Post-UH Financial Instruments

tlb wrote:

tlb wrote:Also what evidence could we possibly have that the Solarian League economy tanked, because of orbital damage at Sol and the loss of prestige of the SLN?

TFLYTSNBN wrote:Were you not paying attention to the US stock market after the 9-11 attacks?

The US stock market did not tank (that is to fail completely, especially at great financial cost) after 9-11; it did drop steeply in the immediate aftermath, but by December was back near the pre-attack levels. If anything, that supports what I have been saying. From Wikipedia:

Stock exchanges closed between September 10, 2001 and September 17, 2001. After the initial panic, the DJIA quickly rose for only a slight drop.

One difference, there have been fears of more attacks after 9-11; but there is no reason (because they never paid attention to Oyster Bay) to expect another attack on the Solarian League. There certainly is no reason for the GA to do more damage to the League members.

The fact that the stock market did not implode after 9-11 is the result of President Bushs jr and sr interceeding with the Fed, the big banks and big investors during the one week market closure to restrain their reflexive urge to panic sell. The fact that the attacks killed only 3,500 rather than 50,000 as originally estimated calmed investors tremendously. Imagine the chaos if evacuations of the twin towers had been unsuccessful, the damage to the Pentagon had been more severe, and if the plane that crashed in a field had hit the Capitol building.

America was lucky.

tlb wrote:Also what evidence could we possibly have that the Solarian League economy tanked, because of orbital damage at Sol and the loss of prestige of the SLN?

TFLYTSNBN wrote:Were you not paying attention to the US stock market after the 9-11 attacks?

tlb wrote:The US stock market did not tank (that is to fail completely, especially at great financial cost) after 9-11; it did drop steeply in the immediate aftermath, but by December was back near the pre-attack levels. If anything, that supports what I have been saying. From Wikipedia:

Stock exchanges closed between September 10, 2001 and September 17, 2001. After the initial panic, the DJIA quickly rose for only a slight drop.

One difference, there have been fears of more attacks after 9-11; but there is no reason (because they never paid attention to Oyster Bay) to expect another attack on the Solarian League. There certainly is no reason for the GA to do more damage to the League members.

TFLYTSNBN wrote:The fact that the stock market did not implode after 9-11 is the result of President Bushs jr and sr interceeding with the Fed, the big banks and big investors during the one week market closure to restrain their reflexive urge to panic sell. The fact that the attacks killed only 3,500 rather than 50,000 as originally estimated calmed investors tremendously. Imagine the chaos if evacuations of the twin towers had been unsuccessful, the damage to the Pentagon had been more severe, and if the plane that crashed in a field had hit the Capitol building.

America was lucky.

Whatever the reason, the fact is that the markets quickly recovered because the economy was still as strong as before the attack. The same is true of the Solarian League, with the exception of the orbital industry of Sol.

The reports online indicate that it was the Fed injecting liquidity that calmed the banks.

tlb wrote:Also what evidence could we possibly have that the Solarian League economy tanked, because of orbital damage at Sol and the loss of prestige of the SLN?

TFLYTSNBN wrote:Were you not paying attention to the US stock market after the 9-11 attacks?

tlb wrote:The US stock market did not tank (that is to fail completely, especially at great financial cost) after 9-11; it did drop steeply in the immediate aftermath, but by December was back near the pre-attack levels. If anything, that supports what I have been saying. From Wikipedia:

Stock exchanges closed between September 10, 2001 and September 17, 2001. After the initial panic, the DJIA quickly rose for only a slight drop.

One difference, there have been fears of more attacks after 9-11; but there is no reason (because they never paid attention to Oyster Bay) to expect another attack on the Solarian League. There certainly is no reason for the GA to do more damage to the League members.

TFLYTSNBN wrote:The fact that the stock market did not implode after 9-11 is the result of President Bushs jr and sr interceeding with the Fed, the big banks and big investors during the one week market closure to restrain their reflexive urge to panic sell. The fact that the attacks killed only 3,500 rather than 50,000 as originally estimated calmed investors tremendously. Imagine the chaos if evacuations of the twin towers had been unsuccessful, the damage to the Pentagon had been more severe, and if the plane that crashed in a field had hit the Capitol building.

America was lucky.

tlb wrote:Whatever the reason, the fact is that the markets quickly recovered because the economy was still as strong as before the attack. The same is true of the Solarian League, with the exception of the orbital industry of Sol.

The reports online indicate that it was the Fed injecting liquidity that calmed the banks.

Wouldn't simply drafting the bank accounts of 5 King's Ransoms err Mandarins ease the burden quite a bit?

As described, this sounds like a distributed central banking system. As opposed to having “the fed” you have sector and system versions of “mini-feds”. Which is a system ripe for arbitrage. In fairness, virtually any attempt to use a currency over time-of-information delays in the months is ripe for arbitrage, but this compounds it.

But to our purposes...it is still a government based currency. It is a government regulator that says system bank A has enough in their portfolio to issue new credits or not, who decides if someone needs to be fined, and deals with the specific regulation that make a Sol a Sol and not just a promissory note from a Rothschild.

And now that government just got rocked on its feet. Asset and revenue wise the government is about to get slugged. Structure wise, no one knows which departments are going to look like what. And god knows if the fees, taxes (if they happen under the new constitution), bonds and other finer points of the government money making are going to hold up.

Regardless of what this means for the New League economy, it interjects incredible uncertainty into the Sol.

GloriousRuse wrote:As described, this sounds like a distributed central banking system. As opposed to having “the fed” you have sector and system versions of “mini-feds”. Which is a system ripe for arbitrage. In fairness, virtually any attempt to use a currency over time-of-information delays in the months is ripe for arbitrage, but this compounds it.

But to our purposes...it is still a government based currency. It is a government regulator that says system bank A has enough in their portfolio to issue new credits or not, who decides if someone needs to be fined, and deals with the specific regulation that make a Sol a Sol and not just a promissory note from a Rothschild.

And now that government just got rocked on its feet. Asset and revenue wise the government is about to get slugged. Structure wise, no one knows which departments are going to look like what. And god knows if the fees, taxes (if they happen under the new constitution), bonds and other finer points of the government money making are going to hold up.

Regardless of what this means for the New League economy, it interjects incredible uncertainty into the Sol.

Dunno how arbitrage is ever going to be stricken from the equation in any market, especially with insider trading, graft and corruption. The bigger the machinery the easier to clog the drain. In the Honorverse, I believe there actually should be some sort of a neutral Central Galactic Bank. Literally situated at the center of the galaxy since time + info = money. But by what measure is the center of galactic civilization in the Honorverse? And at what point would available technology or the benefit of terminii of certain systems make specific placement unfair? Or the current Streak Drive of the MA? Time is the most critical factor of the Markets.

You'll lose the farm if you bet it in the Honorverse Markets.

Seems like in the Honorverse, luck be a lady tonight.

Where to start?

Foreign specie held by SEM? Foreign speice would/should refer to actual metallic or other currency (like of gold, silver, copper or perhaps other minerals) issued by another government and, nominally, of a particular purity level of the metal. So Gold or silver coinage issued by, say England or Austria or some German Principality up through the 19th century, would be of a "standard" (for that country) weight and refined purity of metal. One Pound Stirling, etc. There are plenty of examples of general conversion tables for coins of various European nations (and some things like the Spanish colonies in Central and South America) with the value at a given date for them vs British money.
You don't have to take the conversions from the list but if you presume the metal content/alloy is consistent for that country you just take the like coins and weigh them....and figure the value of the silver or gold content/alloy for that couin in your own currency.
It is very unlikely Manticore or anyone elce is trading in actual metal coins though the commodities markets for all sort of things routinely trades for value of product at a set (aggreed upon) date.
What Manticore and all sorts of banking or financial/business houses would have is accounts held in the nominal currencies of various places. Manticore (with the Junction) and Manticorian businesses would be able to receive payment for goods or services in either Manticorian Dollars or any other currency they thought it reasonable to accept instead of having it converted to Manticorian Dollars at the exchange rate at time of transcation/agreement. So Manticore (and anybody else) could have Solarian Sol Credit accounts at a branch of Bank of New Madid and that would be helpfull (and avoid both the fees and the twice going though real time exchange rates at differnt times) to smooth out purchases with sellers in the League or where the Sol was being used for local currency.

Will the Solarian Credit- specificaly the acounts being held within the old League or anywhere elce - become worthless. We don't know. If the New League repudiated the existing debt and currency it probably would but.....well, it was the Navy of the League that got beat and lost all those ships and the government which has fallen BUT the new government of the League will have to pick up responsibilities and I doubt they will throw the old currency out. Besides, it's electronic bookkeeping and not printed paper or debased species (like a Prince recalling all his old hard money to re-issue it with a new design for at the time of the marriage of his daughter......and dropping it from 90% silver 10% copper to 50% silver and 50% God Knows What. Governments have been known to "play" with the intrinsic value of hard (as in real coin) currencies.

Next. The Queen (and or the financial/treasuary ministers) selling off Soliarina League assets in the portfolios. Same with businesses and down to indiviudal businessmen or investrots. There is a vast difference beteen assets of which the Solarian League (the government or entities) own and assests which are located in the Solarin League.
If you one property or part of a business on a planet or in a system of a Solarian League Member you don't loose it unless said property would have been seized as part of the War. We were never told that happened though the prospect of Manticoran flagged merchant shipping being seized and the ships and crews held as hostages was a major reason for creating Lacoon I.
Other than seeing a couple of local dictators or OFS Governors grabbing ships - to both curry favor with OFS and the SL Bureaucracy and for potential personal gain-- we didn't see the League or any of the League Members actualy taking property or assets owned by Manticorian citizens or Manticorian owned (or controlled) companies. It also was not- that I can recall- discussed by the Mandarins. One reason- not explored in the books- could have been the very negative impact that would have had on all sorts of business and problems for the SL government when there was not actualy a declared war going on. Taking property or assets under Eminent domain or confiscation of assets of "enemy aliens" entails differnt sets of laws and starts all sorts of things happening in the legal communities. That would be especialy true in an interstellar polity like the League and all the non-league systems out there. Not the least of the problems would be that there WAS NO WAR. Massive naval engagements but NO declared war. The challanges the Mandarins had with SL and other Interstellar politics was addressed and they would be -if they started taking Manticoran own private and corporate property/assets- would have blown up in their faces. They start doing that and suddenly dam near everybody in the spheres of governments and businees are going to react "badly". In this case, probably decide that the League really isn't more than one gigantic OFS and react accordingly. Like decide that Manticore is both telling the truth and acting to defend itself in the face of the SLN which it happens to be defeating.
So just perhaps the rest of us just might need to defend ourselves againt the SL Government and take steps now to create alliances to stop this monster.

Ah well, life in international/interstellar politics:)

Brigade XO wrote:Besides, it's electronic bookkeeping and not printed paper or debased species (like a Prince recalling all his old hard money to re-issue it with a new design for at the time of the marriage of his daughter......and dropping it from 90% silver 10% copper to 50% silver and 50% God Knows What. Governments have been known to "play" with the intrinsic value of hard (as in real coin) currencies.

Though to my mind one of the odder examples (though that was gold backed, not actual gold specie) was the US dollar right after WWI.

At the end of that was the US ended up with most of the world's gold reserves (it's profitable to make loans and sell supplies to the combatants of the then largest war in the world while sitting out most of it). So much so that it wildly outstripped the real growth in the economic strength of the country. It was obvious that if the US issued dollars for all that gold, as the gold standard said they should, there would be massive inflation which would shortly drive up the price of US goods and make importing foreign goods a far more affordable alternative.

(And arguably that might have been good for the world economy as those purchases would move the over-concentration of gold out of the US and re-balance it closer to in line with actual economic strength).

Instead the US chose to simply pretend it didn't have about half that gold and leave it in their vaults without issuing the corresponding dollars. This arguably starved the recovering European economies to the extent they stuck to the gold standard.


Normally when countries screw with hard currency it is to debase it, putting in cheaper metals to make more money than they have silver or gold -- not to make less money than they have silver or gold for.

Daryl wrote:That info dump from David explained a lot, it's well reasoned plausible and it's his universe anyway.

On a broader note I do wonder about finances in 2,000+ years, particularly in the Honorverse.
Even fiat currencies usually have an underlying economic base. When you have virtually unlimited energy from fusion and gravitonics, virtually unlimited materials from cheap access to thousands of solar systems, and plenty of time from prolong, everyone should be rich beyond our wildest dreams.

Given unlimited energy yielding unlimited materials, how could anyone have a commodity based currency? Gold, silver, platinum, osmium or iridium are all available in almost unlimited quantities from harvesting asteroids. Consider that an asteroid impact was inferred from the abundance of iridium at the K-T boundary; much more concentrated than anywhere else on Earth.

Ok, technically not specie. A variety of foreign currencies, but predominantly the Sol. The manties and their various corporations probably hold large amounts of credit (as in, other people owe them money) in Sols. And so forth.

While short of deciding to melt the league economy there is no reason to issue a Sol replacement, it’s hard to imagine a bounce back to parity. Either a confidence loss, government inflation, or a bunch of banks jumping the gun on giving themselves new money while the cats away...

(And yes, a purely logical cooperative answer is they shouldn’t. After all, a flow of new money in will devalue the Sol. But at the bank level it a) won’t seem that way because it’s hard to believe you’ll be responsible for inflation with just a system adjustment and b) if we’re playing a prisoner dilemma then we all assume that the other banks are going to make themselves richer at the cost of the common good)

Anyhow, it would seem like the Manties are likely to have shot themselves in the foot here. It would be like the Chinese experienced a plunging dollar. All glory to knocking over their hegemonic competitors, but the loss of literal trillions in debt and holdings would be noticed.

GloriousRuse wrote:Ok, technically not specie. A variety of foreign currencies, but predominantly the Sol. The manties and their various corporations probably hold large amounts of credit (as in, other people owe them money) in Sols. And so forth.

While short of deciding to melt the league economy there is no reason to issue a Sol replacement, it’s hard to imagine a bounce back to parity. Either a confidence loss, government inflation, or a bunch of banks jumping the gun on giving themselves new money while the cats away...

(And yes, a purely logical cooperative answer is they shouldn’t. After all, a flow of new money in will devalue the Sol. But at the bank level it a) won’t seem that way because it’s hard to believe you’ll be responsible for inflation with just a system adjustment and b) if we’re playing a prisoner dilemma then we all assume that the other banks are going to make themselves richer at the cost of the common good)

Anyhow, it would seem like the Manties are likely to have shot themselves in the foot here. It would be like the Chinese experienced a plunging dollar. All glory to knocking over their hegemonic competitors, but the loss of literal trillions in debt and holdings would be noticed.

As wealthy as the SKM is (or was priot to Oyster Bay) Manticore's economy simply is no large enough for the Manty dollar to be the galactic reserve currency. Sort of like the Swiss Franc trying to be the global reserve currency.

However; as Weber has at least alluded to since OBS, the Manticore Womrhole Junction makes Manticore the financial hub of the galaxy. By exploiting the ability to reach most economic centers much faster than the competition, Manticoran banks enjoy a profound competitive advantage. If Manty banks skim only one tenth of one percent off the top of every transaction then the cash flow is ginoromous.