NationStates Jolt Archive

The North Street Journal
Article: Country in Chaos as Stock Markets Crash

It is indeed a tough time in The Peoples Freedom. Late yesterday morning, the stock market crashed 50%.

It is believed that the crash was caused by a number of things. Firstly, there was a large sell-off in the Wanderjarian markets. TPF's largest trade deficit is with Wanderjar, and investment into it's stock market had been heavy. Secondly, the emergency computer software that was suppose to shut down the stock market against a huge loss, failed, and the markets remained open. Finally, TPF had been in the midst of the largest Union strike in all of it's history with millions of industrial workers striking for over a month.

In the following panic, banks were overwhelmd with withdrawal requests, and the Federal Reserve is struggling to cash in gold to change into credits.

In this time of crisis, President Booch has asked investors and citizens to remain calm while the government and business leaders try and figure out a course of action.

OCC: Feel free to send money or encourage investors to help rally the market. The nation will go into a depression, but I do not know how long this will last. Corporations may come in, taking advantage of cheap labor, or Communists may come to incite the people to throw down the government.

To:The People's Freedom
From:John Wood, Foreign Relations Calizorinstan

We are sending you 1.5 billion dollars in money to you, to help recover, we are also sending 5 economic advisor's to your country to help recover from this horrible stock market crash.

From the Office of Lord Sumguy:

we undestand your plight all too well my freind, and the company that i personally own: Sumtech, will spend the equivalent of 3.7 billion U.S. dollars buying stock from companies your nations key industries at 150% the current asking price. We hope this will give your market the boost it desperatley needs. If there should be civil unrest or (God forbid) revolution due to this unfortunate economic disaster, merely say the word, and we will provide whatever military assistance we can. The other nations within my region also offer military assistance if the aforementioned events shoould indeed come to pass.

-Lord Sumguy, Hegemon of Sumguy's Allies

Treasury Department Communication
We thank Lord Sumguy very much for this assistance. If we may ask you for one more thing, we would just like to ask that you also encourage private investing from your citizens. Once again we thank you.


Treasury Department Communication
We thank Calizorinstan for their donation. Thank you once again.

Official Corporate Comminuque

To : TPF
From: Raven corps Board of Expansion

We are interested in establishing a munitions factory within your nation. With your current unemployment, and our high need of employees we have determined that your nation is prime for expansion. This deal would not be to our sole benefit. This deal will benefit your nation is terms of lower unemployment, increased GNP-( Gross national Product), and and of course a very substantial " donation " loan to the TPF national treasury. All we ask is for a small .5% intrest pay back on the loan.

Signed
James Granger

Treasury Department Communication
Raven Corps, we are sorry to inform you that your request to build a munitions factory in TPF has been denied, per the Trade Reform Act of the year 2011.

Telegram:

TO:TPF
FROM: The national Arab-Canadian external Ministry

We are willing to offer you a chance to build a textile plant. We are in need of many workers and are willing to provide a standard wage of 10.00 USD per hour and give min. health Insurance to all of our workers.

Treasury Department

This is acceptable, but you must pay the Tariff [which has recently been lowered] and the tax. The Tariff used to be 25% and now it is 10%, of the initial construction costs.

To:
The First Reich of the PeoplesFreedom

From:
The Imperial Federation of Dai Yuddha Ossyria

The Ossyrian Federation sympathizes with the plight your nation is experiencing and I would like to do whatever we can to assist your nation. Our Ministry of Finances and Budget has already put together a financial aid package of $10,000,000,000.00. Furthermore, if you could provide us with information regarding your major industries then I am sure we could encourage some of our large private corporations to invest in your country.

Finally, if your nation ever does descend into civil war then we would be willing to provide for a peacekeeping force in your nation if you so desire. Although, we hope it does not come to that.

Sincerely,

Dr. Wilhuff Woodhelm, Federal President
Vinzenz Tal-Utrei, Prime Minister
Achilles Tullio, Minister of Foreign Affairs and Cooperation

On Behalf Of

The Most Sanctified and August Sage-Emperor of All Under Heaven,
Patriarch of House Orlan and the Ekunos Clan,
High and Mighty Lord of the Crown Council,
Supreme Protector of the Faithful,
Keeper of the Sacred Law,
Defender of All Beings,
Markos IV Orlan

http://img326.imageshack.us/img326/5962/seal6wf.gif

The UK2 government would like to offer 5.9 billion pounds to help rebuild your Stock Markets.

Rt.Hon.Mary McAleese,Prime Minister of the United Kingdom2

Thank you very much. We will send over our construction crews ASAP.

Treasury Department Communication
We thank you very much for this huge donation and our primary industries are the automobile, armaments, mining, technology, and consumer goods.

The Shakal Empire is willing to pledge $2 Billion Dollars to restructuring. We only ask that Wolke Ind. be allowed to build 3 factories for production. It is offering the Shakal equivalent of $15.00 USD per hour as basic payment. Thge wages will increase as productivity increases.

From:Minister Of Economics Vladimir Corpelstein

OOC: North Storn is not really a country. It's more a named area of land that is internationally agreed to NOT be a country, and is run by a loosely aligned group of super-corporations. This event would be right up their alley...

IC:

Reported by Storn Regional News Service...

And in late breaking news, the North Storn-based Ur-Allon Resources and Logistics Conglomerate has launched multiple takeover bids for several large mining, energy and logistics/distribution corporations in ThePeoplesFreedom, taking advantage of the artificially lowered foreign exchange rate and stock market prices. Analysts within North Storn, and abroad, predict mixed opinions of the effects of this takeover bid, but it represents the largest such bid in Ur-Allon's history, and the latest in long line of similar acquisitions.

While the offer is generous, ThePeoplesFreedom is known for sometimes restrictive foreign ownership laws, and it is not known how their government will react to this takeover bid. The sheer volume of currency on offer could well push their country back out of depression, and given the nature of the deal, do so at a far lower risk of inflation than might be the expected.

Either way, the stock markets across the world watch for TPF's government's reaction with baited breath.

The stock exchange at Northport responded favourably to the news, with Ur-Allon leading the charge up 25 basis points.

On to sport now, with sports commentator...

To:
The First Reich of the PeoplesFreedom

From:
The Imperial Federation of Dai Yuddha Ossyria

We thank you for your prompt reply. With regards to your major industries, we have a very large automobile manufacturing industry ourselves and I am sure DahleezAuto, our largest auto company, will be willing to purchase any factories already in your country and provide a significant increase in pay to your workers, let's say roughly US$15-20/hour depending on the position and experience of the individual worker.

Mining would also be a prime industry for us to get involved in, what resources are available in your country?

Sincerely,

Dr. Wilhuff Woodhelm, Federal President
Vinzenz Tal-Utrei, Prime Minister
Achilles Tullio, Minister of Foreign Affairs and Cooperation

On Behalf Of

The Most Sanctified and August Sage-Emperor of All Under Heaven,
Patriarch of House Orlan and the Ekunos Clan,
High and Mighty Lord of the Crown Council,
Supreme Protector of the Faithful,
Keeper of the Sacred Law,
Defender of All Beings,
Markos IV Orlan

Psst... Here's some help.. (http://forums.jolt.co.uk/showthread.php?t=523434)

Message from the Firehelper Treasury Department:
We the government of firehelper would like to invest in your nation.
1. We are sending 10,000,000,000 credits to your nation for relief
2. Several of our companies will begin to move into your country. These are completely owned by the Firehelper government.
3. We are oign to build a mining/ smelting plants, several lumber yards, a semiconductor factory (yes thats expensive...), farms, and various other facilities.
4. Should this be allowed we consent to all tarrifs and trade restrictions imposed by your nation and the workers pa will be 7 credits a hour (or your currency's equivilent) and they will get healthcare.
5. We are ready to buy any company heading into bankrusy if you inform us. These will go into a new Firehelper companies trust under the name of Firehelper& (well more accuratly its supposed to be in)The PeoplesFreedom Ltd.
We sincerely hope your country will regain its power and we are also prepared to send military aid should the need arise
Sincerely,
Firehelper Government

In order to aid your nation's economy in its time of difficulty, the Vetalian Central Bank offers $2 trillion in payment-deferred loans to your banks in order to meet their reserve requirements. The interest rate on these loans is 6.25%, which will not require repayment for at least five years. We feel that maintaining the stability of your banking system is absolutely essential to recovery from economic losses.

The Vetalian government will also handle recompensation for Vetalian companies that have suffered losses due to the crash.

We will monitor the situation and provide support when needed.

-Viktor Aksyonenko, Chairman, Vetalian Central Bank

OOC: To all participating in this thread.

Just a thought, the sheer volume of money being thrown at TPF is going to swamp them. The inflation that has (if all offers of aid are accepted) just been caused will ruin them faster and more surely than any recession/depression that they're in.

Several trillions of universal dollars have been dumped into that country at a time when it is producing virtually nothing (note that it has a general strike in place). That will simply mean that you have bucketloads of money chasing around the same paucity of goods. Control yourselves, people. What you would have just done, in RL, is what happened in Germany during the depression. People will end up making kites out of credits.

So, in summary. If TPF accepts all offers of aid, it's inflation will soar, interest rates will rise to attempt to keep it in check, housing prices will crash in real terms as banks won't issue loans as they could never keep up with rampant inflation, savings of a lifetime will become worthless overnight, what's left of TPF's stockmarket would be swallowed in seconds by overseas interests looking to exploit its vulnerability (my own corporations first in line, but I'd imagine TPF will decline most offers of aid to prevent this from happening, or jack up the extent of its foreign ownership laws), its currency will plummet against every other currency in the world, it'll still have no exports (general strike), and unemployment will rise as importers flounder and die in the worsening general conditions.

That's the tip of the iceberg. What I can think of while eating a bowl of pasta, and trying to stop my one-year-old from typing for me...

OCC:North, you seem to be an expert in these matters, while I only have expierence in my High School Business two class. If you could guide me, I would love it.

OOC: I know. That's why my money is being offered as loans and only for banks to meet their reserve requirements; the goal is to prevent bank runs from ruining the system, just like the Federal Reserve does now when banks are running low on cash. Just dumping cash or forcing companies to move in will cause the economy to suffer severe inflation.

With a $45 trillion GDP, $2.2 trillion in loans will be enough to cover all or almost all of their banks' reserve ratios, assuming they're using the standard 10% that most nations use for their banking systems.

OOC:

TPF: I'm happy to run you through economically viable means of pulling yourself out of this little conundrum you have (will do so by telegram) but what you do will depend largely on what you want your RP endstate to be? Do you want a communist coup that the rest of the world can butt in on? Do you want a pseudo-corporate state (like me) to bail you out of this debacle, but metaphorically sell your soul in the process? Do you want to blunder about for a while getting weaker and weaker, until the military decide that the government sucks and throw them out?

Will the general strike end? Is Wanderjar looking better? What are your foreign ownership laws like?

There are a whole lot of questions to answer for a realistic extrapolation from this point...

A good first place to start would be to put out an IC request (perhaps in this thread, maybe in another) for economic advisers. You'll get a whole bunch of people who will offer to send you one, and then leave it at that. Find one that'll actually give advice on the circumstances, and run with that.

I might even send someone from one of the multi-nationals that make up North Storn... then I could actually give economic advice IC, rather than OOC... but it'd be biased to what the advisor would percieve as being in his and his corporation's interests, as well as your own.

First off though, telegram me, and tell me what you want to happen in RP terms, and I'll think of a way to get you there...

Vetalia: Yeah, your loans scheme was certainly a smarter option than "here have some money", and a strong first countermove. Still a little inflationary, but only a little, and TPF will be doing well if he can manage inflationary pressures coming out of this, and still have an economy to speak of. But you're right to worry about runs on the banks, although it's not the bank runs in themselves that hurt... it's what happens when the bank panics and tries to not go bust... like, say, calling in ALL of its short term loans at once, and crash-selling stocks and investments to generate liquidity...

OOC: I agree. Given that the stock market plunged by about 50%, I'd say their financial system isn't too strong to begin with. They'll need liquidity for now in order to preserve the system; once it's clear that it will survive and recover, they can start reducing the money supply in order to bring inflation back under control.

Right now, it sounds like a 1929-style disaster, so I'm expecting the worst from the banking system.

OOC: i think that the best course at this point would not to be suplying the government money, but buying stock in their market at more than the going price. This would give an imediate and significant boost.

OOC: That might be a good idea, but it might also not work. Morgan, Rockefeller, and a bunch of other wealthy businessmen tried it by buying huge amounts of stock in the aftermath of the 1929 crash, and it didn't stop the decline.

However, it might work since my nation is helping to support the banking system. The two combined might be able to stabilize the situation, so start buying some stock in the worst-hit companies.

OOC: I thought they did stem the tide for a very short time...
Event: Firehelper begins to buy stock at 175% the current price from various compies ((yes.... still have that 2,000,000,000,000 or so government waste to get rid of))

The Minister of Commerce Blain Baccarat was reading a newspaper looking for the events of the day. When something caught his eye. He saw the The Peoplesfreedom economy was on its way down. Quickly he turned on his computer and typed up a message to their Commerce officials. The message read:

From the Desk of Ministry Department

The word has reached us that you are nearing dire straights. Rotten Bacon is willing to open up manufacturing buildings in you nations to help raise the economy. The pay for the people will not be great but we will set it higher than many others who will enter you nation. Our intension is that your government sells the companies the land in you country for the buildings. Of course the land will be sold when your economy begins to grow. We will work to build your economy up to what it has been in your prime years. The companies interested will pay double for what the land is truly worth. They will also buy land set for houses ensuring that whoever has a house will have a job. The money from the land will help your government thrive and give it opportunities to expand.

We hope that you consider our offer. If you have any questions or disagreements to our offer my doors are always open.

Blain Baccarat
Minister of Commerce

Of course, with so much money flowing into TPF, there will be a need for products to spend it on. And with the country's industry weakened by mass strikes, it is unlikely that TPF industries will be capable of producing them all on their own. Top that off with the fact that TPF's economic problems had been caused in turn by problems in one of the largest exporters to TPF, and the executives at Alexandria Steel and Oil Corporation can smell the trade opportunities. Doubtless other New Manthian megacorporations will not be far behind, and the race for all that foreign currency pouring into TPF will soon be on. Still, there are potential problems. One is a word that AlexandriaCorp executives had heard several times in relation to TPF, a word that caused some of the more sensitive to break out in rashes. Tariffs.

Inquiries are already being made with TPF government officials regarding how many hoops must be jumped through before exports can begin, and, potentially, before AlexandriaCorp or other Manthian corporations can set up factories, shipping liasons and other permanent operations in TPF. A benefit for both sides - the corporations can take advantage of cheap labor from citizens out of work in the depressed TPF economy, and the TPF can get stable, solid jobs that will help them sustain a recovery past the initial infusions of aid cash - and that will eventually become higher-paying as the labor market recovers from the crash and the corporations establish solid markets. If all goes well, of course.

The Errikan Empire is most distressed to hear of our ally's current economic difficulties, and wishes to offer both our greatest condolences and any aid that you may require.

In order to help offset inflation, we wish to increase the supply of other goods, thus hurting their relative values and raising the relative value of your currency. Errikan markets are suffering from overproduction anyway, especially in agricultural products (though raw materials and industrial products are not far behind), and we can secure very low prices with which to flood your markets.

Also, we would recommend that you reach some reach some compromise with your business leaders and labor. You could outlaw strikes in times of economic difficulties in exchange for legally binding promises on the part of business leaders to limit profit margins in order to put further value into production, pay, and lower prices for consumers.