Lacöon I

Let's make this simple. Which of the following statements do you disagree with:

A) Regional financial centers exist outside of the Solarian League.

B) The Solarian League cannot force the regional centers outside of the League to cut off Manticore, because those financial centers are critically dependent on the wormhole network.

C) The Solarian League cannot afford to cut itself off from the regional centers outside of the League, because it still needs to conduct trade with systems outside of the League.

SWM wrote:Let's make this simple. Which of the following statements do you disagree with:

A) Regional financial centers exist outside of the Solarian League.

B) The Solarian League cannot force the regional centers outside of the League to cut off Manticore, because those financial centers are critically dependent on the wormhole network.

C) The Solarian League cannot afford to cut itself off from the regional centers outside of the League, because it still needs to conduct trade with systems outside of the League.

All of them

Outside centers are minor and depend on much larger ones. My example of a small center choking completely on what is routine transaction of a major center exists mad I don't think you have addressed it.

You can choose to trade with the league or not. Choose.

No they do not. What does France NEED from Niger or Somolia? What percentage of EU trade doesn't go to or from the top 40 economies?

SWM wrote:Let's make this simple. Which of the following statements do you disagree with:

A) Regional financial centers exist outside of the Solarian League.

B) The Solarian League cannot force the regional centers outside of the League to cut off Manticore, because those financial centers are critically dependent on the wormhole network.

C) The Solarian League cannot afford to cut itself off from the regional centers outside of the League, because it still needs to conduct trade with systems outside of the League.

If the regional centers are small enough it seems (to me) almost irrelevant if the League can successfully cut them off for not blocking trade to Manticore.


The key point is we don't know how larger, or how numerous, the regional or local finance centers are outside of the League and the GA.

But personally I'd assume they were pretty small. Scaled to handle the financial needs of less prosperous and less connected verge and beyond systems. Which means I mostly reject C. The League might not be able to survive cutting off contact with every financial center outside of the GA. But it almost certainly can afford to cut off a number of them as examples. (And I doubt the Verge and beyond is unified enough to stand together and retaliate by all cutting off the League if the League cuts off any one of them) None of them seem likely to be big enough to have a significant effect on the League's economy.


The corollary to that thought is that even collectively those remote regional finance centers probably handle a very small fraction of the finances of those of the League or the GA. Which means that the League really doesn't need to cut them off to block significant financial linkages with the GA. The little regional centers don't have enough liquidity to plumb those two economies back together once the direct links are cut. The leakage that can get pushed through them just doesn't seem enough to be a short term issue -- not like some previous posts seemed to be assuming.

SWM wrote:I have not forgotten that. What I am saying is that if systems outside the League back then needed regional financial services, then systems even farther outside of the League today certainly need the same. You seem to think that all systems outside the League are like Nuncio. That simply isn't true. Systems outside of Sol back before the Final War apparently needed interstellar financial services. After the war, they expressed that need by creating a distributed financial network, which developed into regional financial centers. Yes, most of those early systems were eventually absorbed into the Solarian League, but the distributed network continued to grow as explored space expanded. There is a lot more space outside of the League than inside it. Something like 80% of the inhabited systems are outside of the League. They need interstellar banking. They need to exchange stocks and bonds. They need regional financial centers, so they don't have to rely on League financial centers six months away.

Most of the banking systems outside of the League simply aren't big enough to really bother the League, other than the SEM, which is likely the only large banking sector not in the League. It's pretty firm lore that I've seen that says other than a very few stellar nations, the SEM being the largest (in terms of economic power), there really -aren't- any other large political systems. Haven was unusual in that it was the second largest in known space and it paled compared to the League's size.

You have repeatedly mis-stated what I am saying. I'm not sure if you are misreading what I write, or are deliberately creating straw men. I have not said that "they are all spread outside of SL control." I am saying that regional centers outside of the League exist, and that they are an important factor in interstellar financial transactions. The fact that Manticore is such a regional center is proof that regional centers outside of the League exist.

I'm disputing your statement that there are any other powerful regional financial centers other than Manticore's outside of the League. Unless there is a large economic base to support such a financial center, there won't -be- any need for a strong financial area, just minor ones.

I have never disagreed with that statement. What I disagree with is your assumption that the League can ignore the other regional financial centers outside of the League. Yes, the League will try to cut off all Manticoran financial interests within the League itself. Absolutely agreed. But I don't think the League can force regional centers outside of the League to cut off Manticore, nor do I think that the League can cut itself off from those regional centers outside of the League. Not if it wants to actually conduct trade with anyone outside the League.

I think it can because it has to if they trade with Manticore. Fighting the war with Manticore means they have to hurt it economically. This means strangling as many sources of revenue as possible. And as others have pointed out, unless those minor/second rate financial systems want to cripple themselves, they -will- have to toe the line or pay a very heavy economic price. Unless Manticore/GA can step in and take over which is a distinct possibility, but the power of the SL's economy and financial system cannot and should not be underestimated.

Johnathan S put it very well. I am assuming, like he is, that most of the regional centers on the Verge and beyond just aren't large enough to do any real damage to the SL or will have to pay the cost of doing business with the SL if they want to continue to trade with them.

Just to throw another angle into this fascnating discussion (economics was my weakest subject in College, but I can balance my checkbook...).

Remember, based on textev from several sources (most recently Shadows of Freedom), virtually all of the Protectorates and many of the Verge systems (like Mobius, Loomis, Shraphim, and Swallow, even Meyers) are dominated by the Transtellars, either as 'partners' with Frontier Security (in the Protectorates) or are under the threat that if they get out of line with the Transtellars, the OFS will use it as an excuse to move in (see Mobius).

And based on textev from SoF, those transtellars tend to completely dominate the economy of those planets, and especially anything to do with trade and economics outside of the planets' hyper limit. They run them as their own personal fiefs and strip value from them, often doing long-term damage for short-term profit (not the first time in history that's happened).

And the Transtellars are based (if not 100%, then 99% IMHO) in the SL, and do most of their banking in the SL.

So, again IMHO (and remember those low grades in Economics), I think that lots of those 'independent' systems, especially those that have something financially worthy for interstellar trade, actually have economies that are tied to SL banking and financial centers by their transtellars, and never have had the opportunity to build their own regional systems (which was what the Rembrant Trade Association was trying to avert in Talbott).

Of course, with FF havng it's own troubles and things being stirred up my the MAlignment (and probably by the GA simply by whipping the Sollies butts), there may be some major...adjustments....occurring on a lot of planets and the Transtellars may find themselves a little hard-pressed (or worse, if they don't get off the Protectorate/Verge planet in time...)

We shall see, eventually.

IMHO as always. YMMV.

Press on.

Hi Zakharra,

This has been an excellent thread,

I still think people are forgetting the time requirement for round trips out to the other financial centers.

NTM the whole question of how the mandarins can enforce anything when Battle Fleet is toast, and FF isn't much better as the evidence piles up, especially that the mandarins have lied about so much, how much weight will their word carry now when its most critical?

I'd expect the verge and beyond financial centers to receive some quick attention from the GA soon after it was formed to reassure them, perhaps a visit from the local force controlling the nearest wormhole if its convenient, to provide the latest news and encourage trade to continue etc.

Meanwhile the mandarins only realised they were in a real war after they learned what happened to Filaretta, which was in June, so trying to shut down the other financial centers only seriously started in late June or July.

So the message took a month to get to the protectorates, and from there another month or two to travel beyond the verge to lay down the SL's law at the FC's within ~700 LT of Sol, the nearest to the verge and beyond financial centers, less for the shells but even the SLN doesn't have all the excess ships just waiting to be sent off to lower the boom, the SLN may have more urgent priorities.

Assuming the mandarins insist, and given the FF BC's are being assembled for their commerce raiding mission, the biggest ships the SLN can send are thus heavy cruisers, the majority of which mass less than 286,000 tons IIRC.

That's really going to impress the verge and the shells, when there could easily be local [they might have ex-FF Indefatigable BC's 3 times the CA's tonnage] if not GA heavy cruisers and BC's wandering nearby among the protectorates and shells that are far bigger and much more powerful, while news of NT, Spindle, Zunker and particularly Saltash has had several month's to percolate beyond the verge even if there isn't a convenient wormhole termini nearby, warning that even RMN DD's can now destroy FF BC's quite easily.

Then the question becomes how long can the heavy cruiser stay, that being the only way the anti-Manticore edict will remain in effect; and given the increasing chaos in the league, just how convincing will those threats and arguments be when the news soon comes of BF's destruction and many systems including from the core all leave, possibly including those from whom many of the crew are from?

The SL will indeed try to cut Manticore from its financial links, I just don't think such attempts will last long enough before the SL has too many other problems surviving under the now arriving avalanche that the financial ones are dropped because other necessities have higher priorities, however wrong that may be.

L

Zakharra wrote:

SWM wrote:I have not forgotten that. What I am saying is that if systems outside the League back then needed regional financial services, then systems even farther outside of the League today certainly need the same. You seem to think that all systems outside the League are like Nuncio. That simply isn't true. Systems outside of Sol back before the Final War apparently needed interstellar financial services. After the war, they expressed that need by creating a distributed financial network, which developed into regional financial centers. Yes, most of those early systems were eventually absorbed into the Solarian League, but the distributed network continued to grow as explored space expanded. There is a lot more space outside of the League than inside it. Something like 80% of the inhabited systems are outside of the League. They need interstellar banking. They need to exchange stocks and bonds. They need regional financial centers, so they don't have to rely on League financial centers six months away.

Most of the banking systems outside of the League simply aren't big enough to really bother the League, other than the SEM, which is likely the only large banking sector not in the League. It's pretty firm lore that I've seen that says other than a very few stellar nations, the SEM being the largest (in terms of economic power), there really -aren't- any other large political systems. Haven was unusual in that it was the second largest in known space and it paled compared to the League's size.

You have repeatedly mis-stated what I am saying. I'm not sure if you are misreading what I write, or are deliberately creating straw men. I have not said that "they are all spread outside of SL control." I am saying that regional centers outside of the League exist, and that they are an important factor in interstellar financial transactions. The fact that Manticore is such a regional center is proof that regional centers outside of the League exist.

I'm disputing your statement that there are any other powerful regional financial centers other than Manticore's outside of the League. Unless there is a large economic base to support such a financial center, there won't -be- any need for a strong financial area, just minor ones.

I have never disagreed with that statement. What I disagree with is your assumption that the League can ignore the other regional financial centers outside of the League. Yes, the League will try to cut off all Manticoran financial interests within the League itself. Absolutely agreed. But I don't think the League can force regional centers outside of the League to cut off Manticore, nor do I think that the League can cut itself off from those regional centers outside of the League. Not if it wants to actually conduct trade with anyone outside the League.

I think it can because it has to if they trade with Manticore. Fighting the war with Manticore means they have to hurt it economically. This means strangling as many sources of revenue as possible. And as others have pointed out, unless those minor/second rate financial systems want to cripple themselves, they -will- have to toe the line or pay a very heavy economic price. Unless Manticore/GA can step in and take over which is a distinct possibility, but the power of the SL's economy and financial system cannot and should not be underestimated.

Johnathan S put it very well. I am assuming, like he is, that most of the regional centers on the Verge and beyond just aren't large enough to do any real damage to the SL or will have to pay the cost of doing business with the SL if they want to continue to trade with them.

Id like to reintroduce a thought here. Financial centers are dependent on trade and value of exchange. This is over simplification, I know. Economics is not my best subject either. Kzt is right to point out that the major centers were in the League prior to the war.

But...

How much trading will the League be doing with Manticore having a chokehold on the terminai and all those Manticorian hulls upon which the League was depending for its carrying trade gone home? Those financial centers will shrink quite a bit when there isn't any business. Huge portions of even the Leagues internal markets are already cut off. Even I know with my weak ecomics that we aren't shuffling around poker chips or pieces on a monopoly board.

Don

Freighters are cheap and easy to build. Every core planet can build them and now needs a bunch. The result will be that Manticore will never again be the leading shipper in the SL or former SL areas. It will be a pretty unpleasant year or so and things will take longer to ship, but it will work.

kzt wrote:Freighters are cheap and easy to build. Every core planet can build them and now needs a bunch. The result will be that Manticore will never again be the leading shipper in the SL or former SL areas. It will be a pretty unpleasant year or so and things will take longer to ship, but it will work.

Modeling the markets and economic impacts of this long term would be fun. As I see it there will be the following periods:

1) Market pause due to Manties.
Wormholes close and manticoran freighters disappear. Everybody waits for freight that doesnt come.

2) Market reaction to Manties
Economies contract due to shipping issues. Commerce warfare begins, destroying hulls on both sides. "Liberty ship" type merchant hulls are laid down by SL in droves.

3) Stagnant war period?
Commerce warfare continues either between the SL and Manticore or amongst the fragments of the SL. "Liberty ship" hulls are in use and the economies are working again, but are being replaced in droves.

4) War over, wormholes opened
Glut of hulls makes shipping cheaper than ever. The Verge is better serviced than ever before.

5) Aftermath
Some major shipping cartels collapse. 3rd parties buy up cheap freighters, creating new trading houses.

Anybody think we would see any other economic periods?

I think people are still misunderstanding what I am saying. I never said that the regional financial centers outside of the League were "big enough to bother the League", as Zakharra put it. I never said that they were big; I only said that they were important factors in interstellar trading in their regions. My point has been that these regional centers pass a certain amount of Solarian financial instruments. And the League cannot control it.

Consider the system Gimel, in the sector Aleph, outside of the Solarian League. Aleph is a regional financial center--not a big one in Solarian terms, but adequate to the needs of the sector. The Bank of Gimel is looking for potential investments. Some of the best investments the bank could make would be things like Technodyne stock, Solarian Treasury Bills, Beowulf Bonds. They will also be active in trading various moneys which pass through their bank--Gimel Rupees, Aleph Yen, Solarian Credits. Wealthy individuals and the Gimel government would also be active in these instruments.

Suppose a Mannerheim company wants to trade with a Gimel company. If they want to pay in Aleph Yen or Gimel Rupees, they will have to exchange Solarian Credits for the Rupees or Yen--presumably at Gimel itself or the regional center Aleph. If they pay with Solarian Credits, the Gimel company will have to exchange them for local money. Either way, Solarian credits are entering the system. They will only have value if the local companies and banks can exchange them for other goods locally or for local currencies. Ultimately, they would have to be able to exchange them back to the Solarian League, otherwise they become worthless in the Aleph Sector.

So at any given time, some amount of Solarian financial instruments are passing through systems outside of the Solarian League. System governments, local banks and corporations, and wealthy individuals will buy and trade Solarian stocks, bonds, futures, and other purely financial instruments. It doesn't matter that these systems are mostly poor compared to the Solarian League. There will still be governments, corporations, and wealthy individuals who want to do the best they can with what money they have, and instruments from the Solarian League are traditionally good investments. It's not enough to cause damage to the Solarian economy, but it is significant in the regional economy, and in the nearby regional economies that it trades with.

Now, we have the crisis between Manticore and the League. Manticore closes the wormholes to Solarian traffic. They can do the same to any system which aligns with the League against Manticore. We will assume that the League retaliates by seizing Manticoran assets within the League, and closing the League to Manticoran trade (a bit superfluous). It also demands that other systems (particularly regional financial centers) stop trade with Manticore.

Those systems are in a dilemma. If they side with Manticore, they could lose trade with the Solarian League. If you are of the opinion that the League doesn't do much trade outside the League, then it doesn't matter; the systems will side with Manticore because of the wormhole network. If you are of the opinion that there is a significant amount of trade (from the perspective of the external system), then they have to make a decision. I think many will still go with Manticore if the League forces them to a decision, because the wormhole network is such a critical factor in financial trade. Getting financial news weeks ahead of competitors is a devastating advantage in financial trade. Shrewd investors (there will be some) will also see the potential gains to be made if the League loosens its grip even a little bit on the Verge, let alone if it starts losing protectorates.

The result will be that investors with access to the wormhole network will be able to make huge profits at the expense of the League and allies who get cut off from the wormhole network. The Solarian Credit will suffer because the local currencies will profit from buying and selling Solarian credits at the best prices. That will damage what Solarian foreign trade remains. That is what I mean when I say that the League cannot afford to cut off the third party regional financial centers. That would force every system to choose between Manticore and the League, and those systems who choose Manticore will profit from it while the League suffers.

These Solarian financial instruments are already out there in the external regional financial centers. They've been bought and traded for hundreds of years, investors taking advantage of the growth and stability of Solarian institutions. Embargoing specific regional centers is not going to pull those financial instruments back into the League; they will still be out there, to be traded with other centers (including Manticore, if it chose).