Brother, can you spare me an ISK?

More virtual-life-imitates-real-life news from the futuristic universe of EVE Online, where EBANK, one of the game’s largest financial institutions, has frozen all deposits after new management discovered a 1.2 trillion ISK (InterStellar Kredit) hole in the accounts.

At first glance this seems to be a repeat of the Second Life banking fiascos of 2007, but, to be fair to the directors of EB, they do seem to have been trying to run a proper retail banking operation rather than just a glorified Ponzi scheme, with interest paid to depositors theoretically covered by interest charged to creditors.

The initial stories of EB’s troubles focused on the embezzlement of 250 billion ISK by the bank’s former CEO, but what really seems to have done the damage is the spectacularly high level of bad-debt provision. Just about the whole of EB’s loan book looks to be unrecoverable, a failure of risk-management that makes even the most delinquent of real-life banks look ultra-cautious.

It is, I think, another example of cargo cult consciousness, the belief that you can capture the essence of something by replicating its superficial form. In this case EB did the things that a real bank does, like taking deposits and making loans, but without the social infrastructure than underpins such a business in the real world, like a legal system that allows creditors to pursue their debtors and seize their assets. More importantly, institutions of finance capital can only exist in the context of a system where there is actual value being produced, rather than an imaginary universe where work ultimately counts for practically nothing.

It’s surprising that anyone still believes that banking and other financial wizardry can magically create wealth, rather than just existing parasitically on the labour of the workers, given that recent events in the real world have shown up the masters of the universe for the frauds that they are. (ISK also stands for Icelandic Krona, and we all know how well that’s been doing recently.) A certain suspension of disbelief is required to enjoy the experience of EVE Online; perhaps for the more avid players their time in New Eden detaches them from reality altogether.