Turn 45 - A Man is Made out of Mud
Looking back you realize you’d actually heard about the first little domino that fell. A tiny one paragraph story in the Griffsport Times about a small luxury shuttlecraft lease service going bankrupt. You remembered that bit because the business model seemed a bit unique, they leased out ultra-high end luxury shuttles to people on a by-the-hour basis. The company had overextended itself as the sufficient demand for the service never materialized.
Then a company that built custom shuttles went out of business, their latest model year offering had failed to gain any traction in the marketplace, and on top of a few hard years in the past it was too much for them. This story actually made the HD news, but more because a few celebrity analysts had been touting the stock just weeks before the fatal earnings report came out that sank the company.
Then came the first boulder to fall as the avalanche began. A major personal automobile firm announced catastrophically bad earnings, driven by the corporation's complete failure to anticipate shifting market demands combined with excessive structural debt and a botched marketing campaign. The company wasn’t in any danger of imminent bankruptcy, but had announced massive layoffs and that they were closing a number of factories, marques, and product lines.
This was followed on the same day by another manufacturer in the automobile sector announcing one of the largest product recalls in planetary history. It wasn’t anything truly stupendous, the fix would take 15 minutes at any dealership and involved a $5 part. Nobody had gotten hurt, but the product was ‘out of spec’ so the manufacturer was fastidiously making it right at their own expense. That the
reason for it being out of spec was that said part was painted the wrong color and thus, if somebody were to open the hood that particular part would clash with the rest of the engine compartment made it just a little ridiculous. But the pump was now primed.
Then a major player in the personal electronics sector announced their own corporate restructuring due to failing to meet earnings targets. And the bears started to roar.
Within an hour automatic triggers had halted trading on all of the Stock Exchanges, but the damage had been done. The market was down almost 25% in a single day, and the Futures market was looking grim.
The resultant slump in the markets led to several small investment firms to fall below Minimum Assets At Hand limits, triggering additional contagion throughout the financial sector as the now over-leveraged firms were forced to frantically raise capital to meet their obligations. This led to several of the largest investment banks in the Empire hitting those same MAAH limits as the capital markets were shaken by events.
By the next morning you were notified that the single largest Corporate Bank in the Empire was facing imminent failure as they had overextended themselves into those same failing investment banks and would fail to meet their own Asset Holding requirements. This had led to several runs on the regular banks throughout the empire as citizens attempted to protect themselves from the possible failures of those banks as well.
It was a serious mess. The economist in you realizes that this is an essential part of the business cycle, that these firms had, despite no wrongdoing or malfeasance, been swept up in a storm of ultimately poor bets on the markets. If they’d zigged instead of zagged they’d have made out like bandits, and indeed a few smaller banks had done just that and would survive just fine. But they’d zagged in a zig situation, and, stretching the metaphor to the limits and beyond, took financial torpedoes below the waterline and were sinking fast.
Your advisors are torn. Bridget puts it very succinctly. “Head says let it go, this will ultimately shake out with a healthier economy in the long term, the companies that are unable to survive this are consuming capital that healthier companies need to thrive. Heart looks at all the people who, ultimately through no fault of their own, are getting hurt by this by losing jobs, investments portfolios, and retirement funds, and wants to step in and make their pain go away by propping up the failing companies.”
That is the rub. You take the time to read through the materials on all of the firms involved, and can see that many of them were older, larger, somewhat sclerotic firms that had been coasting for some time on past glories and reputations. They’d gotten complacent, and it had ruined them. Letting the fire rage in the short term would hurt, no doubt about it, but in the end you’d have nice fertile soil for new companies to rise up in. On the other hand, the sheer human cost could make it such that those companies might be considered too big to fail, because their failure simply hurts too much.
| [] | Action | Result |
| [] | Let the Free Market take its course |
- -10 Imperial Approval
- -10 Approval Change
- +10 Economic Rating
- +10 Economic Event
- +10 Rating Change each planet
- Raise Econ Rating Cap on each planet by 10
|
| [] | Intervene by subsidizing the vulnerable companies |
- Cost - 1,000,000
- Ongoing cost - 100,000
- Can cancel at any time, however at that time there will be a 2d5% reduction in GDP for each planet
- +5% GDP each planet this year only
- +5 Imperial Approval
- +10 Approval Change
- +10 Politics
- -10 Economic Rating
- -10 Economic Event
- -20 Economy Rating each planet
- Lower Econ Rating Cap on each planet by 10
|
QM Notes - After 2 rerolls this was the best you got for Meta Event. -30% GDP on each planet. (actual event was -1d4*10 percent reduction, so you got a little lucky)
