But in the end just like in all the wonderful disclaimers about investing money in the real world. Don’ invest it if you can’t afford to lose it. I have some money in a few places in SL and if it one day went poof, well I would be a bit upset, but it was my money to spend and I’m having fun in the process.

Now let’s also put something into perspective here folks especially those of us in the good ole’ US of A. Let me quote from author Fred Cederholm from Financial Sense Magazine.

“Real money backed by assets has morphed into unreal money backed by only liabilities. Look at any printed US currency in circulation and you see the words “Federal Reserve Note” printed across the top. This means that there is no intrinsic difference between $1, a $5, a $10, a $20, a $50, or a $100 bill. Each would generate the same amount of heat if ignited. The difference in value exists because our government says it does. The backing for the Dollar is heralded as the “full faith and credit of the United States of America.” While the phrase always gives me a surge of patriotic gooseflesh, I know as a CPA and forensic accountant it reduces to the fact that Dollars have perceived value only because the Federal Government has the ongoing power to tax! In the final analysis, it is only the future cash flow from US/ us which can pay down the debt or truly pay the interest on it – not just capitalizing it via still more debt.”

So folks if our “real money” in the “real world” isn’t backed by anything like precious metals anymore, and just laugh at some folks who think all the SL banks should just pack their bags and go home. It is a game, and as I and many others have before. If you invest it you should be prepared to lose it. I for one will continue to enjoy the financial sector of SL. I have meet some of the big players in the arena and while some I wouldn’t trust a goldfish with, others are making some sincere efforts to provide some honesty, and real data that investors can work with.

The article I quote from above can be seen here:
http://www.financialsense.com/editorials/cederholm/2006/1205.html

For all that was exposed in the comments, I suggest you delete the NOT from the title of you article.

I think that there are some real problems with giving a total financial balance sheet based on being a journalist. At the same time, biases should be disclosed. At the time of this article being written, I had banking accounts at SLIB and JT Financial that I opened. I invested on the AVIX, so when AVIX became SL Cap Ex, my dividend balance became a bank deposit at Allenvest Financial. The amount is very low and I didn’t chose to invest at Allenvest Financial, so I didn’t report that bank account. In none of these banks am I a major investor.

Morigi himself, the founder and owner of Rock Insurance, in an interview he gave me some time ago for SLNN.com stated very clearly that at this stage banks and companies are giving him just some numbers, without any real possibility to check them. Ask him…

Here, I wanted to add another thing, though. I think that the journalists (or bloggers, or whatever they want to call themselves) that are now trying to explain us that at least some banks are good, that not everything is totally Ginkoed and (many of them are saying so lately…) that Rock Insurance is great, well, they should also state, first of all, exactly how many lindens they have deposited or invested, in which banks, in which stocks and with which insurance. Then, maybe, they can try to convince us.

Nobody Fugazi has about the same ideas that are expressed in this article here, and to him too I asked to state where exactly he keeps his lindens. He just did not answer. I think that this is at least very unfair and very unacceptable from an ethical and professional point of view. Will SL Herald be better?

Fabio Medby.

Where are RL financial lending company is located, we are required to have our statements to be signed off in order to be able to solicit sophisticated investors, and the United States have very similar requirements.

Depositors, don’t be stupid. While Second Life can be viewed as a game or some form of entertainment, remember that the ginko $700,000 US was real hard cold deposited cash. Only the depositors can stop the existing banks from the pyramid scheme by asking yourself if you are comfortable with loosing your money before you make that next deposit. If you are still going to make that next deposit, well don’t come crying when the bank fails…

In taking a look at the Rock Insurance posted information, have to wonder how an insurance company can sell insurance with reserves that can not support wide spread claims… Would suggest that the owners of the Rock Insurance Company consult a insurance analyst or insurance actuary firm to find out what an insurance reserve really is… Insurance in the banking industry is based in reinsurance and have to wonder how this is possible with one Second Life insurance company?

Tyra hit the prim on the head so to speak. The way I see it there are technically no banks in SL, just commercial operations that chose to finance themselves with extremely short term debt for which they have to pay high double digit interest rates to buy virtual property, develop software applications and run web portals, etc.

But how can you trust the systems? Looking at a bank that reinvests deposits into land sales, the main avatar could just be faking the numbers of the landsales.

But perhaps a somehow trusted independent accountant that worked off of Excel with the meta data viewable would be a good start?

Sure, the companies could come up with fantasy statements, but, from the very nature of these, it would be possible for someone medium educated in accounting to be able to identify the coherence of the information. Also, there could be some kind of auditing on this info, based on reports generated by the systems that operate these financial institutions. Of course some “faith” is required, but, once you have numbers to rely on, at least to some extent, most of this faith can be replaced by rational analysis.