Clay Shirky spends a few pages (p286..290) in his book digging into how as it becomes easier to communicate with others value of each message declines.  After a while everything looks like spam.  He mentions some examples of ways to work around that.  If a few thousand people show up for a political rally, if fans send a few tons of peanuts to the TV network, if activists send flowers the signal value is restored.

As far as I know there is not a good name for this.  “Hard to forge signal” might be good name, but clearly somebody needs to come up with a good tag line for this.

All of which suggests to me that there is money to be made in a service that creates hard to forge signals for a cost.  Such services exist.  There are plenty.    You can go to AbeBooks for example, order a book and send it to your recipient.  You can go to postful.com and send them a color postcard or a letter.  You can send tiny amounts of money thru paypal. There are quite a number of Facebook applications which allow you to spend a bit of money and tie it to your communications.  It’s interesting that there is money to be made in this.  Campaigns managers could use more services like the ones that helped the campaign to save the TV show Jericho, services to do the fufillment.  Online petition sites could hold money in escrow until the issue is resolved.

Of course this is what those racks of gift cards are about in stores; and why some junk mail includes a gift or even a dollar bill.

I’d love more examples or exsiting services you can use to address this example and ideas for new services.

This graph shows the the Counterparty Risk Index, or CRI.

That 400 is basis points, or 4%.

“Upfront spreads on CDS of 16% mean that investors seeking protection on $100 million of debt would need to pay $16 million upfront and $5 million a year.” — from a longer article at Marketwatch

As the risk rises the chance of any given transaction taking place falls.  I find it interesting to note that if you look after any venue where transactions are taking place you want this CRI to be low.  It doesn’t matter where, playground, office, eBay, farmer’s market, does it?  A trust thermometer.

Boy is it hard to learn all the vocabulary associated with this mess in the market, but I do find it all interesting.  For example, counterparty is a useful word.  It means: The other participant in a contract or swap.  So it is the union of buyers and sellers.  If  you’re  the seller the buyer is your counterparty, and visa versa.  It’s a particularly useful word when it becomes unclear who in the transaction is the buyer and who’s the seller, for example when your engaged in barter.  Pass a neighbor on the street, exchange greetings, and you become counterparties.  I like that there is a word for the participants in transactions where the commodities changing hands are harder to quantify.

When Mary smiles at Sally and Sally fails to return the greeting then Mary’s feelings are hurt. Mary took the risk that Sally would reciprocate.  That was her counter party risk.  A more concrete example of counter party risk: the local ice cream company recently went bankrupt and left it’s suppliers with worthless accounts receivables.  Those vendors might have purchased insurance to protect them from that loss.  I gather that in England you can buy insurance that your marriage won’t end in divorce.  I find myself imagining brats sitting on the playground wall placing bets on the chances Mary and Sally smile at each other when they pass.

Bets on the chances that a transaction between parties will go south for one reason or another go by many names.  One that’s in the news these days is credit derivatives.  As long as you can find somebody you sell you the insurance (or to make the bet with you) pretty much any counter party risk what so ever can be hedged.  Betting on the progress of Sally and Mary’s body language is at one end of the spectrum at the other end you can place bets on the chance a government will decline to pay back  its  debt.

The markets for those are signals about the reputation of a given counterparty.  Better than  eBay  reputation scores.  The German government has a better reputation then the US government for example.