Insanity: Screening elements in the HV

Jonathan_S wrote:Their stock markets would have grown up and evolved in that environment of economic and market isolation; and I don't think the transit times have yet dropped sufficiently to significantly change that situation. Yes that will have changed some; for example I expect that major interstellars are listed on multiple system's exchanges to facilitate the trade of their stock between occupants of each of those systems -- but the linkages between those disparate systems' markets seem like they'd be far more tenuous. And some daughter colonies might be close enough to their parent system that most of their businesses might wish to be traded on said parent's markets (the advantages of access to more capital and liquidity possibly outweighing the disadvantages of having such delayed access to the market where your shares are traded)

And like their economies also would have matured in an era where self-sufficiency was at first required, and even afterwards still quite beneficial. The Core worlds would have had diverse and well established economies centuries before it even became possible to routinely ships goods between the stars -- and being self-sufficient likely resisted losing significant share to foreign imports. (But even a tiny fraction of a Core world's economy is more than large enough to let fortunes be made in interstellar shipping; even while it might remain almost insignificant to the economy as a whole)

While most of the Core Worlds are well developed and should still have a lot of materials available to them in-system for most needs the challenge comes with the whole concept of Interstellar economies and development of trade in goods, materials and knowledge comes into play. Ask yourself why there is so much interstellar trade. Because there is usually somebody or a range of somebody who can build/manufacture things that are of higher quality, have better tech, or can do it at better prices. And then there are things that are considered premium goods (like Montana Beef) or that can't be acquired from usual sources. The shipping is moving goods, people, data/commuincations to places that want or need to acquire it.

At one point you could acquire stock ownership for companies outside the National territory of any of the financial centers of many companies but you were removed by time and distance from where those companies were headquartered and or were generating product or income. Think the Dutch East India Company importing spices, other products from the other side of the world. You could buy and sell shares but unless you physically sent the shares to the company headquarters or the Amsterdam Exchange, you bought or sold as you could where you could do the transaction. in the 21st century Earth financial markets- trading effectively goes on 24/7 because some exchange is always open and you can (if you have access) trade electronically.

Moving money is similar in the Honorvers- a blend of in-system financial transactions via electronic communications and sending Drafts though courier systems (letters of credit, and variations) which will be delivered to pay for or transfer money to your account in system X. You get your funds in-hand the same way. You're working through what are either a Factor system or Correspondent Banking system using primarily electronic orders via a bank or financial house in your system to their contractual partners somewhere else. We have seen credit chips mentioned on Bank of New Madrid. That would be an analog of something like the Rothchild banking house or trading houses in London or Amsterdam (pick a city) who will buy things for you or provide funds for you to do business where they are based on the funds they have and agreements you your own Bank/Banking house. Your "bank" or trading company (think Hudson's Bay Company)helps you buy and sell goods. It's more complicated that that but they allow you to move money around.
What usually gets overlooked is that these merchant banking operations are taking fees for the services and they would (again, think 17th, 18th, 19th century colonial development and you sell your agricultural products to your factor who ships you the stuff -or buys it- and place orders with them for what you need from the home country or elsewhere) England was prohibiting actual money -in those cases hard currency of silver/gold/copper- from being sent to the colonies and required the people there to ship their agricultural products or other things back to England. And they couldn't have a local colonial currency-

Manticore, by virtue of its operation of the Junction, is a focal point for the passage of trade and it is getting paid for transit though the Junction. It also (until Oyster Bay) was a major exporter of a lot of goods even if it was also importing from elsewhere as well. Think about a Manticorian company offering a product that somebody out in Silesia wanted/needed at a price below what was being charged by manufacturing in a Core World -and that might only because the shipping cost to get it from Manticore to destination was both less expensive than shipping from said Core World just in cost of time on the ship but not having to have the share of the junction fee TO and Through Manticore on a SL flagged ship.

The Manticorian Government and the various shipping companies headquartered there are making the most of their advantages and apparently investing wisely to both expand their reach and make more money

Brigade XO wrote:Manticore, by virtue of its operation of the Junction, is a focal point for the passage of trade and it is getting paid for transit though the Junction. It also (until Oyster Bay) was a major exporter of a lot of goods even if it was also importing from elsewhere as well. Think about a Manticorian company offering a product that somebody out in Silesia wanted/needed at a price below what was being charged by manufacturing in a Core World -and that might only because the shipping cost to get it from Manticore to destination was both less expensive than shipping from said Core World just in cost of time on the ship but not having to have the share of the junction fee TO and Through Manticore on a SL flagged ship.

The Manticorian Government and the various shipping companies headquartered there are making the most of their advantages and apparently investing wisely to both expand their reach and make more money

I agree and therefore I stand by what I said about Manticore having developed as THE financial centre, but I will qualify that. It's not the financial centre for everything, because that can't be accomplished anyway in the HV. Each planet and maybe each system has its own, local financial system and stock exchange, and the vast majority of all investment is local. Some of it is in regional exchanges for region-local interstellar concerns. And between Core Worlds, that would be too.

Manticore corners the market on interstellar commodity and long-haul investment. This isn't a market that had existed before wormholes, because places were just too far and interstellar commerce was too weak. So actually the best comparison for Manticore wouldn't be the NYSE, but the Chicago Mercantile Exchange.

tlb wrote:That is interesting; but why would the Core Worlds each go their own way, when there is a shared economy in the League and there is trade between those worlds? We definitely know there are interstellar companies, so how does that affect the supposed local markets?

Both England and France had colonies in the period before the telegraph, but the primary financial market in each was still in the capitol city of the home country.

Jonathan_S wrote:In part their economies aren't so integrated. The books seems to say that while interstellar trade is quite extensive each core world is essentially self-sufficient -- they don't need interstellar trade and it doesn't seem to make up a significant fraction of their economy. So there doesn't seem need to integrate their stock markets.

Also history would have driven their markets apart. Even today the core worlds are weeks or more round-trip apart, but they developed when they were vastly more isolated than that. From the end of the final war until the Warshaski invented the grav detector (and shortly aftewards the sail) which combined finally made hyperspace travel safe enough for commercial use was about 300 years. And for at least another couple hundred years after that (up past the point the Junction was discovered) even the fastest dispatch boat was (IIRC) limited to the Beta bands -- so over 6x slower than the modern Honorverse. So even Core systems would have been months round trip time from each other back then.

Their stock markets would have grown up and evolved in that environment of economic and market isolation; and I don't think the transit times have yet dropped sufficiently to significantly change that situation. Yes that will have changed some; for example I expect that major interstellars are listed on multiple system's exchanges to facilitate the trade of their stock between occupants of each of those systems -- but the linkages between those disparate systems' markets seem like they'd be far more tenuous. And some daughter colonies might be close enough to their parent system that most of their businesses might wish to be traded on said parent's markets (the advantages of access to more capital and liquidity possibly outweighing the disadvantages of having such delayed access to the market where your shares are traded)

And like their economies also would have matured in an era where self-sufficiency was at first required, and even afterwards still quite beneficial. The Core worlds would have had diverse and well established economies centuries before it even became possible to routinely ships goods between the stars -- and being self-sufficient likely resisted losing significant share to foreign imports. (But even a tiny fraction of a Core world's economy is more than large enough to let fortunes be made in interstellar shipping; even while it might remain almost insignificant to the economy as a whole)

We have had low cost interstellar transportation long enough now that it seems to me that the Core Worlds might have become more connected than you state. After all the main reason for the creation of the League was to regulate commerce between worlds.

Be that as it may, what I actually want to discuss is the suggestion that an interstellar corporation might sell its stock in multiple marketplaces. I realize that American depositary receipts allow a foreign company to sell its stock on the New York Exchange, but in the pre-telegraph analog I wonder if that was a good way to do it.

So suppose a corporation sends out a block of stock to each of three different exchanges and in one there is high interest and another there is low interest. You then have an arbitrage situation where someone could buy in the low interest exchange and transport it to sell in the high interest one. A much better managed way would be to only sell in one market and all interested parties transmit their buy and sell orders there. Once such a market gets set up to efficiently process those orders, then other corporations would join in.

PS: Do all the systems in the League share a common currency? If they do NOT, then fragmented markets make more sense.

tlb wrote:Be that as it may, what I actually want to discuss is the suggestion that an interstellar corporation might sell its stock in multiple marketplaces. I realize that American depositary receipts allow a foreign company to sell its stock on the New York Exchange, but in the pre-telegraph analog I wonder if that was a good way to do it.

So suppose a corporation sends out a block of stock to each of three different exchanges and in one there is high interest and another there is low interest. You then have an arbitrage situation where someone could buy in the low interest exchange and transport it to sell in the high interest one. A much better managed way would be to only sell in one market and all interested parties transmit their buy and sell orders there. Once such a market gets set up to efficiently process those orders, then other corporations would join in.

My thought on the secondary exchanges wasn't so much that companies would make stock offerings there, but that there would be enough stock of a given core or interstellar company that residents of other systems would wish to have an organized way to trade it with each other should they not wish to deal with the time delays or pricing uncertainties of sending their buy or sell orders all the way to that stock's primary exchange.

So even if that market wasn't the same as, say, Manticore's Wall Street there would almost have to be some market for folks on Manticore to buy or sell shares in, say, Iwahara Interstellar without the order going all the way to Sol. (If you need the money now, and not in two weeks -- or are fine with a local price and want to know you can complete the order, such a local exchange would be very useful)


But yes, when a company's shared are exchanged in multiple locations there's a chance for arbitrage. If someone knows (or suspects) that a company is relatively undervalued in one market they could absolutely buy up shares there, transport them to a higher valued market to sell them. They take the risk that their information is wrong, or is overtaken by events, but if they're correct they reap the profit. And performing that arbitrage would help keep the only loosely connected markets somewhat in sync.

So far in the Honorverse, the currency systems are sort of two tiered which actually is actually an analogy of what we see in 21 century Earth with a major caveat

in our present time, the major powers like the USA, UK, European Union, Russia, China etc have their own currency. To greater or lesser extents, those currencies and those such as the Japanese Yen have an active international market for the buying and selling of same. Also at the moment the Ruble of Russia is in trouble because of several economic pressures on that country.

When you get move out to the Honorverse, the major currencies are Solarian League, Star Empire of Manticore, Alderman Empire, etc and while there are market for the currencies they are used as the basis of payment and trade within those Star Nations. Typically, contracts and purchases are made in the currency of the Star Nation (or League) when people are buying there. ---this is NOT to be confused with the tourist impact with which people are using local currency (or "credit cards") to my things BUT because they are used to or want to be used to bringing in "tourist money" local merchants will accept multiple currencies s on a regular basie. Like much of the EU will let you pay in Euros, US Dollars, British Pounds --as you shift in the direction of Asia places will/ may take USD or Euros but not other currencies....they want to be paid in local currency. This does shift as you move down in size of country and its general economic strength. You go to Iceland and they really want you to use the local currency OR plastic. Depending on where you are there you MAY be able to use USD in places but others than the local currency you're usually only going to use Euros- and get your change back in Icelandic money. Part of that is the ability to convert foreign currency into something usable in the local country market. Part is that keeping up with foreign exchange rates (cell phone data plans and electronic transactions on credit cards with settle with "current" "buying/selling rates" in the electronic markets. SOME overseas possessions of France will accept Euros but usually they want whatever the local multi-island (French group) is using. Similar in the Caribbean where there is a local inter country currancy.

The entire SL was using the Solarian Credit and that (I believe) was forced on those system falling under the grasping hands of OFS. Easier to siphon off graft and extortion that way.

Look at the Talbot Sector- almost all those systems looking to enter it the agreement of annexation with SEM each had their own currency. Yes, there were exchanges between systems but mostly you had to provide funds in local currency. There is/was a negotiated conversion of local system currencies to Manticorian Dollars.

Some currencies are more stable that others so they are more often used pricing of products and commodities. Foreign Exchange --a whole other world.

I'd respectively submit that there is another caveat.
The Honorverse system is more like the pre international telegraph days. With long lead times between systems there would be options to make a killing if you got fresh exchange rates before the local market did.

Brigade XO wrote:So far in the Honorverse, the currency systems are sort of two tiered which actually is actually an analogy of what we see in 21 century Earth with a major caveat

in our present time, the major powers like the USA, UK, European Union, Russia, China etc have their own currency. To greater or lesser extents, those currencies and those such as the Japanese Yen have an active international market for the buying and selling of same. Also at the moment the Ruble of Russia is in trouble because of several economic pressures on that country.

When you get move out to the Honorverse, the major currencies are Solarian League, Star Empire of Manticore, Alderman Empire, etc and while there are market for the currencies they are used as the basis of payment and trade within those Star Nations. Typically, contracts and purchases are made in the currency of the Star Nation (or League) when people are buying there. ---this is NOT to be confused with the tourist impact with which people are using local currency (or "credit cards") to my things BUT because they are used to or want to be used to bringing in "tourist money" local merchants will accept multiple currencies s on a regular basie. Like much of the EU will let you pay in Euros, US Dollars, British Pounds --as you shift in the direction of Asia places will/ may take USD or Euros but not other currencies....they want to be paid in local currency. This does shift as you move down in size of country and its general economic strength. You go to Iceland and they really want you to use the local currency OR plastic. Depending on where you are there you MAY be able to use USD in places but others than the local currency you're usually only going to use Euros- and get your change back in Icelandic money. Part of that is the ability to convert foreign currency into something usable in the local country market. Part is that keeping up with foreign exchange rates (cell phone data plans and electronic transactions on credit cards with settle with "current" "buying/selling rates" in the electronic markets. SOME overseas possessions of France will accept Euros but usually they want whatever the local multi-island (French group) is using. Similar in the Caribbean where there is a local inter country currancy.

The entire SL was using the Solarian Credit and that (I believe) was forced on those system falling under the grasping hands of OFS. Easier to siphon off graft and extortion that way.

Look at the Talbot Sector- almost all those systems looking to enter it the agreement of annexation with SEM each had their own currency. Yes, there were exchanges between systems but mostly you had to provide funds in local currency. There is/was a negotiated conversion of local system currencies to Manticorian Dollars.

Some currencies are more stable that others so they are more often used pricing of products and commodities. Foreign Exchange --a whole other world.

Daryl wrote:I'd respectively submit that there is another caveat.
The Honorverse system is more like the pre international telegraph days. With long lead times between systems there would be options to make a killing if you got fresh exchange rates before the local market did.

Galileo (and others) infamously made money selling primitive telescopes to wealthy merchants so they could identify returning ships while still far outside the harbor, allowing the merchants to make financial moves on the expected cargos before their rivals even knew that the ship was returning.

Galileo (and others) made even more money NOT selling telescopes to the rivals of the first movers...