Fwurg

[Veolian Commonwealth]

((OOC: Continued from the opening of the summit))

The financing track features speakers talking about investments, loans and financial instruments. The programme for the track is:

Financing Track

Introducing the Baltimorus & Salaha Union Economic Index
Speaker: Salaha Mahatvapūr (Baltimorus & Salaha Management Consulting, Unity City)

"We will present the Baltimorus & Salaha Union Economic Index and explain how the index is derived from publicly available economic data in all Union Members."


Flat-fee loans based on zone production disparity between systems
Speaker: Asamānatā Pyara, MSc (Dewa Parivāra University, Veolian Commonwealth)

"We will discuss the benefits and drawbacks of flat-fee loans based on zone production disparity. We will explain the seemingly high interest rate based on a recent use case of loans between the Veolian Commonwealth and the Astai Republic, where interest was as high as 75% over a period of 50 ."


A new investment model: Undeveloped zone leasing
Speaker: Asamānatā Sukhada, MSc (Dewa Parivāra University, Veolian Commonwealth)

"In this talk we present a new investment model based on the temporary leasing of undeveloped zones. We will show that this model is beneficial to both the investor and the investee, and that the model has enough flexibility to appeal to both starting and established economies."

After the talks, a discussion panel consisting of the speakers and several invited guests will be available for answering questions.

[Salaha Mahatvapūr]

Introducing the Baltimorus & Salaha Union Economic Index

To start of the day, a speaker from industry. Salaha Mahatvapūr, named partner of Baltimorus & Salaha Management Consulting, a consulting company based in Unity City.

At the announcement an older veolian male walked onto the stage.

"Ladies and gentlemen, I am honoured to stand here before so many dignitaries from numerous worlds within the Union", he starts with a deep voice. "Today, I present the Baltimorus & Salaha Union Economic Index and related analysis programs, and I will discuss some of the observations we have made based on these and other metrics."

"Though the recent recession experienced by the Union could not easily have been predicted, we have asked ourselves how we could give a metric to the health of the Union's intergalactic economy. Having this metric will allow policy makers to better benchmark their models, and will help companies such as ours explain to our numerous clients how they can benefit from the Union economy.

Evaluation of several metrics has shown that a metric based on taxable income offers much insight. Though some worlds have a large amount of spendable income, the total income generated by the Union is still constrained to the added value of that of her citizens.

I will not bore you with the technical details and instead show you the results, so suffice it to say that the programs necessary for the compilation of the B&S-UEI Corrected Taxable Index meticulously scan and analyse every public tax report ever submitted to the Union, and takes into account the fact that newly joined worlds need some time to build their economy to a baseline level."

"I have annotated some important events on this version of the graph, to illustrate how the economy reacted to recent events.

In red, I have highlighted the Mandalorian War, in three phases. The first phase starts at the leftmost red line, which shows the start of strategic maneouvres by the Mandalorians around 105. Then, the threat phase where the Mandalorians were at our borders from 113 to 117. The tragic events at the Bisidn outpost announced an incursion by Mandalorian fleets into Union territory. And eventually, the retreat of the Mandalorians around 130.

As you can see, the Union economy experienced little to no growth during the war, with a drastic reduction in taxable incomes after the Mandalorian incursion of our coreward border and the blockade of the Stellaria and My'enru systems.

At the end of the war most worlds started to cope with the reduced availability of certain goods, when the recession hit. The Union's economy immediately dropped to below war-level efficiency, though for a shorter time as the government stepped in with stimulus aid. As you can see, the B&S-UEI is a representative metric of the Union's immediate growth."

"We have also developed a program for estimating the total possible income of the Union economy as a whole. This gestalt economy shows how effective trades between worlds are in matching market expectations in a frictionless market."

"Based on the estimated trades and industry output of 148 the Union is capable of producing over 2000 12-sets. , , and see large demand, followed by and .

Furthermore, the gestalt economy estimates a total taxable income of 21 395 . Our analysis shows that the actual sum taxable income is 18 385 . Given an unlimited amount of trade capacity, the Union could produce an additional 3550 per turn, and is currently at 83.8% efficiency. This is a very impressive feat.

The gestalt economy takes into account the production of special goods. I now for a fact that if terraformation is scaled down by 50%, another 1200 would become available, greatly boosting the Unions total economy."


"This concludes my short talk. Ladies and gentlemen, all tools and programs and information I used for this talk are freely available to you all. If you feel that these tools are helpful, or helped you gain further insight, consider contacting Baltimorus & Salaha Management Consulting. We offer a range of services, including the preparation of long-term economic projections.

Thank you."

((OOC: You can find all mentioned tools at Economy Analysis.))

[Asamānatā Pyara (mask of Veolian Commonwealth)]

Flat-fee loans based on zone production disparity between systems

After the announcement of the next speaker, Asamānatā Pyara of the Dewa Parivāra University in the Veolian Commonwealth, a young veolian woman walked onto the stage.

"Hi, I am Asamānatā Pyara. I will discuss the currently seen form of loan in the Union's economy: the flat-fee loan.

In a flat-fee loan, the parties agree on the loaned out amount, the running time and the interest. The interest is the additional amount to be returned on top of the loaned amount. It is common to express the interest as a percentage of the loaned amount.

I will discuss the recent loan of the Veolian Commonwealth to the Astai Republic. In this case the Veolian Commonwealth transferred a total of 10000 over a period of 10 . Starting at the end of every two payments, the Astai Republic started a return payment of 70 per for a duration of 50 ."

"The first thing we see is the amount returned: 17500 . Expressed as a percentage of the loaned amount, the additional returns are 75% of the original sum. At first sight this seems like a very expensive proposition for the Astai Republic, as they will somehow have to create an additional 7500 with an investment of 10000 .

To get a grasp on the intention of the the loan, let's have a look at the composition of the loan. It is clear that the loan can be decomposed to five units, each unit is comprised of a loan of 2000 , and a repayment of 3500 over 50 . The loaned amount neatly conincides with the average cost of developing a zone for industrial use. We will assume that the money is used for that purpose. It seems that the Astai Republic will have to make a profit of 3500 on the constructed zone in 50 to break even.

This is not the case. Under the assumption that they would have wanted to develop the zone whether they receive the loan or not, they will only have to make a profit of 1500 to break even. The 2000 cost of the zone has to be invested regardless of where the money comes from.

Given the Astai's penchant for production of they are capable of producing 160 per zone. This means that, once the zone is developed, they will mine 8000 over 50 . To break even, they would have to sell the for 0.1875 per . This is not to difficult in the current economy, where scrap metal is harvested from the other side of the Union to supply -based industries because local mining does not provide enough raw materials.

If the Astai are able to produce products based on the from the invested zones, they will be able to create an even larger profit over the 50 of repayment. As you can see, even with an interest of 75% the Astai are capable of turning the investment into a profit!

Of course, the interest can be lowered. However, if the interest is lowered too much, the Veolian Commonwealth would rather invest the money in their own system: 50 worth of their own industry would create at least a 1000 given that their zones produce only 100 raw materials per . In this case, that would mean that an interest below 50% would no longer be profitable to the Veolian Commonwealth.

Flat-fee loans like these create clarity as to the expectations of the two parties. Both sides know what they will get and when they will get it. However, these loans also serve to lock in the price of raw materials before they are even mined.

I will be joining the discussion panel later on, so please save your questions for then."
Asamānatā Pyara

[Asamānatā Sukhada (mask of Veolian Commonwealth)]

A new investment model: Undeveloped zone leasing

After the announcement of Asamānatā Sukhada, also attached to the Dewa Parivāra University of the Veolian Commonwealth, another young woman walked onto the stage. She looks exactly the same as the previous speaker.

"Hello everyone, my name is Asamānatā Sukhada, and after my sister's talk on flat-fee loans, I would like to present a novel investment model: the undeveloped zone leasing model.

One of the drawbacks of the flat-fee loan model is the expectation that the beneficiary of the loan will be able to immediately convert the investment into profits. Not all small economics are capable of doing so in the short timeframes of most flat-fee loans.

In the undeveloped zone leasing model, I model an investment not as a loan but as a lease with an flexible duration. The investing party enters into an agreement with the beneficiary to invest an amount of covering the development of a zone, in return the beneficiary will deliver the produce of the zone to the investing party. After a set period, the contract's termination clause can be invoked, whereby the beneficiary buys out the investing party for the agreed upon sum.

I will demonstrate the model with an example, followed by a short discussion of the options of the model."

"This example will show a basic application of the undeveloped zone leasing model. In this example, the Alice Empire boasts a large economy, while the Bob Confederacy still has a number of undeveloped moons.

Both parties agree upon the following: Alice will lease one of Bob's zones. To do so, they will transfer the sum of 2500 , of which 2000 are to be used by Bob to develop a zone. In return, Bob will ship the 100 produced by the new zone to Alice. After a period of 52 the termination clause can be invoked, allowing Bob to buy out of the contract with Alice for a sum of 1000 ."


"In the previous example, application of the model allows both parties to benefit greatly. In effect, Alice will receive 100 per for a year as if they have the zone in their own system, at the cost of 1500 . In return Bob will be able to acquire a developed zone in their own system for only 1000 .

Depending on the circumstances of Alice and Bob, they could have agreed upon a smaller investment. For example, if Bob is already flying a trade fleet to Alice, the initial investment can be lowered to factor in the fact that Bob does not need a dedicated trade fleet to deliver the goods. Depending on their relation, Alice might also agree with Bob that the termination clause can be invoked after only 20 .

The strength of the undeveloped zone leasing model is the fact that it can allow small worlds to continue their normal development, while at the same time ensuring that their growth in the future is already started.

The real strength of this model shows if Bob has undeveloped zones that they can use to produce more than 100 . If they can lease out zones that produce 120 , they can either offer Alice a more profitable agreement, or agree that they themselves receive the surplus 20 . This way Alice invests in both Bob's immediate growth, and in their long-term growth"

"It is my opinion that this new investment model will open up an easy and clear method for smaller worlds to propose investment schemes to larger more established worlds. For larger worlds it opens up the possibility of increasing their raw materials production without costly investments in Space Habitats or Outposts."
Asamānatā Sukhada

[Veolian Commonwealth]

During a short break the stage was quickly refurbished. The announcer then introduced the panel and his two aides.

The discussion panel consists of:

• Cror Burchi of the Excarian Federation
• Salaha Mahatvapūr of Baltimorus & Salaha Management Consulting
• Asamānatā Pyara of the Dewa Parivāra University
• Asamānatā Sukhada of the Dewa Parivāra University

After the short introduction, the announcer started with the first question form the audience.

((OOC: Feel free to ask questions. You don't have to wait for the previous question to be answered, the answerers can make clear which question they are answering!

If you have OOC questions on the math or the logic behind a talk, or didn't fully understand it, you can also ask the question IC -- more roleplay is more good.))

[Empress Saret Neferti]

The veolian empress subtly indicated that she would like to ask a question. When she was given the microphone, she stood up.

"Cror Burchi, how has the availability of stable credit through the Kelwaraan bank impacted the Union economy in your opinion? And does this change the dynamic of comparative advantage?"

[Cror Burchi (mask of Storyteller (Brend))]

Cror Burchi gave a big smile when he was asked a question.

"Honestly, the Kelwaraan credit is not well-established enough to have a real impact on the total of the Union's economy. The single shining moment so far has been its use to combat the recent recession. The currency might enable better investments and easier trading, but in practice this has yet to happen."

"You still can't do two things at the same time, with our without saving your money."
Cror Burchi

[Veolian Commonwealth]

After some other questions the moderator indicated that the alloted time was reached and closed the discussion.

((OOC: The summit is closed in the closing ball))