Debt Crisis
It's unclear when exactly, but a rumor began circulating throughout the continent that the Moxi Duchy was bankrupt and the Alpha Kingdom was in default on its debts.
Almost simultaneously, a surge in people selling bonds from both countries emerged. High-yield bonds that had previously enjoyed a premium were now being sold off at rock-bottom prices.
Driven by panic, more and more people believe rumors. The lower bond prices fall, the fewer people are willing to buy.
Led by certain individuals, countless bondholders have demanded that the two governments make early repayments.
Looking at the reports sent back by envoys stationed abroad, Caesar IV lost a lot more hair.
Before ascending the throne, he longed for great power; after taking the throne, he realized how difficult it was to King.
I find it too tiring to handle things myself; but if I delegate authority to my subordinates, I worry about losing control.
"This is information coming from various places. If this matter is not handled properly, our bonds issued internationally will face a major run on them."
The reason I've gathered everyone here today is to discuss how to prevent a run on bonds from happening again.
As he spoke, Caesar IV distributed a thick stack of documents to the crowd.
The content above is largely the same, just from different sources; you can just look at any one of them.
After a quick scan, everyone's faces darkened. Clearly, the actual situation was far more serious than Caesar IV had described.
"Your Majesty, the bond run seems unstoppable. The simultaneous emergence of such rumors across the mainland clearly indicates that someone is manipulating things in secret."
The enemy came prepared; it's definitely not something we can resolve by simply offering a few explanations.
We must now prepare for the worst and do everything possible to prevent the kingdom from going bankrupt in a run on funds.
The Duke Newfoundland said with a bitter expression.
There is no doubt that the bankruptcy he refers to is a bankruptcy of government credibility, not a bankruptcy of finances.
Once a massive run on the bank occurs, there's only one thing Alpha Kingdom can do—lie flat.
No money is no money. Even if you sell everything you own, you can't raise enough funds in a short time.
The domestic nobles are also unreliable; the lesser nobles are already impoverished. The greater nobles are still preparing for war and are unlikely to use their last reserves to bail out the kingdom.
Since it's destined that the money can't be repaid, then let's just not pay it back. By defaulting on these debts, the Alpha Kingdom's finances are immediately revived.
The benefits are visible, but the consequences are also terrible.
If I encounter trouble in the future and want to borrow money again, there's definitely no hope.
What's more troublesome is that the country's credibility is lost, which will affect its political and diplomatic activities.
The creditors' hostility is also a big problem.
Those who can afford to buy war bonds are no ordinary people.
The high-ranking nobles transferred the risk, while the lower-ranking nobles, who were behind on the news, not only did not escape, but instead became the ones who took over the losses.
They are also part of the ruling class; at least locally, they wield considerable influence.
The hatred of one or two people is nothing, but the hatred of a group of people can also influence the political stance of a country.
"Isn't there a way to deal with this?"
"I am not satisfied, "Caesar IV asked, unwilling to give up.
"Your Majesty, the kingdom's total debts amount to over 96 million gold coins. This includes loans between nations and bonds we have issued."
Of the total debt, domestic debt is about 36 million, but this part is not a major concern for the time being. The nobles are not foolish enough to stab us in the back at this time. What needs to be addressed is the international debt.
If our trade with the Black Forest Kingdom goes smoothly, we expect to save another 16 to 18 million gold coins.
Let's take an optimistic estimate and calculate it at 4,200 gold coins. Of that, war bonds account for approximately 30 million gold coins.
Under normal circumstances, these 30 million gold coin bonds won't all come at once and be demanded for redemption.
However, this incident is clearly being manipulated behind the scenes and cannot be judged according to normal economic principles.
It's possible that war bonds circulating within the kingdom might be transferred out and become part of a run on the bonds.
How much cash we need to prepare depends not only on ourselves, but also on the neighboring Moxi Duchy.
If they withstand the impact, and with the spread of confidence, we can quell the storm with eight million gold coins.
However, the Moxi people have long been on the path of borrowing new money to repay old debts, and they will probably collapse as soon as the run on the bank begins.
If panic builds up, even if we prepare 30 million gold coins, we may not be able to withstand the impact.
"Governments around the world might also stab us in the back and demand debt repayment ahead of schedule."
The data doesn't lie; Marquis Delgado's words completely dashed Caesar IV's hopes.
Eight million gold coins is something we can manage to scrape together. But thirty million gold coins? Forget about it, the Alpha Kingdom isn't that wealthy.
Perhaps feeling that his previous statement was too absolute, after a moment's hesitation, the Marquis Delgado added:
"Your Majesty, there is still a way, but the consequences could be quite serious, and it might even be a case of losing more than you gain."
If we acquiesce to the Dante Kingdom and the South Bank Kingdom's northward expansion to annex the County of Glint and the County of Nadar, we can probably save ten million gold coins.
If this goes further, tacitly allowing the Franks to annex the Opulus Kingdom, tacitly allowing the Ilibia Kingdom to annex the Avalart Kingdom, tacitly allowing the Church to invade the Turan Kingdom...
If we satisfy the ambitions of all the countries on the continent, then our debt problem will no longer be a problem.
That makes sense. If we do this, the debt problem will disappear, and it will all be transformed into a defense problem.
Within ten years, the Aslant Continent will transition into an era of "fierce competition among powerful nations." If they are lucky, the Alpha Kingdom will become one of the dominant powers; if they are unlucky, it will perish halfway through its journey.
"Marquis Delgado, you're thinking too simply. Putting aside the consequences of doing this, the kingdom's tacit approval isn't as valuable as you think."
In the Northern Continent, we do have a lot of influence, but in other parts of the continent, it's just so-so.
Unless someone openly and publicly stands up to support them, there might be some chance, but the hope is slim.
People would rather eliminate a competitor than receive a piece of support that is dispensable.
Count Francis said with a solemn expression.
Only those involved in diplomacy know how unfavorable the current international situation is for the Alpha Kingdom.
This debt crisis, while seemingly orchestrated, is also the result of collusion among various countries.
Without the tacit approval of several major powers, who would have the capability to launch a coordinated attack across the entire continent?
Compared to the dilemma of the Alpha Kingdom, the Moxi Duchy, which is also mired in a debt crisis, presents a completely different picture.
In the back garden of the palace, King George was leisurely brewing tea and chatting with a group of princes and ministers, showing no sign of tension.
"Has anyone found out who is targeting the duchy?"
George asked calmly.
Through a series of behind-the-scenes maneuvers, the Moxi Duchy has secretly settled most of its debts by "passing on knowledge and paying off debts with special cultivation resources".
The current bank run is just a staged performance to cover up the truth.
After all, their transactions violated the existing unspoken rules.
It takes time to transform theoretical knowledge into practical power, and the minor nobles involved in the transactions need to keep things secret even more than the Moxi Duchy.
If word gets out, the Moxi Duchy will certainly face joint suppression from all sides, but these traders will face annihilation.
If it weren't for the discovery that someone was secretly plotting something, King George, who was just watching the show, wouldn't have bothered with these disputes.
"Your Majesty, all direct leads have been cut off. However, according to the nobles who traded with us, the mysterious person who approached them may be from the Church."
Based on analysis of various sources, their primary target in this operation is the Alpha Kingdom, and we are merely pawns in their campaign against Alpha people.
These guys are trying to cripple the principality's finances through a run on our bonds, forcing us to default on our debts, thereby triggering a larger-scale panic and igniting the Alpha Kingdom's massive debt crisis.
Unfortunately, despite their meticulous planning, none of these people anticipated that the principality had already resolved its debt problem. Now, even if they were to create a huge uproar, it would be futile.
As long as the Duchy's finances don't collapse, everyone's confidence in the Alpha Kingdom will not waver.
After all, on the surface, the Alpha Kingdom's financial situation is far better than ours!
Count Renato said with schadenfreude.
Clearly, even without concrete evidence, he still believed that the Church was the mastermind behind it all.
Regardless of the reason, Count Renato felt no goodwill whatsoever towards the Church, which wanted to push them into the Abyssal Hell.
Since we can't afford to offend the behemoth that is the Church, watching their schemes fail and they get humiliated is also a kind of enjoyment.
"As expected of the Church!"
I don't know what the Alpha Kingdom did to make the Church hate them to the core, to the point that they went to such lengths.
If I'm not mistaken, they'll lose at least hundreds of thousands of gold coins just from this crazy crackdown on bond prices.
However, this is for the best. With the Church causing trouble for the Alpha Kingdom, the alliance between our two countries will be even stronger.
The Central Three Kingdoms are stirring up trouble, and their northward advance is unstoppable. The duchy still needs time to recover, and now it needs the Alpha people to stand in the way.
Send a copy of the information you found to Caesar IV. Also, tell them that the entire duchy is now united, and all the nobles will work together to deal with the crisis; they are not so easily defeated.
George said, frowning.
Even a skilled cook can't cook without rice.
Seeing the opportunity presented to him, he had no choice but to suppress his ambitions due to the limited strength of the Moxi Duchy.
In the Mountain Territory, Hudson was happily welcoming the opening of the canal and envisioning the great economic development that would follow, when he received a devastating blow.
The uproar over the debt crisis swept through the Alpha Kingdom, and it seemed as if the whole world knew about it overnight.
Anyone with a modicum of political acumen knows what will happen once a run on banks occurs.
It's one thing if the bonds in your hands become worthless, but the key issue is the political and economic impact.
Hudson was too lazy to even think about the political crisis. He figured the tall ones would hold up the sky first, and let the King and his ministers worry about it.
However, economic issues cannot be avoided.
The market in the Seven Grassland Nations that we finally managed to open up might be shut down directly. Even if we manage to keep it, the cost will be considerable.
The maritime strategy for the future must be readjusted. Forget about international trade for now; for the next few years, let's focus on domestic trade!
The newly emerging aristocracy is so miserable; even the slightest disturbance can cause a major impact.
If it were a deeply entrenched, old-fashioned aristocrat, they would never be so flustered.
Take the Dalton Family as an example. They are also involved in international trade, but they are not afraid of such storms.
As far as Hudson knows, they have established partners in many countries across the continent.
There are also many intermarriages between them, and they have long established a community of shared interests.
Let alone political fluctuations, even if two countries go to war, it won't affect their ability to continue doing business.
"My lord, Mr. Jose has entered the territory. Because he is accompanied by his family, he is expected to arrive at the lord's manor in five days."
Tom's words eased the worry on Hudson's face considerably. After planning for so long, they had finally succeeded in poaching him.