
How I Used Eve Online to Predict the Great Recession (2013) - omnibrain
https://www.gamasutra.com/blogs/RaminShokrizade/20130405/189984/How_I_Used_EVE_Online_to_Predict_the_Great_Recession.php
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mjevans
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.

~~~
ricardobeat
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
This seems like it's basically a sustainable way to achieve the same effects
that inflation is typically used to achieve in western economies.

~~~
JBReefer
The Dutch more or less invented the Western economic model.

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

~~~
rkangel
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
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.

------
lucozade
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.

~~~
mayukh
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/sp0827...](https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082705)

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
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.

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nwah1
Yet another piece of evidence for why we should implement Land Value Taxation.

~~~
bufordsharkley
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)

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

~~~
iamdave
Someone will figure it out with Steam.

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creo
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.

------
0x445442
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
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

~~~
AlexCoventry
You could be waiting a while. If a government with good control over a
sovereign currency doesn't want a housing crash to happen, it can forestall it
for a long, long time by keeping interest rates low. People were predicting a
housing crash in the US starting in 2003, and people have been predicting one
in Australia for a decade.

~~~
brad0
What can force an interest rate rise?

Right now I can’t afford a house and would love to know the conditions that
would increase interest rates.

~~~
lotsofpulp
Defaults can cause interest rates to rise, which happen when expectations
aren't met. Such as labor costs rising more than expected, causing businesses
to default on their loans or shortage of a natural resource causing it's price
to spike. It can then cause a chain reaction of defaults and interest rates
rise to reflect the increased risk premium. Unfortunately, due to lags in the
feedback loop, this is inevitable as you can never accurately predict the
future.

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hedvig
"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?

~~~
MaulingMonkey
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.)

~~~
Mashimo
And here is a graph about the cash sinks and faucets:
[https://images.contentful.com/7lhcm73ukv5p/2mCQPkfNbWw0K2E64...](https://images.contentful.com/7lhcm73ukv5p/2mCQPkfNbWw0K2E64awEWw/86249411c0b1835a6897ecc26d22f56d/9a_sinksfaucets.png)

Taken from the monthly report:
[https://www.eveonline.com/article/p3j6gs/monthly-economic-
re...](https://www.eveonline.com/article/p3j6gs/monthly-economic-report-
january-2018)

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daddosi
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.

------
FreekNortier
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?

~~~
YouKnowBetter
I will tell you my predictions in 10 years.

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nosuchthing
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
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
Right, so moderator intervention... which still leaves those questions.

~~~
grzm
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.

