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Contagion is a poor word, IMO. I would use "house of cards". "Contagion" suggest completely innocent players getting affected and dragging others. IMO anybod

Contagion is a poor word, IMO. I would use "house of cards". "Contagion" suggest completely innocent players getting affected and dragging others. IMO anybody "investing" large sums of money on behalf of others is responsible for understanding what they are doing. I use quotes around investing because most of these companies do not really invest even on a good day when they don't touch crypto -- most just speculate on price which is completely different from investing -- which is putting money into something that produces more money because you think it is is sound and will be producing more in the future.

davidgerard 4y ago
it's the proper term in economics, but yes
- twawaaay 4y ago
  It is, but I don't like it because it suggests that things happened to affected companies due to purely external reasons. It is like my daughter saying "the glass fell from the table and broke". No, it was you who dropped the glass or at least placed the glass in vulnerable position where it can tip off the table easily. Blaming the glass for it breaking is not very useful because it elicits no correction and same for companies -- suggesting companies were innocent bystanders suggests nothing has to or can be done about it.
  - davidgerard 4y ago
    even in economic usage, there's often an implication of "and then these craven assholes", c.f. the recent FSOC paper on systemic risk of crypto
  - anonymoushn 4y ago
    Sure, just like if someone leaves their money in Paypal or Wells Fargo it's their fault they got scammed.
dmak 4y ago
> Contagion is a poor word > "Contagion" suggest completely innocent players getting affected and dragging others. ??? That is what is happening in the FTX saga... What are you talking about?
- skrebbel 4y ago
  For years plenty of people have kindly explained to whoever would listen that crypto is 99.9% a scam. Uninformed individuals buying into the hype are victims, but every investor in FTX or any related firm knew exactly what they were doing and chose to take the risk they took. They’re responsible for their losses and complicit in the scam.
  - Telamon 4y ago
    Except that FTX isn't "crypto" it is/was a centralised exchange, a company just like others. So whether you believe crypto itself is a scam or not, this is straight up old-style fraud from a company doing things they shouldn't, so not really the same thing.
    - ves 4y ago
      FTX had enormous crypto holdings and made investments in companies you’d definitely consider crypto companies, notwithstanding that there aren’t any “pure” exchanges in the crypto world anyway—they all get their noses in it.
    - compsciphd 4y ago
      FTX wasn't just an exchange for crypto. they had their own crypto token, FTT. the whole fraud is based around the fact that the valuation of FTT was in reality fraudulent.
      - Telamon 4y ago
        No it isn't. That's what SBF is trying to tell people to make it sound like it's just a story of incompetence and incorrect valuations. They stole user deposits which were specifically not meant to have anything done to them but be held and used them in the trading arm/to prop up other things. The price of FTT shouldn't have mattered to anyone not holding FTT. But yes the precipitant here was that they had clearly been thinking "oh we have loads of FTT still so can always sell that to cover user withdrawals and won't get caught".
danuker 4y ago
I only somewhat agree. If you are tricked or scammed into believing an investment is better than it is, then some blame is on the one doing the defrauding.
- twawaaay 4y ago
  If you put $1B of somebody elses money with no or BS research then it is still your fault. It sometimes seems to me I put more effort into researching products I buy on Amazon than some of these do when transferring hundreds of millions of dollars.
  - danuker 4y ago
    How could you detect secret preferential treatment? You could only do so after something happened to expose it. From Wikipedia: > According to John J. Ray III, Alameda had a “secret exemption” from FTX’s auto-liquidation protocol. This could only become apparent once Alameda was not margin called when it should have been. Which is when something went quite wrong to trigger the need for the margin call.
    - twawaaay 4y ago
      It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). In almost every case those bad deals had red flags all over them if you only care to look. "Crypto" is red flag enough -- anything about it should already be treated with extreme caution. It has always been interesting to me to see people go do a version of a woman falling for a man who mistreated his ex wife. No. If he mistreated his ex wife it is very likely he will do the same to you. It is a matter of character and changing ones character substantially is very difficult because it requires you to have qualities that you are missing if you are a bad person.
      - gjvc 4y ago
        It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). This is very true. If you've ever had a "bad boss" at work, chances are that they did not do just one thing, but many things that were bad / against other people's interests.
popcorncowboy 4y ago
I'd suggest that all investing is fundamentally "speculating on price".
- twawaaay 4y ago
  No, that is not true. The idea of speculating is "I don't care understanding the underlying business, the only things that matters is the price is going up". But that does not mean there are no people actually investing. Investing means you understand at least to some degree the thing you are investing in and you think it is sound investment -- meaning there is good enough chance the money you will put in it will get multiplied over time. When actually investing you don't really care about short term price changes. When my stock falls rapidly I instantly check the news about my company to see if there exists some fundamental reason for the fall and if there is none -- I usually start thinking about whether it makes sense to buy even more of it while "stupid" speculators let it become cheap.
  - popcorncowboy 4y ago
    All investing is fundamentally a prediction about the future. Getting comfortable with a level of risk, doesn't change the fact that all predictions about the future are definitionally speculative. "Investing" vs "speculating" is a matter of degree, not kind.
    - sime2009 4y ago
      Traditional investments have ways of generating and returning money without selling the asset itself. For example, stocks in companies can pay dividends, real estate can return money by renting out properties. They are positive sum games and the risk of loosing money is much lower. Speculating, like gambling is a zero sum game (at best). Any gains come directly from other players. They are inherently risky. There is a qualitative difference here.
      - lordnacho 4y ago
        No, GP is right. "Speculating" is merely a loaded term for investment that the writer does not approve of. There's any number of plausible reasons why one person's investment is another's speculation: - Is technical analysis investing or speculating? - How much do you need to know to call it an investment? Do you just need to have heard of FTX, or do you need to have gone to visit for due diligence? - How do you know it's zero sum? A business model may appear later that makes it positive sum. EOTD we're talking about decisions under uncertainty. That's literally all decisions. > Traditional investments have ways of generating and returning money without selling the asset itself. For example, stocks in companies can pay dividends, real estate can return money by renting out properties. They are positive sum games and the risk of loosing money is much lower. This part is particularly suspect. Let's say I make a crypto exchange and sell shares in the company. Let's say it pays dividends. Is buying my shares speculating or investing? Look at real estate, your other example. There's a massive real estate collapse going on right now, with enough empty units to fit all of Germany in it. Is that speculating or investing?

davidgerard 4y ago

it's the proper term in economics, but yes

twawaaay 4y ago
It is, but I don't like it because it suggests that things happened to affected companies due to purely external reasons. It is like my daughter saying "the glass fell from the table and broke". No, it was you who dropped the glass or at least placed the glass in vulnerable position where it can tip off the table easily. Blaming the glass for it breaking is not very useful because it elicits no correction and same for companies -- suggesting companies were innocent bystanders suggests nothing has to or can be done about it.
- davidgerard 4y ago
  even in economic usage, there's often an implication of "and then these craven assholes", c.f. the recent FSOC paper on systemic risk of crypto
- anonymoushn 4y ago
  Sure, just like if someone leaves their money in Paypal or Wells Fargo it's their fault they got scammed.

dmak 4y ago

> Contagion is a poor word > "Contagion" suggest completely innocent players getting affected and dragging others. ??? That is what is happening in the FTX saga... What are you talking about?

skrebbel 4y ago
For years plenty of people have kindly explained to whoever would listen that crypto is 99.9% a scam. Uninformed individuals buying into the hype are victims, but every investor in FTX or any related firm knew exactly what they were doing and chose to take the risk they took. They’re responsible for their losses and complicit in the scam.
- Telamon 4y ago
  Except that FTX isn't "crypto" it is/was a centralised exchange, a company just like others. So whether you believe crypto itself is a scam or not, this is straight up old-style fraud from a company doing things they shouldn't, so not really the same thing.
  - ves 4y ago
    FTX had enormous crypto holdings and made investments in companies you’d definitely consider crypto companies, notwithstanding that there aren’t any “pure” exchanges in the crypto world anyway—they all get their noses in it.
  - compsciphd 4y ago
    FTX wasn't just an exchange for crypto. they had their own crypto token, FTT. the whole fraud is based around the fact that the valuation of FTT was in reality fraudulent.
    - Telamon 4y ago
      No it isn't. That's what SBF is trying to tell people to make it sound like it's just a story of incompetence and incorrect valuations. They stole user deposits which were specifically not meant to have anything done to them but be held and used them in the trading arm/to prop up other things. The price of FTT shouldn't have mattered to anyone not holding FTT. But yes the precipitant here was that they had clearly been thinking "oh we have loads of FTT still so can always sell that to cover user withdrawals and won't get caught".

danuker 4y ago

I only somewhat agree. If you are tricked or scammed into believing an investment is better than it is, then some blame is on the one doing the defrauding.

twawaaay 4y ago
If you put $1B of somebody elses money with no or BS research then it is still your fault. It sometimes seems to me I put more effort into researching products I buy on Amazon than some of these do when transferring hundreds of millions of dollars.
- danuker 4y ago
  How could you detect secret preferential treatment? You could only do so after something happened to expose it. From Wikipedia: > According to John J. Ray III, Alameda had a “secret exemption” from FTX’s auto-liquidation protocol. This could only become apparent once Alameda was not margin called when it should have been. Which is when something went quite wrong to trigger the need for the margin call.
  - twawaaay 4y ago
    It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). In almost every case those bad deals had red flags all over them if you only care to look. "Crypto" is red flag enough -- anything about it should already be treated with extreme caution. It has always been interesting to me to see people go do a version of a woman falling for a man who mistreated his ex wife. No. If he mistreated his ex wife it is very likely he will do the same to you. It is a matter of character and changing ones character substantially is very difficult because it requires you to have qualities that you are missing if you are a bad person.
    - gjvc 4y ago
      It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). This is very true. If you've ever had a "bad boss" at work, chances are that they did not do just one thing, but many things that were bad / against other people's interests.

popcorncowboy 4y ago

I'd suggest that all investing is fundamentally "speculating on price".

twawaaay 4y ago
No, that is not true. The idea of speculating is "I don't care understanding the underlying business, the only things that matters is the price is going up". But that does not mean there are no people actually investing. Investing means you understand at least to some degree the thing you are investing in and you think it is sound investment -- meaning there is good enough chance the money you will put in it will get multiplied over time. When actually investing you don't really care about short term price changes. When my stock falls rapidly I instantly check the news about my company to see if there exists some fundamental reason for the fall and if there is none -- I usually start thinking about whether it makes sense to buy even more of it while "stupid" speculators let it become cheap.
- popcorncowboy 4y ago
  All investing is fundamentally a prediction about the future. Getting comfortable with a level of risk, doesn't change the fact that all predictions about the future are definitionally speculative. "Investing" vs "speculating" is a matter of degree, not kind.
  - sime2009 4y ago
    Traditional investments have ways of generating and returning money without selling the asset itself. For example, stocks in companies can pay dividends, real estate can return money by renting out properties. They are positive sum games and the risk of loosing money is much lower. Speculating, like gambling is a zero sum game (at best). Any gains come directly from other players. They are inherently risky. There is a qualitative difference here.
    - lordnacho 4y ago
      No, GP is right. "Speculating" is merely a loaded term for investment that the writer does not approve of. There's any number of plausible reasons why one person's investment is another's speculation: - Is technical analysis investing or speculating? - How much do you need to know to call it an investment? Do you just need to have heard of FTX, or do you need to have gone to visit for due diligence? - How do you know it's zero sum? A business model may appear later that makes it positive sum. EOTD we're talking about decisions under uncertainty. That's literally all decisions. > Traditional investments have ways of generating and returning money without selling the asset itself. For example, stocks in companies can pay dividends, real estate can return money by renting out properties. They are positive sum games and the risk of loosing money is much lower. This part is particularly suspect. Let's say I make a crypto exchange and sell shares in the company. Let's say it pays dividends. Is buying my shares speculating or investing? Look at real estate, your other example. There's a massive real estate collapse going on right now, with enough empty units to fit all of Germany in it. Is that speculating or investing?