Subprime Troubles Crushing Second Life Real-estate Values
by Walid
Imaginary World to Face Real Life Problems(Second Life : Linden : Ucs News) The problems in the U.S. subprime mortgage market are spiraling out of control and have caused a virtual financial crisis, said economist Mark Zandi. The Second Life financial markets are in peril from more than $1 trillion in risky virtual mortgages, we could be just one hedge-fund collapse away from a global online liquidity crisis, said Zandi, chief economist for Moody's Virtual

A total Second Life Real-estate meltdown is likely, as the risks are growing daily, Zandi emphasized in a conference call with reporters following the release of a new study on subprime debt. The study shows that the Second Life housing crisis in Linden could be deeper and last longer than investors now believe.

With iconic structures like the Budweiser virtual pavilion and associated housing complex sitting empty and nearly bankrupt the problems are spreading into other virtual worlds. "Mounting mortgage delinquencies and defaults now pose the most serious threat to the entire Second Life financial system and economy," said Zandi in his report.

"If there is a fault line in the Second Life financial system, it runs through the U.S. housing and mortgage markets," he said.

Zandi's comments came as Second Life is reeling from lower than announce traffic and a growing online credit crunch, centered on the subprime arena, and in Linden's corporate debt market.

The shocks are rippling through the Second Life stock exchange, "I have no doubt the shares of listed virtual companies will be suffering." said Zandi

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Unconfirmed Sources political satire and news story parodies as represented above are written as satire or parody. They are, of course, fictitious.

Your Comments

kl wrote:
Chuck Schumer needs to organize a virtual bailout for all the virtual FB's. I wonder if all the Blacks and Latinos are hardest hit in second life like the media says in the real world? This is really assinine.

Dominus wrote:
This was funny.

John M wrote:
The devil of it is, I take the fantasy / reality correlation seriously. This post was even on Implode-O-Meter, but then, it is the weekend!

mehere wrote:
what was the date of printing this news release??
LL recently out-lawed all gambling.
This likely caused the recent market fluctuations.
In addition to that, the wse was rocked by peril after peril.
But, hey, that is exciting news.
Too much virtual land being created, may lead to lower virtual land values.
Fire sales of land leads to lower average prices of land that is sold, too. The general prices of land might be somewhat stable, but if one large land owner decides to have a fire sale, and liquidates real quick at real low prices, then the average price of land sold goes down too.
Other people might look at that and react by reducing what they expect to get out of selling virtual land.
Buyers and bidders of virtual land, may then start to buy and bid lower.

Jake Planer wrote:
This is obviously a joke. The thought that RL sub-prime lending woes affect the SL economy is absurd, and although the closing of casino's could cause sales of some land, there were not THAT many casino's in SL as a percentage of all land. LL sells new sims almos daily, and have added new sims to the land to keep up with demand. All they need to do is skip a few days to compensate for the dumping of some parcels. In addition, the number of people that borrow L$ to buy land is minimal. The land is owned outright in almost all cases! Land prices in SL will flutuate, as will the Linden Dollar value, but it is unrelated to the US and/or World Economy

fear wrote:
Some of you people are tools.... ITS A JOKE!

Dominus wrote:
I hear the Dollar is falling against the Linden, though.

Prokofy Neva wrote:
Actually, I have more customers because while their RL houses have been foreclosed on, their Second Life houses only cost them about $17.32 US a month so they can go wild.

There isn't a huge mortgage market in SL because the avatars are anonymous so it's very insecure, but you can secure the loan by holding their land until they pay. It hasn't proven that popular because most people rent, or they buy land themselves outright.

The sub-prime thing has really affected the clothing and attachments market -- people buy more of them than ever because entertainment always does well during recessions.

Starter homes and prefabs are way down though (premium accounts). Why? Analysts blame the gambling ban and Supply Linden printing Lindens out of thin air and selling them on the LindEx like Yeltsin used to print rubles! I think Greenspan Linden needs to reduce LindEx fees, raise weekly stipends and take the heavy hand off the land-creation machine, because it gluts the land market. Send the sim-makers on a 14 day holiday, the economy will be completely fixed by the time they get back tanned and rested. That's the great thing about a fake world, when it breaks you can fix it very quickly.

Kathy T. wrote:
This is an awesome post. I've linked to you on Shak & Jill!

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