In Fifty Days, Payments Innovation Will Stop In Silicon Valley • Hacker News Board

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#201

Post by [deleted] » Thu, May 12, 2011, 3:45 AM UTC

gburt wrote: post #193

redthrowaway wrote: post #180

Earlier quoted context omitted.

The mortgage crisis says hi. The problem with free-market ideologies isn't that the market won't adjust to consumer need, it's that it causes considerable pain in doing so and will only provide a counterbalance if there's a monetary incentive. Free market capitalism is, at it's core, evolution. It leads to amazing responsiveness, complexity, and, arguably, beauty. It also has made 99.99% of all species that have ever…

The Community Reinvestment Act seems to be a pretty likely stimulus for the mortgage crisis - incentivizing "anti-racist" behavior rather than good lending practices. Worse yet, the "considerable pain" you're trying to avoid gets worse over time -- as central bankers reduce interest rates (read: print money) to jack up growth until it gets too fast then pull money from the market (read: increase interest rates) to sl…

[deleted]

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#202

Post by tzs » Thu, May 12, 2011, 5:04 AM UTC

olalonde wrote: post #200

tzs wrote: post #142

Earlier quoted context omitted.

> No I don't think most regulations are good for society in aggregate, including building codes. Nearly every large earthquake proves you wrong on building codes. Compare deaths for a given magnitude quake in areas with strong building codes vs. areas with weak or no building codes.

That's not the point. Alcohol prohibition reduces alcohol related deaths. Doesn't make alcohol prohibition a good thing for society.

Alcohol has some societal benefits. Some people find it pleasurable, it helps some people overcome anxiety in social situations, and it helps programmers cope with the horrors of programming in Java.

I don't see what societal benefits structurally unsound buildings provide.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#203

Post by nazgulnarsil » Thu, May 12, 2011, 5:15 AM UTC

drndown2007 wrote: post #136

lhnn wrote: post #126

Earlier quoted context omitted.

I'd like to say this should not be legislated, and people should choose who to do business with on their own. If they offer the government a bond to cover losses, then people might go to that business instead of some startup. OTOH, perhaps I don't care when all I'm investing in my "Silicon Valley Facespacecash" bank is $20. Another reason to use alternative currencies...

That works in theory. But have YOU read all the fine print when opening an account with your bank? I haven't either -- everything we do is based on some common sense and trust. If we had to verify everything we did with everyone we did it, our way of life would end.

this amounts to saying people are not competent to manage their own lives. which is true, but don't cloak it.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#204

Post by anamax » Thu, May 12, 2011, 5:19 AM UTC

arethuza wrote: post #167

anamax wrote: post #125

Earlier quoted context omitted.

You weren't paying attention. The ratings were issued by companies that had been given a monopoly by govt. Securitized mortgages were a creation of govt. The idea that you're missing is regulatory capture combined with govt encouraging transactions that didn't make economic sense otherwise. (One of the underappreciated consequences of RC is that it amplifies "private" bad behavior and shuts out good behavior.)

"govt encouraging transactions that didn't make economic sense otherwise" More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages. As they didn't keep the mortgages for very long the level of risk they were accepting was low so they didn't do much checking on whether people could actually pay or not - they really didn'…

> More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages.

Selling them to GSEs. You do know what the "G" stands for, right?

And speaking of the GSEs, they lied about how many of the loans in their portfolio were subprime. As a result, no one knew that those loans were as common as they were, which threw off everyone's risk calculation.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#205

Post by nazgulnarsil » Thu, May 12, 2011, 5:22 AM UTC

dpatru wrote: post #176

nupark2 wrote: post #160

Earlier quoted context omitted.

If a company does a good job for a good price, its fame will quickly spread. So what happens when that company is bought out by new owners, starts skimping on product safety, and 1,000 people die before the market notices? If 1,000 people die, is the company held liable by the government? If people band together to enforce preventative measures in the community (even through private means), such that such a thing doe…

> If 1,000 people die, is the company held liable by the government? Intentional or negligent killing is prosecutable. I doubt, though, that not requiring bonding for a money-transfer startup will cause the deaths of 1000 people. As to businesses generally, tort lawyers as a class make a pretty good living holding businesses accountable. The Ford/Firestone controversy comes to mind. ( http://en.wikipedia.org/wiki/Fir…

I can always tell when a site has gone past the point of no return when comments like this are simply downvoted to oblivion. If you disagree state why.

but whatever, I always call these things. Internet communities refuse to be elitist about quality because they 1. believe in democracy and 2. are made up people who like to be inclusive because they were excluded as kids.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#206

Post by drivebyacct2 » Thu, May 12, 2011, 5:29 AM UTC

endian wrote: post #79

lutorm wrote: post #73

Earlier quoted context omitted.

... whose exchange rate against the dollar has gone up by a factor of 6 over the past weeks? If you had any debt nominated in Bitcoin, you'd be screwed.

...which is why you should define debts in terms of some weighted (USD, EUR, Gold, BTC, ...) currency basket and then pay in Bitcoin using its "exchange rate" at that time. One option: a volume-adjusted average of MtGox.com trades over the last K hours Another: use 0.001 of the amount to buy options to convert X Bitcoin into the agreed upon amount of (USD, ...). Market-making HFT bots will compete, making X the most…

But then you're effectively pinning the value, or debt value of BitCoin on the USD. I think that is counter to the idea of Bitcoin.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#207

Post by lhnn » Thu, May 12, 2011, 5:40 AM UTC

jbooth wrote: post #158

lhnn wrote: post #126

Earlier quoted context omitted.

I'd like to say this should not be legislated, and people should choose who to do business with on their own. If they offer the government a bond to cover losses, then people might go to that business instead of some startup. OTOH, perhaps I don't care when all I'm investing in my "Silicon Valley Facespacecash" bank is $20. Another reason to use alternative currencies...

While we're at it, why have contract law? People should be able to figure out on their own who's likely to keep their word, and the market will punish those who break it.

An argument against specific, outrageously expensive regulations for an industry does not equate to an argument against contract law. Your argument is invalid.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#208

Post by premchai21 » Thu, May 12, 2011, 6:12 AM UTC

drndown2007 wrote: post #136

lhnn wrote: post #126

Earlier quoted context omitted.

I'd like to say this should not be legislated, and people should choose who to do business with on their own. If they offer the government a bond to cover losses, then people might go to that business instead of some startup. OTOH, perhaps I don't care when all I'm investing in my "Silicon Valley Facespacecash" bank is $20. Another reason to use alternative currencies...

That works in theory. But have YOU read all the fine print when opening an account with your bank? I haven't either -- everything we do is based on some common sense and trust. If we had to verify everything we did with everyone we did it, our way of life would end.

> But have YOU read all the fine print when opening an account with your bank?

Yes. Paraphrased:

Bank agent: “You'll also have to sign this.” (Hands over a sheet of paper.)

Me: “Let's see here… […] ‘comply with the Deposit Agreement and Disclosure’. I need to see a copy of the Deposit Agreement and Disclosure, please.”

Agent: “Of course.” (Hands over a booklet.)

Me: “All right. Well, you may have to wait a bit…” (Starts leafing through the booklet. Cut to analog clock, then to clock fifteen minutes later.)

It was the same thing with signing up for public storage. “… ‘agrees to the Privacy Policy, which is incorporated by reference’. I don't seem to have a copy of the Privacy Policy here.” “Here you go,” and another sheaf of paper appears.

Note that in these cases I'm still basing my interpretation on a lot of contextual and cultural information, because while the alternative of trying to get them to lock down all the definitions separately would be amusing, it would fail. In many cases, every one of the relevant providers is in a position to drop me, whereas I'm reliant on at least one of them accepting me, so the power balance is tipped heavily in their favor.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#209

Post by arethuza » Thu, May 12, 2011, 7:48 AM UTC

anamax wrote: post #204

arethuza wrote: post #167

Earlier quoted context omitted.

"govt encouraging transactions that didn't make economic sense otherwise" More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages. As they didn't keep the mortgages for very long the level of risk they were accepting was low so they didn't do much checking on whether people could actually pay or not - they really didn'…

> More like the companies selling mortgages were desperate to get the loans off their balance sheets so that they could release the capital for new mortgages. Selling them to GSEs. You do know what the "G" stands for, right? And speaking of the GSEs, they lied about how many of the loans in their portfolio were subprime. As a result, no one knew that those loans were as common as they were, which threw off everyone's…

Actually, I was more thinking of banks like Northern Rock in the UK.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#210

Post by acabal » Thu, May 12, 2011, 7:52 AM UTC

tluyben2 wrote: post #39

pilif wrote: post #38

Here in Europe, PayPal (which is acting like a bank) had to get a banking license (like any other bank). As far as I know they didn't go bankrupt yet, so it can't be a wholly bad thing. If I drive a vehicle that acts like a car, I need a drivers license. If I run a service that acts like a bank I need a banking license. I really don't see a problem here.

They are talking innovation; sure Paypal can get licenses like that, but a startup can't. Most (by far) startups don't have 500k to lock away. And most don't have the money to pay the license fees. So yes, it's an issue as far as innovation of payment services goes; now suddenly you NEED to get millions in investment and that all doesn't go into the product but instead into government crap.

If your revolutionary banking startup can't dredge up $500k in the land where Color managed to get away with $41 million, then your banking startup probably isn't such a good idea to begin with.