All out Warfare Against the Sollies

kzt wrote:

Silverwall wrote:Or more simply the government declares the insurers financiers "to big to fail" and write them a cheque on the national debt. They did it here in NZ when some of the insurance companies were going bankrupt because of the Christchurch earthquake claims.

As pointed out above and in real life this is the sort of event for which government backing is assumed/required to avoid total financial meltdowns. It also cushions the blow for the average man in the street who is looking to government to soften random acts of misfortune.

Today the US total government debt is $19,360,176,741,617.54
So we'll say $19 trillion.

The US GDP is generally said to be $17.42 Trillion.

If the US government tomorrow decided to issue an additional $68 trillion is bonds to cover an emergency what would the effect be?

You now have a national debt of $85 trillion. The entire US tax revenue (local, state and federal) is estimated to be $6.45 trillion. This is 600 billion less than the US government spends. So the deficit slowly rises and the rating of US government bonds slowly goes down. A 68 trillion increase will not result in a slow drop in rating, it will be a freefall to toilet paper land.

There is no possible way you can ever pay that off and nobody will buy bonds for that because nobody with that kind of money is that dumb. Essentially the only option to do this is the government printing huge amounts of money. You know what an economist calls the effect of a government printing huge amounts of money?

Hyperinflation.

They are in a war for survival of their nation do you think being able to pay off that debt is going to be a worry? Instead of thinking how bad things are try to think of all the ways that a government would try and do to keep things going?

You are also forgetting how long people live waiting a century for a bond to mature would be consider a basic long term investment. You will always find people who would be willing to buy high risk long term bonds.

What is the GDP of Star empire of Manticore? If Klaus Hauptman can be worth trillions think of the scale of an economy that can produce that.

I wouldn't be surprised if the Hauptman Cartel did not include a number of insurance companies that are exposed directly, and indirectly through re-insurance.

pnakasone wrote:

Silverwall wrote:Or more simply the government declares the insurers financiers "to big to fail" and write them a cheque on the national debt. They did it here in NZ when some of the insurance companies were going bankrupt because of the Christchurch earthquake claims.

As pointed out above and in real life this is the sort of event for which government backing is assumed/required to avoid total financial meltdowns. It also cushions the blow for the average man in the street who is looking to government to soften random acts of misfortune.

Today the US total government debt is $19,360,176,741,617.54
So we'll say $19 trillion.

The US GDP is generally said to be $17.42 Trillion.

If the US government tomorrow decided to issue an additional $68 trillion is bonds to cover an emergency what would the effect be?

You now have a national debt of $85 trillion. The entire US tax revenue (local, state and federal) is estimated to be $6.45 trillion. This is 600 billion less than the US government spends. So the deficit slowly rises and the rating of US government bonds slowly goes down. A 68 trillion increase will not result in a slow drop in rating, it will be a freefall to toilet paper land.

There is no possible way you can ever pay that off and nobody will buy bonds for that because nobody with that kind of money is that dumb. Essentially the only option to do this is the government printing huge amounts of money. You know what an economist calls the effect of a government printing huge amounts of money?

Hyperinflation.

Good examples, but the assumption that Manticore is dying off without the SLN to trade with is like saying that "the pigmy astride the arteries requires as much blood flow as the rest of the body". Keep in mind, Silesia -- corruption and all-- was one of the most important trading partners for the SKM, then Trevor's Star came back in, and now they've got all of Haven effectively -- much closer to home and all of those freighters to use for foreign trade. Heck, just by transporting between the Talbott quadrant, Silesia, the Andermani, and the systems inside the wormholes they already control, there's plenty of shipping/financial work to be done...

The wet navy parallel would be "what if your navy had 80% of the container ships in the world, and you brought them all home, then closed the best ports for most of the rest of Planet Earth, and oh yeah,that includes control of both the Panama and Suex canals. You've got plenty of food AND all of the boats, plus the USAF and USN submarine fleet on your side.

Oh yeah. Trade with us an not only will we open your ports and let you use our boats, will kick out whatever tin-pot dictator has been sitting on you an skimming of all they can from your hard work.

AKA, for manticore, Do you think that many of the Lacoon II wormhole'd systems are so loyal and proud of how well the Mandarins have been running the SL that they WON't take the opportunity to jump ship of they feel like the RMN is gong to stick around? and give them enough time and coverage to get on their feet, SDF wise?

Who wins? he/she/they who have the most boats and the biggest/best whack a mole sticks around...

Or how about: we built a freighter fleet and we will never ship anything on your ships again. Oh, and our fees have gone up just slightly.

So kzt what would do you in Mantcores place?

You are fighting a war for the survival of your nation and just took a major kick to the groin of your economy. If you lose the war you will never be given the chance to recover.

kzt wrote:Or how about: we built a freighter fleet and we will never ship anything on your ships again. Oh, and our fees have gone up just slightly.

Fleets aren't much good if your ports are blockaded and/or you can't use the shortcuts through Panama and Suez. Especially since blockaded wormholes don't add a week or two to a voyage, they add months.

George J. Smith wrote:I wouldn't be surprised if the Hauptman Cartel did not include a number of insurance companies that are exposed directly, and indirectly through re-insurance.

He owned a large shipyard. Note the past tense. Bet it had bonds and other financial instruments that were secured with the military contracts that he won't be able to deliver

He has a shipping line that lost it's most lucrative cargo and markets and currently is competing with 20,000 unemployed freighters for scraps.

All the financial side stuff lost access to the vast majority of human space, so he went from having a say 10 trillion customers to deal with to 1-200 billion or so, most of whom are less wealthy than the average citizens of the core worlds.

Ah well - easy come, easy go.

SharkHunter wrote:Good examples, but the assumption that Manticore is dying off without the SLN to trade with is like saying that "the pigmy astride the arteries requires as much blood flow as the rest of the body". Keep in mind, Silesia -- corruption and all-- was one of the most important trading partners for the SKM, then Trevor's Star came back in, and now they've got all of Haven effectively -- much closer to home and all of those freighters to use for foreign trade. Heck, just by transporting between the Talbott quadrant, Silesia, the Andermani, and the systems inside the wormholes they already control, there's plenty of shipping/financial work to be done...

The basic problem is scale.

There are roughly 1500 highly developed SL member systems, and some large number (like 1500) of less developed systems that are roughly equivalent to TQ system and most of Silesia. There something like 5-6 trillion people in the SL and 3-5 trillion in the "associated" system.

How many people are in Silesia and the TQ? 50 billion? How many in Andi space, 50 Billion? Haven? 100-200 billion?

And the Andi's and Silesia are long-standing customers and TQ has been around for long enough that people have built business plans around shipping stuff to/from them.

So they lost something on the order of 10 Trillion customers on 3000 planets and gained 100-200 billion people on 100 planets (Haven) and the average Haven citizen is significantly less wealthy than the SL core citizens, though possibly better off than the associated system citizens.

And then the entire industrial production of Manticore vanished, and the trade based on shipping that to other places with it.

So I find it difficult to see how this is anything but catastrophe for the shipping lines.

pnakasone wrote:So kzt what would do you in Mantcores place?

You are fighting a war for the survival of your nation and just took a major kick to the groin of your economy. If you lose the war you will never be given the chance to recover.

Damned if I know. David seems to be implying "Oh, this is a terrible catastrophe - oh, never mind, wee are back in business".

The problem with the situation facing Manticore is similar but not the same as the 1920's Crash and Depression.
That was essentialy world wide and when the financial systems went down they took all sorts of things with them. That was NOT a direct cause of warfare! The industries still existed but the fiancial markets were so inflated that when they did crash they kept going down and too many investors/owners found themselves holding worthless paper. Well, much of it became actualy worthless when the companies went either out of business or bankrupt and filed for protection under Chaper 11 or other methods of being able to attempt to reorganize and possibly recover.

Problems? Yeah. Not only were many lenders overextended (lent out too much based on their capital) but when the various markets crashed, so many people/businesses had nothing with which to buy goods (consumer or business) and the markets (external and internal) for all sorts of things from widgets to food (in the form of bulk grain or other agricultual products) particularly in the "overseas" markets.

You can survive -probably- if you can sell enough in your local and regional markets to cover your expenses but between costs rising and loss of markets, the various producers could no longer cover their fixed and variable expences. In a simple version, the farmers couldn't sell grain for enough to cover both (or either) their costs of borrowing to fund that years planting AND the mortgages on their farms + equipment loans.
So what do lenders do when borrowers default? Foreclose on the assets and the try (hope and pray that they can) sell to SOMEBODY to recover at least the rest of the original loan still owning. Since this was a massive problem covering much of the nation (and a lot of the world) the lenders- even after foreclosing- were still only getting back cents on the dollar IF they could find a buyer.
See the Mortgage Crisis in the '90', the "Savings & Loan Crisis" is the 80's and the whole "Too Big to Fail" problem we went through in the "00's.
That is why the problem with Manticore's losses is very different. They actually do have markets they can serve, at least with shipping if not yet (until rebuild of the manufactuing infrastructure) and probably will be able to get those ships back being profitable. The trick is to keep the financial balls in the air while the new trading patterns get worked up and sorted out.

Yeah, the Government is going to have to help bail them out but NOT because it was something the businesses did to themselves. It was INFLICTED on them both by the SL buracray and by the Alignment. You want to say no to that and it is not possible, look at Roosevelt and the various government programs in the 1930's.

If Manticore does NOT try to sort this out by buffering the damage untill MOST (well hopefully most) of the companies can get back on their feet- or their successors can- then Manticore will implode and a combination of it's allies and a vast number of other systems will eventually move into the vacuume created.
Sigh.......micro and macro ecomomic theory plus having lived and worked through the last 30 years of that crap ...big smile. Want to buy a "slightly used" automated blood analysts machine? I think it is still in storage. How about 30 or 40 franchises of various Nationaly Known food chains (no, I didn't make those loans, just reviewed them). I could tell you stories.....perhas best if I do not. TARP.......well, it did-more or less- keep the lenders from gutting the borrowers to save themselves.