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It should be old news by now - Ginko Financial is no longer accepting deposits or withdrawals. In essence, it is no longer parading around in bank clothing. And suddenly people will be trying to figure out what a perpetual bond is, and how to deal with the website interface for WSE Live since they may have no experience with trading even fictional stocks.

It's not good, it certainly is not ideal, but it certainly is - so we have to deal with it. So let's navigate through this, shall we?

Dealing With Your Sudden 'Wealth' In Ginko Perpetual Bonds (GPB)

The latest on the Ginko customer transfers is posted on the WSE site:

GINKO CUSTOMER TRANSFERS
Submitted by: World Stock Exchange (WSE)
Date: August 09, 2007

All Ginko Financial customers will have an account automatically created on the World Stock Exchange and all Ginko Perpetual Bonds will have been issued to account holders within 48 hours. The World Stock Exchange will post an announcement when this process has been completed.

Once your account has been created you will need to reset your password by visiting a WSE ATM and typing: "reset password". You can view a list of WSE ATM locations here:
https://www.wselive.com/education/atms

GPB Does Not Mean Green Peanut Butter

But what are GPB? From the prospectus:

Ginko Perpetual Bonds are non-expiring bonds which yield L$0.01 per month each. The yield is guaranteed by Ginko Financial so your risk is minimized, though not completely eliminated. While the bonds do not expire, it is possible for the company to cancel them by paying a liquidation dividend of L$1 per share. The yield will not rise or fall because it is guaranteed by Ginko Financial, but the risk of bankrupcy still exists.

This fits with what a perpetual bond is.

What GPB basically are: Loans to Ginko Financial by former bank customers (in this context). So if you had 100 Linden dollars in Ginko Financial, you'll get the equivalent in bonds - and get paid about 3 Lindens a fiscal quarter. That payment will be within the WSE site, which you can withdraw from an ATM. The payment can be called a dividend or coupon - you can think of it as interest on your involuntary loan to Ginko Financial.

Basically, the move to GPB is a form of 'IOU' from Ginko Financial, except you can't send people with baseball bats over if there is a default.

What GPB are not: liquid. People will be trying to sell GPB to get their money back, but this will be subject to what people are willing to pay for it. As you can see here, the interface can be overwhelming at first glance.

The Interface and Things You Should Know About Trading

The Overview, Trading History and Last 10 Trades are indicators of recent performance. You can tell what the stock is presently worth, and even guesstimate the trend of the GPB based on recent performance. These will be important over time; despite your best efforts it is unlikely you will be able to sell your shiny new GPB because everyone else will be trying to sell. Who will be trying to buy? Likely it will be Ginko Financial itself, and perhaps a few speculative investors. Selling low to speculative investors will not help anyone but it can minimize your losses should GPB fold completely - and it will degrade the value of the bond for others.

There are areas where one can buy or sell the GPB. Don't play with them yet. Read the rest of this first.

Below the areas where one can buy or sell, you can see some Buy orders (on the left) and some Sell orders (on the right). The Buy orders are important, as if you do a Market sell, you will be filling those orders. The Sell orders are important because that gives a truncated list of everyone who is trying to sell - your competition. Look at those, see how many bonds are being sold and at what price.

If you decide to buy or sell GPB, you have two main options. One is the market sell (on the left), which is almost always a bad idea because it simply sells the stock at the Buy order prices. Buy order prices are frequently put in place for day traders who cycle the bonds for a profit margin. I cannot see that much of that will be done in the case of GPB, but be advised that it can happen. Assume that it will.

Placing a sell order gives you more control. You can choose the minimum price you would sell for and let it sit there in the hope that someone will buy it.

Basically, you have 3 options.

1. Option 1 is to sell at very low rates.
2. Option 2 is to attempt to sell at rates which reflect the value of your Linden dollars, or better.
3. Option 3 is to sit on the bonds and see if they pay.

This Sucks

Yes, it does suck. Basically, Ginko transferred a lot of financial responsibility from itself and gave its clients the same problem that they had: The markets invested in on WSE are not liquid, and nobody really seems to want to invest in Ginko Financial. Instead of getting it 'hard and fast' with an immediate loss of funds, this draws it out into a 'slow and hard' sort of copulation of your fiscal resources. That does suck, especially in the short term.

In the longer term, remember that in the prospectus, the risk factors state:

Ginko Financial might be unable to meet it's financial obligations with bond and account holders. In such a case Ginko Financial's assets would be liquidated and divided among both bondholders and accountholders. This could represent a significant, possibly complete loss of the capital invested.

The specific risks which Ginko Financial faces are many and cannot be listed here. For more info see the WSE's Terms of Service.

So if Ginko finally does sell it's investments - something which seems unlikely to happen in the future - people who own bonds will get a proportionate share of the sale of its investments. With ATMs no longer accepting deposits, the money isn't coming from others who are depositing to Ginko ATMs. The interest rates, as well as any liquidation by Ginko Financial, must come from present and future investment by Ginko.

Boiled down, any financial instrument is only worth as much as someone else is willing to pay for it.

And remember - as I noted before, Ginko Perpetual Bonds have both Nicholas Portocarrero and Lukeconnell Vandeverre on the board of directors.

What Will Linden Lab Do?

Considering Philip Linden's recent comments, you can expect Linden Lab to do as much as it normally does when people lose money on 'resident transactions'. Unless, of course, you're the WSE. Then Zee Linden will apparently be all over it. Maybe.

Can You Sue?

For those of you wondering whether you can sue, this comment by Benjamin Duranske demonstrates the problem with that:

Rasta - there’s a really interesting question there — can’t we all sue this guy? That’s an interesting thought. There’s a lawsuit right now regarding the game World of Warcraft where a bunch of players in a class action suit are suing a gold farming company for damaging the economy of their world. Not much has happened yet in the case, but it’s out there. The problem here is that it’s pretty hard (though not impossible) to sue someone in a foreign country. And it’s even harder to get their assets if you win. So in this case, if you’re not in Brazil, it would be an uphill battle to get to Sanchez’ assets, and if you’re talking about the guy who registered the domains, he’d certainly be easier to sue (though according to the “Official Ginko Blog” he has moved since the domains were registered) but I’m not sure how much he really ended up with in the end. I wouldn’t be that surprised if somebody brought a suit here, but I’d not put the odds much higher than 50/50.

Your second question (re: the value of Lindens) is important too. I’m working on a piece about that right now, actually, so check back in. I plan to have it up in a day or so.

For looking at the legal aspect of things - do check out VirtuallyBlind for a balanced perspective by a real lawyer, though he's in the US. Europe and other parts of the world may have some variances on all of these legal issues.

Community Notes

Forepawz Golem and Craig Solzhenitsyn really stuck it out there by informing people at the ATMs. They deserve some respect; as volunteers they took the brunt of the community's anger and distress. Don't orbit or cage them. It isn't their fault.

Benjamin did a nice community post, but it's not that easy. The sad truth is that people have lost money, and I know people who have lost millions of lindens in Ginko Financial - to the tune of over $5,000 US. While some would want to run around and say, "I told you so" right now - chill out, you're not making matters better and are only painting yourself in a bad light. Let people be angry at what they are supposed to be angry about. There is a sad lesson that the community has to learn here, and no amount of annoying comments will make that bitter pill easier to swallow for people. Leave your ego in the refrigerator, maybe it will contract to a size which is more bearable for the community.

If you want to be another Prokofy Neva, that's fine, but expect to be as respected as she is. She thinks I, for example, fear her. The truth is I just don't want to waste time and energy on someone who is as big as the time and energy dedicated to her. I don't feed trolls.

Going forward, again, we will have a fiscally more intelligent community - so what this issue with Ginko should be saying after being filtered by the community is:

• We want better investment or we will not invest.
• We want more transparency or we will not invest.
• We want more realistic expectations on our investments
• We want better policy from Linden Lab when it comes to these things.

And what everyone needs to know - and know right now - that these demands should now be made on where the GPB now are: The WSE. The other exchanges are not immune, but WSE is where the GPB are.

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