Developer Diary #22 – Loans and Debt

[Colon]

you are of course perfectly right here. I just wanted to suggest a criteria that would be very simple to implement and still capture the main effects. A debt/GDP-ratio would be the perfect solution but I doubt that GDP is calculated in Victoria II. Given the closed money circuit Paradox implemented for Vicy II I'm wondering if it would be possible to calculate GDP and GDP per capita numbers. I guess that should really be something players would appreciate as a performance feedback. It would also provoke alternative economic development strategies. Democracies might want to maximize the consumption power of their citizens (GDP), while autocratic regimes might aim for an industry that is better suited for warfare (heavy industries, arms...). The well known industrial index might be a weighted index of the GDP and several output numbers of strategic industries.

It would be very easy to calculate GDP in Vic. In this game the profits factories and RGOs equal the added value they create (output minus inputs). Thus take sum of all the profits of RGO, then add the sum of all profits and losses of factories and you have a GDP figure.

 

[Sute]{h]

I think it was said that if you have no coastline and are in debt to eg. the UK, they don't have the option to force you to keep paying interest (although if you're defaulting the UK, you're probably defaulting everyone), so they instead get a CB right away. Then the AI would try to get military access so they can attack you and demand some land in compensation, if you don't start paying.

I'd love to see the UK try this on Lippe-Detmold... somehow I doubt Prussia will allow it. And since the UK can't prevent Lippe-Detmold from borrowing from the british national bank, I guess Lippe-Detmold can borrow the entire british national bank without fear of the consequences. Unless I've missed something.

Of course you don't control whom you lend money from which makes this less exploitable, but it still seems wierd.

 

[Colon]

It would be a bit of an anomoly, but a default of Lippe Detmold is hardly going to bite anyone in the ass. And there aren't really a lot of landlocked countries of any size. The only one that could be an issue is Switserland, but if the game is properely modelled, they aren't going to be likely to default.

 

[telesien]

I'd love to see the UK try this on Lippe-Detmold... somehow I doubt Prussia will allow it. And since the UK can't prevent Lippe-Detmold from borrowing from the british national bank, I guess Lippe-Detmold can borrow the entire british national bank without fear of the consequences. Unless I've missed something.

Of course you don't control whom you lend money from which makes this less exploitable, but it still seems wierd.

You can't control from whow you borrow or whom you actually lend. That would probabaly lead into some very interesting games when great wars with very interesting alliances could erupt in various places. Just like the one you wrote about.

 

[Balesir]

Well if you conquer a country that owes money to your national bank ie. your people, now it's instead you who owes money to your people. Logical.

I agree - which may well lead you to make them a satellite/puppet/protectorate, as OHGamer suggested. That wasn't my point, however.

I would assume cash is inherited, although if you're annexing them due to them having high debt, how much cash do you think they have, what with having their army destroyed in a desperate fight for survival after (nay, because) suffering from crippling debt.

This wasn't the case I was curious/concerned about. I was wondering if this would mean that a small, cash-rich country will be a target for bandit-nations looking for a swift boost to their finances, encouraging governments to fund major projects with debt rather than saving up cash reserves.

No biggie - just exploring the implications of the system.

 

[unmerged(75409)]

I'd love to see the UK try this on Lippe-Detmold... somehow I doubt Prussia will allow it. And since the UK can't prevent Lippe-Detmold from borrowing from the british national bank, I guess Lippe-Detmold can borrow the entire british national bank without fear of the consequences. Unless I've missed something.

Of course you don't control whom you lend money from which makes this less exploitable, but it still seems wierd.

On Lippe's ability to break the Bank of England:

If bankruptcy is similar to Vic1, then there is a potential stopper to this exploit:

Lippe-Detmold would be automatically declared bankrupt if its maximum revenue from taxes and tariffs exceed the interests on the total loans taken so far. Considering how small Lippe's tax and tariff base is, the game would declare Lippe bankrupt long before they would make a dent in the Bank of England's treasury. And at that point I assume Lippe would not be able to take any more loans, until it has repaid all loans accumulated so far. Regardless of what the UK does or does not do in response to Lippe's bankruptcy.

In Vic 1 it was not completely transparent how the game assessed a country's ability to serve the interest on its outstanding loans, but it was correlated to your tax and tariff income AFAIK. So at some point the game pulled the plug on your accumulating debt, and declared you bankrupt, you were not able to do anything about that if you let it come so far.

This would stop small countries from crashing the credit system. Those countries which fail to pay back their debts would consequently remain excluded from credit for the remainder of the game.

Bankruptcy in Victoria 1 - usual suspects of whom bankruptcy is almost expected

In Vic1, there were a couple of "usual suspects" who would very often go bankrupt: The Arabian nations (Abu Dhabi, Nejd), VIP's African statelets (Nama, Kongo, Ndebele etc), and the occasional German minor. Sometimes also small poor countries like Bolivia or Ecuador.

What could be done about it in Vic 2:

For game purposes it would probably be best if Nejd, Abu Dhabi, Nama etc were excluded from any credit from 1/1/1836 on. This would prevent silly situations like UK gobbling up the Arabian desert before 1850. Also those places saw no intrinsic development at all in the Vic timeframe, it makes only sense to exclude them from credit and "lock" them in perpetual poverty. I doubt Goldman-Sachs would have loaned the Emir of Nejd or the Chief of the Nama any money in 1840 or 1850 anyways.

If this makes them unplayable, a compromise would be to have them start the game already in an artificial "debt repayment" situation, i.e. in a situation as if they had gone bankrupt on 31/12/1835 and already negotiated a peaceful repayment plan with their nearest civilized neighbour. Then they would only remain excluded from credit until they have repaid a small loan, which the player could achieve relatively quickly but the AI would not manage this and remain excluded from debt.

 

[Tommy4ever]

Every week I want this game more and more.

The debt system sounds great, the gunboat diplomacy very 19th century.

My thanks to everyone at Paradox working on this project. Your doing a great job!

 

[Colon]

Leviathan07, you're assuming that gunboat diplomacy is the only penalty for a default. It isn't. For one, your own population will also be affected and they won't be happy. You are also assuming the UK will be only foreign lender. That won't be the case. Prussia is also quite probable to be an affected lender and in the case of Lippe Detmold they could very easily annex you.

Frankly, you're making a mountain of a molehill. Landlocked countries in default will have a slight advantage over non-landlocked defaulters, but they'll feel repercussions regardless. Considering how few landlocked countries there are it's hardly worth getting worked up about it.

 

[Earl Uhtred]

Every week I want this game more and more.

The debt system sounds great, the gunboat diplomacy very 19th century.

My thanks to everyone at Paradox working on this project. Your doing a great job!

The only thing that could enthuse me more about this project would be a release date

 

[Searry]

So if you win a war against your creditor, can you clear the debt?

 

[telesien]

The only thing that would make this system really better (and I hope that it will become part of future expansion) would be the possibilty for cappies to use this loan system as well. It could be even simplified only to internal loan to avoid problems with gun-boat diplomacy or CB. Nevertheless it would be good addition

 

[unmerged(75409)]

Leviathan07, you're assuming that gunboat diplomacy is the only penalty for a default. It isn't. For one, your own population will also be affected and they won't be happy. You are also assuming the UK will be only foreign lender. That won't be the case. Prussia is also quite probable to be an affected lender and in the case of Lippe Detmold they could very easily annex you.

Frankly, you're making a mountain of a molehill. Landlocked countries in default will have a slight advantage over non-landlocked defaulters, but they'll feel repercussions regardless. Considering how few landlocked countries there are it's hardly worth getting worked up about it.

Yes I know it is not much of an issue, but
a) the AI does not know about bankruptcy,
b) it would be silly to have every game feature in 1837 a message that Abu Dhabi defaulted on your loans,
c) any game mechanism that can be abused, will be abused.

Have you read the AAR where Krakow became a superpower through "revolving door revolutions"? The player abused the rebels-overthrow-government mechanism by having his country go into democratic revolution, monarchist counterrevolution, democratic counter-counter-revolution, monarchist counter-counter-counter-revolution and so on, because the net effect from having first a democratic and then a monarchist overthrow of the government was +50 relations with Russia, Prussia and all the other absolutist monarchies. Each time. So after 6 cycles he was from -100 to +200 relations with them. When he was at +200, he started raising money (I forgot where he got it from) and then he would go and buy provinces and do all sorts of shenanigans. You'd think having such high MIL would wreck any attempt to play a game of Victoria, but he coped and turned Krakow into a continent spanning empire.

As I said: Every mechanism that can be abused, will be abused. That's why I propose that such attempts to abuse the credit system should be prevented.

If the VIP mod is ported into Victoria 2 then there will be about 20-30 new countries in Africa. it is a safe bet that at least half a dozen will go bankrupt. (None of them have a tax base.) Many of them start out landlocked, without a common border with France or the UK. There needs to be a way to exclude them from the loan system. (Barring access to loans for uncivilized countries would probably also do it...)

Don't get me wrong, I love the loan system. I'm just proposing some detail solutions.

 

[Sovereign]

Yes I know it is not much of an issue, but
a) the AI does not know about bankruptcy,
b) it would be silly to have every game feature in 1837 a message that Abu Dhabi defaulted on your loans,
c) any game mechanism that can be abused, will be abused.

Have you read the AAR where Krakow became a superpower through "revolving door revolutions"? The player abused the rebels-overthrow-government mechanism by having his country go into democratic revolution, monarchist counterrevolution, democratic counter-counter-revolution, monarchist counter-counter-counter-revolution and so on, because the net effect from having first a democratic and then a monarchist overthrow of the government was +50 relations with Russia, Prussia and all the other absolutist monarchies. Each time. So after 6 cycles he was from -100 to +200 relations with them. When he was at +200, he started raising money (I forgot where he got it from) and then he would go and buy provinces and do all sorts of shenanigans. You'd think having such high MIL would wreck any attempt to play a game of Victoria, but he coped and turned Krakow into a continent spanning empire.

As I said: Every mechanism that can be abused, will be abused. That's why I propose that such attempts to abuse the credit system should be prevented.

If the VIP mod is ported into Victoria 2 then there will be about 20-30 new countries in Africa. it is a safe bet that at least half a dozen will go bankrupt. (None of them have a tax base.) Many of them start out landlocked, without a common border with France or the UK. There needs to be a way to exclude them from the loan system. (Barring access to loans for uncivilized countries would probably also do it...)

Don't get me wrong, I love the loan system. I'm just proposing some detail solutions.

Frankly I'd rather just put up with Usual Suspect Defaulters then add a mechanism that locks out nations from the credit market.

For instance locking uncivs out would make them unplayable probably, you need to speculate to accumulate or you'll probably go nowhere, and playing Euro's or the US or Japan all the time gets pretty boring after awhile, eventually you want a challenge, and if that happens to be to turn Nejd into a super-power it would suck to make it pretty much impossible by being banned from the credit market. Especially as you won't be able to tech trade or land trade either in Vicky 2.

All in all, so what if Nejd goes banckrupt every game, it really wont be a big deal. And anyway I'm sure CB's due to defualts won't involve land-grab objectives, probably just reparations or something.

 

[Sovereign]

to elaborate further, I actually can not think of one instance where a nation was fully conquered and ruled as a full colony after having defaulted.

Egypt, Tunisia and Morocco, where there were bankruptcies/heavy debt loads, all became protectorates, where an outside power (Britain for Egypt, France for Tunisia and Morocco) held the top positions to "advise" the local administration on how to run the country, but there remained a separate Egyptian, Tunisian and Moroccan state which was still liable for the debt burden before, though usually repayment had been renegotiated to be much less onerous than before the European intervention.

So if a player is worried about inheriting a mountain of debt by taking over the bankrupt place, I'm assuming that the option of making the nation a protectorate would still exist. Perhaps that would then change the repayment system so that your citizens get paid first, even if you are not the power with the biggest navy.

Sometimes. hell many times, direct rule is not the best option when building an empire.

That would make for a great Default/CB War Objective

The debtor becomes a satellite state, the debt is reduced to what the satellite can manage.

I'm not sure if satellite states are still in the game actually, or if they are replaced completely by SOI. The thing is only Great Powers can have SOI's, so what if you're not a Great Power, but declare war on a deptor, what could you then demand?

It's the exception that kind of spoils the idea.

 

[Earl Uhtred]

I bet the war aims you can define, and thus peace terms you can easily demand, when a state defaults on its debt will be towards expansion of influence / vassalisation rather than annexation.

 

[Colon]

Yes I know it is not much of an issue, but
a) the AI does not know about bankruptcy,
b) it would be silly to have every game feature in 1837 a message that Abu Dhabi defaulted on your loans,
c) any game mechanism that can be abused, will be abused.

Have you read the AAR where Krakow became a superpower through "revolving door revolutions"? The player abused the rebels-overthrow-government mechanism by having his country go into democratic revolution, monarchist counterrevolution, democratic counter-counter-revolution, monarchist counter-counter-counter-revolution and so on, because the net effect from having first a democratic and then a monarchist overthrow of the government was +50 relations with Russia, Prussia and all the other absolutist monarchies. Each time. So after 6 cycles he was from -100 to +200 relations with them. When he was at +200, he started raising money (I forgot where he got it from) and then he would go and buy provinces and do all sorts of shenanigans. You'd think having such high MIL would wreck any attempt to play a game of Victoria, but he coped and turned Krakow into a continent spanning empire.

As I said: Every mechanism that can be abused, will be abused. That's why I propose that such attempts to abuse the credit system should be prevented.

If the VIP mod is ported into Victoria 2 then there will be about 20-30 new countries in Africa. it is a safe bet that at least half a dozen will go bankrupt. (None of them have a tax base.) Many of them start out landlocked, without a common border with France or the UK. There needs to be a way to exclude them from the loan system. (Barring access to loans for uncivilized countries would probably also do it...)

Don't get me wrong, I love the loan system. I'm just proposing some detail solutions.

Again, we are speaking about a slight advantage for landlocked defaulters over non-landlocked defaulters. That does not mean a default is rewarding on its own. Yes, Lippe Detmold would safe from an attack by the UK, but they are not safe from neighbouring lenders, they are not safe from their own population and you can no longer borrow money from abroad so you'd have to make serious cutbacks on your budget. Moreover all of this is assuming that Lippe Detmold will default in the first place.

And I don't know why you assume Abu Dhabi will default. One of the main reasons auto-promotion has been introduced is to make it less likely the AI will bankrupt itself by promoting POPs to soldiers.

Finally, to make the game absolutely foolproof to people who are willing to ride roughsod over the spirit of the game is a pointless exercise. Don't look for exploits if you don't want to use them.

 

[unmerged(63310)]

to elaborate further, I actually can not think of one instance where a nation was fully conquered and ruled as a full colony after having defaulted.

Egypt, Tunisia and Morocco, where there were bankruptcies/heavy debt loads, all became protectorates, where an outside power (Britain for Egypt, France for Tunisia and Morocco) held the top positions to "advise" the local administration on how to run the country, but there remained a separate Egyptian, Tunisian and Moroccan state which was still liable for the debt burden before, though usually repayment had been renegotiated to be much less onerous than before the European intervention.

So if a player is worried about inheriting a mountain of debt by taking over the bankrupt place, I'm assuming that the option of making the nation a protectorate would still exist. Perhaps that would then change the repayment system so that your citizens get paid first, even if you are not the power with the biggest navy.

Sometimes. hell many times, direct rule is not the best option when building an empire.

I really hope this is how it works... would be fantastic to use the CB of a default to set up a protectorate which adds the defaulting nation into your SI and forces them to pay back your nation first before navy size is calculated. Which then results that the creditor with a large navy who is not wanting to let your nation to get all the money repaid first which would normally go to them might send gunboats and possible CB which then your nation as protector has to decide is it worth going to war over if you already extracted most of your credit repayments...

Then prestige loss of not honoring a protectorate alliance or something would be the cost of the larger navy country getting a CB without your own nation going to war to protect its SI. Could be some very cool diplomatic maneuvers!

Since it is a bit cyclical which nations will extend loans (the richest nations have the largest amount of capital in the bank but as they loan out the largest capital amounts will cycle thru nations) there is the possibility of a nation with smaller fleet like Spain for instance loaning money to a Sardinia Piedmont fighting off Sicily and then Italy defaults when Sicily win the war and Italy is unified. So Spain sends in gunboat and then gets a CB to for war to reclaim its payments- the war goal is protectorate over Italy which Spain wins. Italy is added into Spain SI for the length of time it takes to repay Spain loans.

Meanwhile- France which loaned money to Sicily was being repaid by Italy as it had the larger fleet but when Spain which loaned the money to Sardinia whose debt Italy inherited and defaulted on and then Spain wins its war goals vs Italy... which means Spain gets debt repayment preference due to protectorate even though France has larger fleet.

France now has the choice to go to war to recover its money from Italy which has started to repay Spain first due to the protectorate status Spain won in the war. Spain is obliged for prestige reasons and repayment reasons to defend Italy but if already most of its debt is paid off... probably won't want to risk war against a large neighbor with bigger fleet like France so now France gets debt repaid, Italy in its SI for the duration of debt repayments, and a prestige bonus for defeating Italy. Spain got a prestige bonus as well but then took a loss when not defending its protectorate but does get most of its money back before France while newly unified Italy has twice lost prestige and had horrible financial strains being forced to repay 2 nations. Sounds fun!

 

[Ithron]

Unbelievable. Where were The Minds behind Vic & Vic2 when Hoi series so desperately needed them? Its getting better and better while Hoi series is still crying for having actual economics (instead we spend time thinking if AI can manage the tremendiously difficult trade of 4 resources..) - especially with the new "give AI control over military" model - I personally enjoy gaining upper hand by "macro" gamplay, instead of praying for the right body count after each small battle. I'm already dreaming of implementing different economical schools in Vic2 (probably at the same time as trying to remake Vic2 into WW2 game, I just hope devs don't delete all the very nice work on combat, supplies - algorythms, etc, that is done for the Hoi3 ) starting from command economics up to classical economics, Austrian school, Keynesianism, fresh, salt water economics, etc. Economical cycles should be fun and with Vic2 should be easy to create them (or maybe we could even expect to see them in vanilla..uuuu..well if not..at least give them as 'random events'..). If clauswitz AI can manage Vic2, then I'm even more convinced that making realistic WW2 game with Vic,Vic2 level economics and 20+ resources is just matter of work.

 

[unmerged(164401)]

with all these brilliant ideas implemented, i do hope they do give this game an enormous time for balancing. it seems that the new system gives the nations alot of reasons for war. theres a war for 1) a fight for an SoI on a nation 2) fight for Great Power status 3) a fight for the repayment of debts.

i fear that with this game, we will experience more wars that we should. that's why i think there should be as much time for balancing as the time put in implemeting all these features in the first place. we are promised that, so that's a good step(at least for the awarness).

 

[Sovereign]

with all these brilliant ideas implemented, i do hope they do give this game an enormous time for balancing. it seems that the new system gives the nations alot of reasons for war. theres a war for 1) a fight for an SoI on a nation 2) fight for Great Power status 3) a fight for the repayment of debts.

i fear that with this game, we will experience more wars that we should. that's why i think there should be as much time for balancing as the time put in implemeting all these features in the first place. we are promised that, so that's a good step(at least for the awarness).

I believe you reckon without POPs sir, their fortunes and the limits of their tolerance for war will surely act as a break on rampant military-adventurism.