago
  Not to self-promote too heavily, but I did an episode of my georgism-centric radio show about this very article[0]. Videogames really offer a fun space to explore economic instruments-- treating the real world as a laboratory is a bit more dangerous. [0] http://seethecat.org/ep/2017-09-12.html http://seethecat.org/ep/2017-09-12.html
0x445442 9y ago
How I predicted the housing market crash in 2005... Office Mate: We're making an offer on a $650K house. Me: I know roughly what you make. Did a rich uncle die? Office Mate: No but our lender said we can afford it. Me: How much of your take home pay will go toward your mortgage? Office Mate: About 60% Me to my wife: Honey, we're cashing in our lottery ticket and leaving California.
- nstart 9y ago
  Happening here in Sri Lanka. Still waiting for the market crash to happen. People are spending upwards of 70% on all their leasing across housing, expensive cars, and luxury items like 65 inch TVs not to mention CC bills. Banks have started buying up debts and offering refinancing plans. Meanwhile I'm hunkering down and saving cash wondering if I'll get lucky
  - Danieru 9y ago
    Sounds like the kind of situation which will crash once interest rates rise. I hope your cash is in USD or another solid currency. At this point I do not think it is a question of getting lucky, if anything you want it to keep going. Longer it goes on the more cash you have and the higher the discount rates. My worry would be that once prices crash two challenges will appear: 1. Once the crash starts there will be tons of attempts to stall the inevitable. It could be months before prices hit a true low point. 2. Credit is going to dry up. Domestic banks will not have the balance sheets to allow for further lending. What loans will be available will be hard to get and more expensive than is "fair". Which speaks to how difficult it is for consumers to benefit from conservative behavior in times of folly. Unless you save enough to buy discounted assets in cash out-right consumers buying at the bottom of the market are also buying in the context of restricted credit. For my own situation, me and my wife are buying a house here in Japan. Over here bank's balance sheets are super-healthy and banks are extending large volumes of credit easier than they would in the past. My friends and co-workers got accepted for large home loans at reasonable rates. I have studied the bank balanace sheets as part of my stock investing so I am not worried of us being in a over-credited state. In fact japanese banks home loan load has been decreasing on a percentage basis over time as old bubble era loans get paid off. Yet it appears to me that Japan is in a phase of expanding home credit. Or atleast expanding home credit to lower/younger quality borrowers in response to fewer traditional borrowers starting families and buying homes. The net result in Japan is that buying a home is a massive good deal. We were careful with the location and builder but I needed to put no effort to get a loan at an insanely low interest rate.
nosuchthing 9y ago
Previous discussion here: https://news.ycombinator.com/item?id=9158868 Side note, why is this story allowed to remain on the front page yet this one from 4 hours ago was removed with 22 upvotes on the front page: https://news.ycombinator.com/item?id=16468939 Bias? Selective rule enforcing? Both links are high quality technical reports. There's clearly a feature for PAST submissions on each HN link.
- grzm 9y ago
  From the FAQ (https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html): > "How are stories ranked?" > "The basic algorithm divides points by a power of the time since a story was submitted. Comments in comment threads are ranked the same way." > "Other factors affecting rank include user flags, anti-abuse software, software which downweights overheated discussions, and moderator intervention."
  - nosuchthing 9y ago
    Right, so moderator intervention... which still leaves those questions.
    - grzm 9y ago
      The prior discussion was from 42 days ago. From what I've observed and seen mentioned, normally if the previous discussion is from a year ago or more, then it won't be marked a dupe. If you think something was done unfairly, the best way to get an authoritative response is to email the mods via the Contact link in the footer.
- ThomPete 9y ago
  It's a dupe.
- kristianp 9y ago
  Please don't put 4 spaces before urls, the HN software doesn't make them into links if they are pre-formatted like that.
rajacombinator 9y ago
“How I predicted x”: flipped a coin, forgot about the times it was wrong!
- carlmr 9y ago
  Exactly. And even if you have one million people making only a single prediction. Some people are going to be right. Especially because a downturn is like a 1 in 20 chance if you go by years. So out of a million people having one guess at the next downturn, about 200.000 will be right and can brag about it, without having any higher understanding about what happened (even if they will staunchly believe they understood something, because they were right).
  - perl4ever 9y ago
    What I observe though, is not large numbers of people making random guesses and exponentially fewer being validated through random events. The people who become notable are those who predicted an economic crisis, for decades before circa 2008, and once they got notoriety for that, have continued to predict doom for the subsequent decade. Eventually they either die or are right again.
- rkangel 9y ago
  I understand what you're saying about selection bias, but he has given a reasoned argument, providing a model that matched reality in multiple places. You're response of "it doesn't always work" is without value unless it provides an example of where it doesn't work.
  - olympus 9y ago
    His prediction would carry a lot more weight if he had written about it prior to the recession. A lot of people can say "I predicted that" after it happened, but those who have proof they can point to have a lot more credibility. All he has is that he "won a bet" after a "conversation with a friend." Unless he was wrote about it ahead of time, we have no way of knowing whether he also made a similar bet with another friend in a different conversation to say that housing prices were going to continue towards the moon. If he had also structured the bet in which he got his school payed for and seemingly no downside if he lost, then he could have guaranteed free school, and looked like Nostradamus either way. So it's quite possible that this is selection bias at work, and he "flips coins" on a regular basis and only brags about the ones that come up heads.
hedvig 9y ago
"I mean that when a tax or rent is paid in EVE, this does not cycle back into the economy, it just magically disappears. In the real world, when a property tax is paid it cycles back into the economy through expenditures on public infrastructure such as education and road maintenance" " Interesting - there's not a way to develop something in the game that could cycle it back in?
- ztjio 9y ago
  There are plenty of 'taxes' in game that are cycled back in. What is being referred to here are fees that deter certain gameplay styles such as not ever joining a real corp. That said, there are some currency sink fees that are used to help maintain reasonable economy stability as well. That's needed in any game with an important economy aspect.
- MaulingMonkey 9y ago
  There is and there has been! Simply cycling it back in is certainly doable, and arguably already done (or approximated) - I'd argue it's more the local infrastructure deterioration/modeling that isn't (fully) simulated in EvE, for NPC infastructure. A couple of gamedev terms: - Cash faucets - sources of currency generation / magically introduced into the economy, functionally equivalent to the bank printing currency in the real world. - Cash sinks - places where currency is magically destroyed / taken out of the economy, functionally equivalent to the bank destroying old currency in the real world. If your cash faucets and sinks exactly balance each other out, you could look at it as the bank simply reinvesting the currency instead of creating and destroying an exactly equal amount - externally, the net effect is identical. Of course, this is rarely the case - both in games and in real life. For the currency to be "healthy" and serve a purpose in a player economy, you want to avoid faucets outnumbering sinks to the point that you have extremely inflation. E.g. in Diablo 2, one would barter in known rare items - gold is effectively worthless, there are few effective sinks to sink it into. (Games of course usually use an impossible number of magical faucets and sinks - the kind of centrally planned economy that would require a star trek style post-scarcity environment run by complete and utter LARPing fanatics to ever pull off, contrasted to our current real world where you maybe have a single state bank trying to carefully control inflation with a currency printing lever.) Returning to EvE online: They still have a bunch of magical zero-maintenance infrastructure in "high security" space, but they've also added a lot of player buildable infrastructure that generally needs fueling and defense. If you don't pay for a road's upkeep in real life, it starts to get a few potholes. If you don't pay to maintain and defend your player owned stations in EvE online (be it through your money or your material and your time), someone's going to blow it up or take it from you - for amusement, profit, or both. This is a much stronger deterioration of infrastructure than you generally see in real life. (I forget how much of this player buildable infrastructure predates this article, if any.)
pupdogg 9y ago
I think it would be more impressive if you predict the NEXT recession.
- iamdave 9y ago
  Someone will figure it out with Steam.
FreekNortier 9y ago
Bookmarked this thread. Does anyone have information on what the current state of the global economy is and if we are facing another recession imminently?
- erikb 9y ago
  I have a glass ball and if I ask it nicely it will tell me.
- YouKnowBetter 9y ago
  I will tell you my predictions in 10 years.
daddosi 9y ago
I thougt it funny to spend a huge realestate tax increase on building aditional houses. Then do the same with food and utilities. Like government tossing the hot potato into the air and catching it again.
creo 9y ago
I used EVE ESI API (realtime cached in-game data) to test my resource management software. It turned out to be very close to final "real world" data. Disclaimer: Its for my own use only. Didn't sell it or even make available to anyone.
lucozade 9y ago
What he predicted was a correction to a housing bubble. Specifically, it seems, the Californian housing bubble. There is nothing particularly special about housing bubbles and their correction. This happens all the time. What he didn't predict was the effect that that correction in 2008 would have on the global financial system. That's because you'd need to include securitisation, how the big players were holding risk and the effect of perceived credit worthiness on short term liquidity. A while ago, when I looked into this, I found just one paper, written prior to the crash, that could reasonably be considered to have predicted what occurred. Unfortunately, I can't find it, if I do I'll add the link.
- rando444 9y ago
  I read a book prior to the crash that I consider an accurate prediction of what was coming. "The coming crash in the housing market" by John Talbott The author used a mountain of evidence and trends to back up the books premise, and going through it all it was hard to deny. Timing such an event though is always difficult, as exemplified by other books like 'The big short'.
- mayukh 9y ago
  And even if you did find something, how would you know if they were just lucky or truly prescient ? Folks are constantly predicting gloom and doom. Some have even made successful careers out of it, their low probability of predicting such catastrophes not withstanding. Relatedly there were several economists predicting bad things. https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082705 https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp0827... Its easier to say bad things will happen and be right eventually, the much much much harder part is to get the timing right.
  - lucozade 9y ago
    That's my point. The paper didn't predict bad things happening. It specifically said that banks were holding higher level tranches of CDOs. Because they're MTM accounted they could suddenly drop in value if default rates increase. This, in turn, could cause other banks to suspect their creditworthiness and pull their funding lines. In other words, it was very specific about what it thought a collapse mechanism was and it turned out to be spot on. I don't believe they were either lucky or prescient. I think that they were well informed and joined the dots in a way that few others had.

164 points by omnibrain 9y ago

I like the idea of a hot potato effect caused by taxes that match the 'real' value of an asset. This should apply not just to real assets (like houses) but the current commodity value of a 'future' in any other value. I had desired such a tool relative to speculation on the stock markets (and at the time postulated that requiring whoever 'owned' a future __must__ receive it when it comes due); however the idea of taxing that invested value while it is held seems to be an even cleaner way of handling the problem.

thedirt0115 9y ago
Who determines the 'real' value of an asset, and how?
- wetpaws 9y ago
  Market correction does :)
  - thedirt0115 9y ago
    Well yeah, in practice, we can say an asset's value is what the buyer and seller agreed upon for the price, but I'm asking about valuing it while it's being held for taxation purposes. This is easy for stocks, etc, which are homogenous units that have other sales going on all the time, but for a house, for example? Comparisons are hard in practice! No house I've bought/sold has come in at the government's valuation.
    - mjevans 9y ago
      In the case of real-estate or other location dependent properties, there's often an assessment process of some sort. As a simple means the government could also act as the 'auction house' for properties and entertain prospective bids on a property. The median of those bids could be used to set the asking price if it's higher than the last public valuation of the property (this is mostly to discourage front companies down-bidding to cheat taxes). For more fungible items the current market valuation seems much more obvious.
      - sokoloff 9y ago
        I've long felt that the appeals process for a real estate tax appraisal should include the owner's option of, "Deal! I'll sell it to you [the city/town/county] for 90% of the value you just appraised it for, subject only to being eligible for a Certificate of Occupancy [which cannot be unreasonably withheld]." Optionally, add a provision that, if the town objects, the owner names a new price for the appraisal that the town can either accept as a valid appraisal or purchase the property for 111% of the owner's figure.
        nikanj 9y ago
        In Vancouver we have the opposite: realtors call you weekly and promise you 1.4 million cash on the spot, while the tax value is 600k. Can’t raise taxable values to be realistic, as a lot of older folk are sitting on fixed income in multi-million dollar homes.
        sokoloff 9y ago
        It seems that when prices move in this direction, you could raise the taxable value and simultaneously lower the millage rate so that the overall tax receipts are what the city needs. This way, people whose properties have skyrocketed in value relative to the rest of the city would have their taxes go up slightly, those whose values have gone up but gone up by a relatively lower amount would see a reduction in taxes, and the city still gets all its revenue for operations. If everyone's value has doubled (as an example), it would seem better to raise everyone's assessments by 100% and cut the millage rate by 50% than to have some weird half-Prop13 situation where 123 Main St is assessed at half of 125 Main St because 123 last sold in 1984 and 125 sold last week for $1.4MM in cash.
        photojosh 9y ago
        We don't have a land value tax in Australia. But I think we should. > Can’t raise taxable values to be realistic, as a lot of older folk are sitting on fixed income in multi-million dollar homes. In this situation, maybe we should allow retired/older folks to defer taxes until the sale of the property (kind of a government-based reverse mortgage). Would be messy to administer though.
    - Qwertious 9y ago
      >Well yeah, in practice, we can say an asset's value is what the buyer and seller agreed upon for the price, but I'm asking about valuing it while it's being held for taxation purposes Hah, it's kind of zen - if a house isn't being offered for sale, does it really have a selling-price? As a hypothetical, you could mandate that people put a value on their house, and then say "you must accept offers more than Nx that price - so say, if N=2 and you value your house at $1million, then if someone offers $2mil, you automatically sell. Then, charge them tax based on their own evaluation. If they value it way too low for the purposes of tax fraud, then someone will just buy their house for said stupidly-low price and sell it at market-price for a profit. I mean, there are all sorts of social problems with it (that might well sink it), but it seems like a pretty nifty solution to the problem.
      - thedirt0115 9y ago
        Oh man, tell me that wouldn't start a wave of ML startups scouring the tax valuation listings for houses to flip!
  - ianai 9y ago
    and composite utility. Ie location, size, amenities, etc. A home near a good school will always have a higher value. Aka hedonic regression and valuation.
- wyager 9y ago
  Probably the best way to do this that would actually be fair and as accurate as plausible would be to auction some sort of contractual instrument that pays out or charges the bearer depending on the difference between the sale price (whenever the land happens to sell again, if ever) and a predicted price (set by the auction). The land would be taxed at the rate established by the auction, and the instrument would be configured such that manipulating the auction on your own property is economically unfavorable. This would allow people with expertise in accurate land pricing to make (a bit of) money and remove any arbitrary or unfair pricing from a tax assessor.
- aidenn0 9y ago
  For easily traded assets, it's easy; the owner sets the value and must accept any offers to buy above that value. There are obvious issues doing this with residences though.
  - RHSeeger 9y ago
    That ignores sentimental value, though. I wouldn't want to be taxed a huge amount for my father's watch.. but neither would I be interested in selling it for less than a huge amount. It's certainly not worth that huge amount to anyone but my family.
    - aidenn0 9y ago
      That's why I qualified with "easily traded." I have seen people argue for it still working for other forms of property (most notably houses; I don't want to be forced out of my home) with the argument that if people set a value e.g. 2x what the property is worth, that will deter forced selling and then the tax rate can be lowered slightly to be revenue neutral. I'm less convinced.
ricardobeat 9y ago
In the Netherlands (and probably other countries too) this effect is used the other way around - there is a large tax on savings, from 1.6% to 5% depending on the assets, that actually incentivizes moving cash to more speculative investments. Regarding futures, I was under the impression that's how it works - if a contract expires on your hand, you have to take delivery. There are a few funny stories around of that happening accidentally to paper traders.
- taneq 9y ago
  This seems like it's basically a sustainable way to achieve the same effects that inflation is typically used to achieve in western economies.
  - naeem 9y ago
    The Netherlands is a Western economy
  - JBReefer 9y ago
    The Dutch more or less invented the Western economic model.
- perl4ever 9y ago
  If you don't take delivery, you've just lost the entire value of the contract, so I don't understand why we would need a deterrent for that case.
- phillium 9y ago
  Many futures contracts settle to or have the option to settle to cash now so this is no longer really a problem
- olympus 9y ago
  I believe this works in the Netherlands because they have a robust pension system. Disincentivizing savings without having a good system in place for retirement would break a country in a single generation.
darawk 9y ago
https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Indeed, that is the basis of the One True Tax.
- aaronblohowiak 9y ago
  Pigovian taxes have a place, too.
  - darawk 9y ago
    Totally agree. Thanks for pointing that out.
erikb 9y ago
For me it's really hard to say actually. On the one hand, as a person with relatively few assets I'd say it would be clearly in my advantage that there are no assets and all value needs to be produced by labor. But at the same time it is also a natural desire that you build up something that you can use when you are old and tired. And that shouldn't necessarily be a lot, lot worse than what you are used to in your prime time. So in some regards we also need assets. Both sides have good reasons.

nwah1 9y ago

Yet another piece of evidence for why we should implement Land Value Taxation.

bufordsharkley 9y ago
Not to self-promote too heavily, but I did an episode of my georgism-centric radio show about this very article[0]. Videogames really offer a fun space to explore economic instruments-- treating the real world as a laboratory is a bit more dangerous. [0] http://seethecat.org/ep/2017-09-12.html http://seethecat.org/ep/2017-09-12.html

0x445442 9y ago

How I predicted the housing market crash in 2005... Office Mate: We're making an offer on a $650K house. Me: I know roughly what you make. Did a rich uncle die? Office Mate: No but our lender said we can afford it. Me: How much of your take home pay will go toward your mortgage? Office Mate: About 60% Me to my wife: Honey, we're cashing in our lottery ticket and leaving California.

nstart 9y ago
Happening here in Sri Lanka. Still waiting for the market crash to happen. People are spending upwards of 70% on all their leasing across housing, expensive cars, and luxury items like 65 inch TVs not to mention CC bills. Banks have started buying up debts and offering refinancing plans. Meanwhile I'm hunkering down and saving cash wondering if I'll get lucky
- Danieru 9y ago
  Sounds like the kind of situation which will crash once interest rates rise. I hope your cash is in USD or another solid currency. At this point I do not think it is a question of getting lucky, if anything you want it to keep going. Longer it goes on the more cash you have and the higher the discount rates. My worry would be that once prices crash two challenges will appear: 1. Once the crash starts there will be tons of attempts to stall the inevitable. It could be months before prices hit a true low point. 2. Credit is going to dry up. Domestic banks will not have the balance sheets to allow for further lending. What loans will be available will be hard to get and more expensive than is "fair". Which speaks to how difficult it is for consumers to benefit from conservative behavior in times of folly. Unless you save enough to buy discounted assets in cash out-right consumers buying at the bottom of the market are also buying in the context of restricted credit. For my own situation, me and my wife are buying a house here in Japan. Over here bank's balance sheets are super-healthy and banks are extending large volumes of credit easier than they would in the past. My friends and co-workers got accepted for large home loans at reasonable rates. I have studied the bank balanace sheets as part of my stock investing so I am not worried of us being in a over-credited state. In fact japanese banks home loan load has been decreasing on a percentage basis over time as old bubble era loans get paid off. Yet it appears to me that Japan is in a phase of expanding home credit. Or atleast expanding home credit to lower/younger quality borrowers in response to fewer traditional borrowers starting families and buying homes. The net result in Japan is that buying a home is a massive good deal. We were careful with the location and builder but I needed to put no effort to get a loan at an insanely low interest rate.

nosuchthing 9y ago

Previous discussion here: https://news.ycombinator.com/item?id=9158868 Side note, why is this story allowed to remain on the front page yet this one from 4 hours ago was removed with 22 upvotes on the front page: https://news.ycombinator.com/item?id=16468939 Bias? Selective rule enforcing? Both links are high quality technical reports. There's clearly a feature for PAST submissions on each HN link.

grzm 9y ago
From the FAQ (https://news.ycombinator.com/newsfaq.html https://news.ycombinator.com/newsfaq.html): > "How are stories ranked?" > "The basic algorithm divides points by a power of the time since a story was submitted. Comments in comment threads are ranked the same way." > "Other factors affecting rank include user flags, anti-abuse software, software which downweights overheated discussions, and moderator intervention."
- nosuchthing 9y ago
  Right, so moderator intervention... which still leaves those questions.
  - grzm 9y ago
    The prior discussion was from 42 days ago. From what I've observed and seen mentioned, normally if the previous discussion is from a year ago or more, then it won't be marked a dupe. If you think something was done unfairly, the best way to get an authoritative response is to email the mods via the Contact link in the footer.
ThomPete 9y ago
It's a dupe.
kristianp 9y ago
Please don't put 4 spaces before urls, the HN software doesn't make them into links if they are pre-formatted like that.

rajacombinator 9y ago

“How I predicted x”: flipped a coin, forgot about the times it was wrong!

carlmr 9y ago
Exactly. And even if you have one million people making only a single prediction. Some people are going to be right. Especially because a downturn is like a 1 in 20 chance if you go by years. So out of a million people having one guess at the next downturn, about 200.000 will be right and can brag about it, without having any higher understanding about what happened (even if they will staunchly believe they understood something, because they were right).
- perl4ever 9y ago
  What I observe though, is not large numbers of people making random guesses and exponentially fewer being validated through random events. The people who become notable are those who predicted an economic crisis, for decades before circa 2008, and once they got notoriety for that, have continued to predict doom for the subsequent decade. Eventually they either die or are right again.
rkangel 9y ago
I understand what you're saying about selection bias, but he has given a reasoned argument, providing a model that matched reality in multiple places. You're response of "it doesn't always work" is without value unless it provides an example of where it doesn't work.
- olympus 9y ago
  His prediction would carry a lot more weight if he had written about it prior to the recession. A lot of people can say "I predicted that" after it happened, but those who have proof they can point to have a lot more credibility. All he has is that he "won a bet" after a "conversation with a friend." Unless he was wrote about it ahead of time, we have no way of knowing whether he also made a similar bet with another friend in a different conversation to say that housing prices were going to continue towards the moon. If he had also structured the bet in which he got his school payed for and seemingly no downside if he lost, then he could have guaranteed free school, and looked like Nostradamus either way. So it's quite possible that this is selection bias at work, and he "flips coins" on a regular basis and only brags about the ones that come up heads.

hedvig 9y ago

"I mean that when a tax or rent is paid in EVE, this does not cycle back into the economy, it just magically disappears. In the real world, when a property tax is paid it cycles back into the economy through expenditures on public infrastructure such as education and road maintenance" " Interesting - there's not a way to develop something in the game that could cycle it back in?

ztjio 9y ago
There are plenty of 'taxes' in game that are cycled back in. What is being referred to here are fees that deter certain gameplay styles such as not ever joining a real corp. That said, there are some currency sink fees that are used to help maintain reasonable economy stability as well. That's needed in any game with an important economy aspect.
MaulingMonkey 9y ago
There is and there has been! Simply cycling it back in is certainly doable, and arguably already done (or approximated) - I'd argue it's more the local infrastructure deterioration/modeling that isn't (fully) simulated in EvE, for NPC infastructure. A couple of gamedev terms: - Cash faucets - sources of currency generation / magically introduced into the economy, functionally equivalent to the bank printing currency in the real world. - Cash sinks - places where currency is magically destroyed / taken out of the economy, functionally equivalent to the bank destroying old currency in the real world. If your cash faucets and sinks exactly balance each other out, you could look at it as the bank simply reinvesting the currency instead of creating and destroying an exactly equal amount - externally, the net effect is identical. Of course, this is rarely the case - both in games and in real life. For the currency to be "healthy" and serve a purpose in a player economy, you want to avoid faucets outnumbering sinks to the point that you have extremely inflation. E.g. in Diablo 2, one would barter in known rare items - gold is effectively worthless, there are few effective sinks to sink it into. (Games of course usually use an impossible number of magical faucets and sinks - the kind of centrally planned economy that would require a star trek style post-scarcity environment run by complete and utter LARPing fanatics to ever pull off, contrasted to our current real world where you maybe have a single state bank trying to carefully control inflation with a currency printing lever.) Returning to EvE online: They still have a bunch of magical zero-maintenance infrastructure in "high security" space, but they've also added a lot of player buildable infrastructure that generally needs fueling and defense. If you don't pay for a road's upkeep in real life, it starts to get a few potholes. If you don't pay to maintain and defend your player owned stations in EvE online (be it through your money or your material and your time), someone's going to blow it up or take it from you - for amusement, profit, or both. This is a much stronger deterioration of infrastructure than you generally see in real life. (I forget how much of this player buildable infrastructure predates this article, if any.)

pupdogg 9y ago

I think it would be more impressive if you predict the NEXT recession.

iamdave 9y ago
Someone will figure it out with Steam.

FreekNortier 9y ago

Bookmarked this thread. Does anyone have information on what the current state of the global economy is and if we are facing another recession imminently?

erikb 9y ago
I have a glass ball and if I ask it nicely it will tell me.
YouKnowBetter 9y ago
I will tell you my predictions in 10 years.

daddosi 9y ago

I thougt it funny to spend a huge realestate tax increase on building aditional houses. Then do the same with food and utilities. Like government tossing the hot potato into the air and catching it again.

creo 9y ago

I used EVE ESI API (realtime cached in-game data) to test my resource management software. It turned out to be very close to final "real world" data. Disclaimer: Its for my own use only. Didn't sell it or even make available to anyone.

lucozade 9y ago

What he predicted was a correction to a housing bubble. Specifically, it seems, the Californian housing bubble. There is nothing particularly special about housing bubbles and their correction. This happens all the time. What he didn't predict was the effect that that correction in 2008 would have on the global financial system. That's because you'd need to include securitisation, how the big players were holding risk and the effect of perceived credit worthiness on short term liquidity. A while ago, when I looked into this, I found just one paper, written prior to the crash, that could reasonably be considered to have predicted what occurred. Unfortunately, I can't find it, if I do I'll add the link.

rando444 9y ago
I read a book prior to the crash that I consider an accurate prediction of what was coming. "The coming crash in the housing market" by John Talbott The author used a mountain of evidence and trends to back up the books premise, and going through it all it was hard to deny. Timing such an event though is always difficult, as exemplified by other books like 'The big short'.
mayukh 9y ago
And even if you did find something, how would you know if they were just lucky or truly prescient ? Folks are constantly predicting gloom and doom. Some have even made successful careers out of it, their low probability of predicting such catastrophes not withstanding. Relatedly there were several economists predicting bad things. https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082705 https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp0827... Its easier to say bad things will happen and be right eventually, the much much much harder part is to get the timing right.
- lucozade 9y ago
  That's my point. The paper didn't predict bad things happening. It specifically said that banks were holding higher level tranches of CDOs. Because they're MTM accounted they could suddenly drop in value if default rates increase. This, in turn, could cause other banks to suspect their creditworthiness and pull their funding lines. In other words, it was very specific about what it thought a collapse mechanism was and it turned out to be spot on. I don't believe they were either lucky or prescient. I think that they were well informed and joined the dots in a way that few others had.