Developer Diary #22 – Loans and Debt

[Balesir]

FWIW this seems wrong. The entity which borrowed the money no longer exists. As for the people who live there, who probably lent the money, well, try not to get conquered in your next life. Finally, what country would ever annihilate another state in war (as opposed to peaceful diplomacy) and then pay their debts?

Thinking about this for a while, and the example of the Bolshevik refusal to pay the Tsar's debts brought me to realise that it actually isn't about what the debtor nation/government does or thinks - it's about the view of the creditors. This shows the beauty of getting a CB on defaulted loans - the creditor can act on a CB or not, at their option.

There probably does need to be some sort of "bad debt statute of limitations", though. Neither governments nor POPs are plausibly going to await their payback and keep gaining MIL for generations on a loan that's clearly not coming back...

 

[Balesir]

An interesting feature.

I wonder... what would happen in the following scenario:

Your POPs have paid in a total of £100,000 into the National Bank, and the balance seems to be rising by £1,000 or so a month. So you decide to embark on a railroad-building spree or whatever, borrowing £90,000 from the NB. The next month, an adverse economic event hits. Your POPs start to draw down their balances by £1,000 a month.

Do you have a banking crisis in about a year's time, or is this when you start to tap foreign lenders for loans?

The NB isn't an actual bank, so no bank crisis per se, but when your POPs want to draw down and can't (the money isn't there) they gain MIL due to lack of purchasing power. I guess at that point you could borrow (from foreign lenders) and pay back some loans with the money, but would the foreign loan get paid first? Good question.

 

[Zhou Yu]

"...there is a shadowy cartel of international financiers with hidden goals who are always willing to lend a hand."

This is comedy. I love it.

 

[King]

An interesting feature.

I wonder... what would happen in the following scenario:

Your POPs have paid in a total of £100,000 into the National Bank, and the balance seems to be rising by £1,000 or so a month. So you decide to embark on a railroad-building spree or whatever, borrowing £90,000 from the NB. The next month, an adverse economic event hits. Your POPs start to draw down their balances by £1,000 a month.

Do you have a banking crisis in about a year's time, or is this when you start to tap foreign lenders for loans?

Well it depends what you do, but if you do nothing and need to borrow more quickly then you will start to look abroad for the money. However your interest payments to your POPs will start to help them get back on their feet finaincially.

 

[Vargas]

I like it!

 

[Capt. Kiwi]

I thought I'd replied to this, but apparently not.

I'm not sure if this is quite as perfect as it should be. There is no consideration for diplomatic or non-naval pressure (yes you can declare war, but the risk of that should be factored into repayment order. Switzerland should repay Austria before the UK, for example). This isn't too big an issue, as there aren't that many landlocked nations of significance (Switzerland, Bavaria, Paraguay, ...?). Similarly, I'm sure there will be players who figure out ways to exploit this feature, but that shouldn't be game breaking and will happen no matter what features you put in.

I'm more concerned about the inclusion of gunboat diplomacy for this and only this purpose. It just seems like bad game design, when instead you could just use a further abstraction (eg military score), or use this system and do other things too (colonies for example, along the lines of what happened with Samoa). It just seems inefficient. Still, I'll back you to make the feature work the way you want, and I'll see what I think when I finally get my hands on it.

 

[Figo]

shadowy cartel of international financiers with hidden goals who are always willing to lend a hand

you cant build strong fortress with open gates and windows =(

 

[Searry]

I hope there will be a prestige hit, if you default loans.

 

[unmerged(77251)]

Firstly, reading some of the comments above, one confusion seems very common: you don't borrow from a country, but from it's national bank. So why showing a list of countries in the "loans taken" tab on the screenshots ?
Maybe it would help just adding a fancy 'national bank of' tag before each country name in this list, so that future players might be able the distinguish between where the money comes from (the bank), and who's garanteeing it (the country).

Secondly, if I understand this correctly, interest that are paid to the national bank from which you borrowed money remain into the circuitry, and contribute to your pops income. Sooooo, how much can this 'interest income' represent in term of total income ? Would it be possible, for an instance, to create a finance-only economy, in which you nearly don't tax you're pops, which thus accumulate money and lend it through the national bank and finally collect interest ?

 

[telesien]

Secondly, if I understand this correctly, interest that are paid to the national bank from which you borrowed money remain into the circuitry, and contribute to your pops income. Sooooo, how much can this 'interest income' represent in term of total income ? Would it be possible, for an instance, to create a finance-only economy, in which you nearly don't tax you're pops, which thus accumulate money and lend it through the national bank and finally collect interest ?

I believe you can. But since it will be them collecting interest, you will still have to finance the state somehow.

 

[out]

Haven't read through all 12 pages of the thread, so sorry if this has been addressed already.

Shouldn't the repayment priority at least somewhat affected by army size and proximity? If Georgia borrows from both Russia and Britain, it'd make no sense to favour the brits over the russians. Likewise, any protectorate states should favour their patron country over someone with big boats.

Perhaps it's better to allow the player to set repayment priority (either ordering country manually or setting a per-country priority level like EU3 auto-merchants). If they piss off a country with a huge fleet, it's at least their own choosing.

 

[JoeGiavani]

Haven't read through all 12 pages of the thread, so sorry if this has been addressed already.

Shouldn't the repayment priority at least somewhat affected by army size and proximity? If Georgia borrows from both Russia and Britain, it'd make no sense to favour the brits over the russians. Likewise, any protectorate states should favour their patron country over someone with big boats.

Beleive me, the ruler of a small nation would much rather a Russian army at their borders than a British gunboat in their harbour.

 

[Kaiserschmarrn]

Beleive me, the ruler of a small nation would much rather a Russian army at their borders than a British gunboat in their harbour.

I am not convinced.

 

[JoeGiavani]

I am not convinced.

Well present day Georgia is far friendlier to the EU than it is to the Russians, though it only shares a land border with one of them.
And 19th Century Russia was much less advanced, and the UK far more powerful in comparison.

 

[Colon]

Maybe present day Georgia is friendlier with the EU because the EU never annexed them.

 

[Andrelvis]

I am not convinced.

I must say I'm not convinced either.

 

[Earl Uhtred]

Beleive me, the ruler of a small nation would much rather a Russian army at their borders than a British gunboat in their harbour.

/
HELL YEAH! Bring it on!

 

[JoeGiavani]

Maybe present day Georgia is friendlier with the EU because the EU never annexed them.

Yeah obviously Germany never had imperial ambitions on eastern europe.
o

 

[gamer42_au]

IRL a not uncommon outcome of debt default by uncivs (and possibly some small civs) was imposition of a tariff charge payable to the creditors.

IIRC in the case of China (and possibly others), the tariff mechanism was imposed and managed by the European creditors (ie English running the Chinese customs and excise and using the proceeds to pay Chinese debts - I think the same occurred in Egypt).

So having a gun-boat diplomacy outcome linked to export income would also make sense, automatically funded by tariff increase.

Interesting issue if you allowed the (presumably higher) bureaucratic efficiency of the creditors to apply to the tariff collection.

I do think there should be a prohibition or limitation on using gun-boat diplomacy on a Great Power. Russia defaulting on its debts might well give a CB, but the idea of them rolling over and repaying under duress due to some fleet steaming up and shelling Sevastapol (or even St Petersburg) would reduce my immersion. Of course the prestige loss from debt default may well drop them from GP status, in which case the point is moot.

On debt repayment order, perhaps being a vassal should push the national bank of your overlord to the top of the order. This would represent the Egyptian situation fairly well. Perhas vassals should also only tap the international market (if at all) after they go to the overlord market (so order is borrow from domestic, then overlord, then other international - if allowed)?

 

[King]

No peice of game mechanics we dream up will ever be perfect for every situation. However, we had a stated goal when we dreamed up this system, to make fleets more important. We have achieved that goal.