Uxeau News NetworkTALK SHOW: "L'espirit du Temps". Economic Calamity of the Gallic Confederation
Bonjour, Mesdames et Messieurs
My name is Francois Vermillion and you are watching Uxeau News Network. All the latest news from Gallia and beyond!
The recent exodus of Montluc Advanced Engineering from Languedoc has significantly undermined economic activity in the region, prompting civil unrest that continues up to this day with the reports of guerrilla attacks of the rebellious miners against the local forces both planet-side and in space. The gravity of situation is starting to soak in the minds outside of Languedoc, prompting the discussion on the current economic situation in the Confederacy and social stability. Today, invited experts will be analysing the situation in Gallia regarding current economic developments, key indicators, legal side of the issue, and what a regular citizen of Gallia is to expect in the upcoming years.
Today our guests are Edmond Dufraine, Ph.D. in economics and ex-Professor of the Free University of Languedoc who left Languedoc after the recent punitive actions of the Confederacy, and Antoine Villefort, ex-Chief Officer of Marne Planetary Tax Office and now a senior Investment Fellow at “Investissements et économies Radelle” Hedge Fund.
Bonsoir, Messieurs. I hope you will excuse us at making this programme in space as our new office planetside is not ready and its location cannot be disclosed due to security issues. We welcome you to our talk show “L’espirit du temps” and hope today we all will have a fruitful discussion with insight for our viewers as what is going to happen next, and what to do or not to do.
To start, how would you evaluate the economic situation in Gallia following the collapse of the Monarchy.
Edmond Dufraine, Ph.D. in economics and ex-Professor of the Free University of Languedoc
Bonsoir, Francois. I hope Monsieur Villefort will not mind my starting *chuckles*. And thank you for having us at your studio - I surely do not mind staying in space as long as we have the opportunity to tell the Gallic populace the hard truth. And the truth in short is - Gallia is stagnating and it is unlikely to change unless it comes up with some genius revitalisation plan while stabilising political fiend.
So to understand the current economic situation, we have to get back to the basics of economics, namely the supply and demand. You see, during Royal times, the economy of Gallia was heavily oriented on the military and industrial sector as the plan on the invasion of Sirius had been being prepared for decades if not centuries. Add to this two internal wars that, despite limiting the general stability of the Kingdom, contributed to the production output of the both sides, who were competing not only militarily but also economically. And competition is the best drive for a well performing economy, especially when so much is at stake. So, to the supply and demand. The demand for the military sector and heavy industry was as high as ever - making factories work 24/7 in four or even five shifts. New factories were opened up in attempt to satisfy the insatiable hunger of the demands of the nation at war, opening up thousands if not hundreds of thousands jobs all across Gallia for both sides. In turn, it provided the workers with money who they if lacking free time invested in stocks of national companies or saved in banks, strengthening the financial system that throughout all the war time showed strong growth. If they had free time - they would go and spend hard earned Francs to rest from their work, contributing significantly to the service sector that was booming while catering for the workers of heavy industries and for huge royal army. Situation was trickier for the Council but overall was similar. The influx of resources and captured goods from the new territories was also revitalising for the Gallic economy. Of course, by the end of the war the economy was already showing signs of weakening as the expansion dragged down and the expenses soared. Yet it is still not comparable with what happened after the war.
So the war ends, Gallia is shattered into fraction-states, foreign companies technically can use this disarray to enter the new market. How did the economy feel overall? Terrible. Back to the demand and supply. Now there is no strong demand for the military and industrial sector. Of course, this slightly changed after the emergence of the Confederation but the monarchy-age levels are still unreachable. The unified government is absent, and hence no government orders and no pumping up the money. A huge chunk of state reserves were withdrawn by the Royalists fleeding to the Hebrides, i bet Monsieur Villefort will elaborate this in detail later. Local economies like Dauphine and Languedoc were cut off from the general production chains of the Kingdom, leaving them prone to unemployment and fast decay of the economic ties. Ille-de-France stood aside not governing anything, Orleanais fell to the Republic, destroying local ownership rights and making a lot of important stakeholders and talented people with capital to leave the system, Baron Montluc is just another example thereof. Republic brought socialist agenda that aggravated even further the business climate. Grand Duchy was too busy sorting out where to locate the newly came landless nobles. Only the Minarchy felt more or less fine, as the lawlessness of the interregnum gave them ripe market for spreading nox. Service sector had witnessed a plunge as the consumers did not want to spend their savings fearing that worse times are to come. Less spending - less business activity - less income - less taxes. And the situation is still dire...
Francois Vermillion: And how does the new Confederate government address those issues?
Edmond Dufraine: In theory, the task of Confederation was to restore the pre-war production chains, liberalise the market by decreasing the tax and allowing the influx of foreign capital through either free or minimally taxed foreign trade, while catering for the local Gallic businesses. If you think of it, Confederation could have used the benefits of being fractured to foster competition among the regions and thus, as I said before, to maximise the efficiency of capitalistic economy. To do so, however, the Confederacy is to embrace what “Confederacy” really is by becoming decentralised and giving freedom to the Confederate subjects to decide on their domestic policy and legislation. In doing so, the Confederates would allow the subjects of Confederacy to come up with different legal conditions for businesses to operate and regulations to trade under, making them “compete” with each other, thus maximising the production thereof. This could have been a new way for Gallia that through economic competition eventually could have united. What we saw, however, was anything but this. The Confederation de facto became a police state, coming up with lazily copied Royal Laws that were designed for different circumstances, and depriving the subjects of Confederation of any autonomy. Let me elaborate.
Royal Laws were designed to close off the Kingdom at war with almost everyone, to minimise the impact of foreign economies on the military machine of Gallia that at all times should have been capable of functioning independently. The trade of small businesses was limited for the times of war to concentrate the capital in three big corporations that performed almost all state requests and under strict supervision of the Crown - again, for the sake of stability and minimisation of foreign influence. Times have changed, however. GMS, IDF, and EFL are slowly recovering from the loss of capital withdrawn by the Crown and the nobility that fled, and after the destruction of infrastructure after the war. The new Gallia found itself in completely different circumstances and trying to apply the old approach would be just inadequate. As I said, they should have made some free trade zones, allow wider range of foreign goods and companies to enter and do business with Gallia, to export our goods, and to foster competition and growth of local economies. The restriction on mining for smaller business is just ridiculous, prompting resourceful Gallic miners to go into Taus where they risk being attacked by outcasts or someone else. Is this the way to treat your own citizens by forcing them out into dangerous space? Strict bureaucratic regulations regarding visas and registrations of modular facilities with no benefits provided in return is also blatantly stupid and definitely not the way to foster local growth and invite foreign businesses. Atop of this all, they declared supremacy of this idiotic Confederate laws over the local laws, nullifying any opportunities for the Confederate subjects to somehow mitigate the drawbacks of the Confederate legislation and come up with their own ways of nurturing local economy. Not only the Confeds prevent actually the economic growth by laws, but on example with Baron Montluc in Languedoc we saw they prevent any local developments b the use of force. They lost the legal battle to the Baron, in my opinion, as no valid legal response was even cared to be given, not even speaking about their valid points. This indifference and readiness to use force at earliest convenience renders them an autocratic state. That is something people can expect from “Kingdom” where the will of the King is absolute, but not from something with the loose name “Confederacy” and a conventional organ “Assembly” in charge.
Francois Vermillion: So what is going to happen in the field of economics to Gallic Confederacy?
Edmond Dufraine: Well, Francois, I would not be optimistic. The state stagnates, SME do not want to start as it is very problematic to enter the market under the current laws. The local governments do not show much initiative as it can be deemed “harmful” by the Confeds and stopped as it was with the Barony of Languedoc. Foreign businesses refrain from doing business in Gallia as there is too much bureaucracy with little benefits, and a typical Rheinland transport would surely rather go to Liberty famous for its trade freedoms, rather than go through nine hells of Gallic bureaucracy. Gallic Confederation now is probably worse for making business than Kusari with their rigid adherence to catering for their keiretsu. It is also reflected in the GNP dynamics of Gallia as compared to other houses
The inefficiency of Gallic foreign trade is coupled by an opportunity to get fined for anything, from comparing an officer to quasilawful entities, to being outright extorted. Exporting Gallic ores and raw resources is problematic not just for foreign corporations and individuals, but for the Gauls themselves. Will the military and industrial sectors revive? Perhaps, the Confederation is indeed building its new fleet. However, with no big and scary foreign enemy to rival, and no civil war to foster competition, those two sectors would not be enough alone to trigger the same chain reaction for the service sector as during the Kingdom times. And the service sector would not just revitalise by itself as the post-war inflation that is not curbed, the financial activity of which Monsieur Villefort will surely talk, and lack of investments would all be strong obstacles to the service sector.
Francois Vermillion: So what would you suggest for our viewers?
Edmond Dufraine: I really suggest a universal panacea in this case but I would not spend much money and would but some resources to store money in. Like gold, or platinum. With the current rate of inflation the Franc is weakening and banks are not giving a damn about it. The Bank rate at it is now is discouraging to open a business, plus the orthodox legislation. I myself ran from Languedoc after the events with the Baron, but unlike other people who followed the Baron I found my own way. First in Zurich, but with the absence of opportunities locally and with strong ties to Gallia, I ran further until found myself on planet Bordeaux. Now it is a sprawling colony of the Enclave, the Royalists. The life is booming, the legal pressure is minimal, and the local nobility has tons of money to spend on whatever you are ready to present to them. I heard there is a University soon to be opened, so I would like to stay there. If you are afraid of all the scary rumours about the Enclave - do not believe them. It is just the Gallia it used to be before the Confeds. I would suggest considering an option of moving into the Enclave’s territories where everyone is needed and one can really make a good career there. I would suggest for the Baron also to move into the Enclave’s territory with MAE! This option does not fit everyone, obviously, but if you are from among those poor souls who have nothing to lose - I would certainly give it a shot. Its young economy even now is no less promising than of the whole Confederation.
Francois Vermillion: Thank you, Monsieur Dufraine. That was an interesting analysis and quite an audacious suggestion in the end. Now, let us move to Monsieur Villefort. How would you comment the financial situation in Gallia after the war and now?
Antoine Villefort , ex-Chief Officer of Marne Planetary Tax Office and now a senior Investment Fellow at “Investissements et économies Radelle” Hedge Fund
Bonsoir, Francois. Monsieur Dufraine already touched upon certain financial points as economics and finances are inexorably intertwined, but I will add up a bit. As he mentioned, the whole production chain in Gallia after the war collapsed. This was paired with a huge withdrawal of capital by the Royal family who were the key capital holders in IDF and EFL, and also owned quite a share in GMS. Such a withdrawal decreased the production capacity of the three corporations that had to resort to drastic economical measures in everything, and to seek capital from elsewhere. Alas, this capital could not be readily found - most stakeholders in Gallia, the nobility, either fled to the Hebrides, taking everything of value with themselves, or went to Lorraine where they did not wish to readily invest the money during the interregnum and in conditions of the devalvation of the national currency. This lack of finances accompanied by decreasing quality of life and post-war inflation launched a chain reaction where regular citizens unsure of their future tried to withdraw their funds from the national and private banks who, in the absence of huge finances of the nobility, did not have the funds to pay back the deposits and had to freeze the operations of funds withdrawal. This in return caused even greater chaos among the population, and now the businesses, prompting even higher inflation, higher depreciation of Franc, and higher prices for everything. Salaries became much lower, business could not operate and could not cover their credits, and the population became risk averse, not investing into anything, not depositing the money into banks, and plungind the Gallic economy deeper into the abyss. Banks started to blow up and declaring their bankruptcy. In a dire attempt to save the situation, the Central Bank (if it was still central at the time) increased lowered the bank rate by 7% (!), however, it was too late already. The holders of the state bonds started to sell them as soon as possible, as the return on those bonds was a fantasy now. This in turn caused chaos on the financial market, where people tried to sell the stocks of big corporations to get cash and invest it into some solid goods like gold to avoid the inflation. The real estate also was devoured by the panic coupled with transition of the worlds under the new administration. Orleanais real estate was completely destroyed when the Republic came on fears that socialist legislation would not benefit the big land owners. Most of the latter left Orleans anyway just before the arrival of the Republic. So what do we have in the end? An unstable risk averse economy that is suffering from high inflation, has no capital to invest, has no desire to invest, and destroyed banking system. And then the Confederacy came with their obsolete laws that instead of liberalising the trade enforced more bureaucracy. That was the final nail. My hedge fund operated from Ille-de-France and we tried working with the Duchy, the Republic, and the Minarchy during the provisional times. The Minarchy is all about freedom and laissez-faire economy but not in the sense of “invisible control” but in the sense of absolute lack of control and regulation. You just can’t be sure if your stocks portfolio would be expropriated from you by the Course families. The Republic is a weird case of democracy where the power played with socialism for too much, hence high taxes for financial sector and strict regulation. We tried that for a bit and the profits weren’t really enticing. So we tried the Grand Duchy as well. It would be ok if not the lack of desire of the local nobility to invest in anything, fearing the aggravation of the situation. Well, and the Confederate laws. When MAE emerged we worked with them too, and it wasn’t that bad. Company wasn’t big, of course, but was rapidly growing catering for the local mining industry. We supported their political adventure, hoping that the new Barony could be a safe haven from strict regulation. When the Confeds came, we left with MAE fearing the witch hunt. Now we are located in Taus, which is not very stable, and hearing Monsieur Dufraine, we would consider moving into the territory of the Enclave. It would mean lack of access to foreign financing, but with the rigid regulation of the Confederacy, I doubt that would make a difference.
Francois Vermillion: Did the Confederation try to stop the financial chaos?
Antoine Villefort: I mentioned it before a bit. Not really, there is no single banking policy. The over-regulation of trade is not contributing to the situation, and for better or for worse they do not try to assist EFL, GMS, and IDF. The latter which almost purely depended on the Royal capital now is de facto in a state of limbo and cannot do much, hence cannot yield taxes. The Confederation including Minarchy as a fully-fledged member, the Minarchy “grey” capital can easily be invested into anything in the Confederacy, making it difficult to make reports thereon as some details are better not to be disclosed. I wonder, if the top bankers and economists of the Confederation even understand that their economy is fuelled by the nox trade. And then they blame outcasts with their Cardamine and brand them “animals”. The financial qoutes are record low nowadays, with them being lower only during the provisional period. In defence of the Confeds I need to say that should they try to interfere with the financial market - they won’t change much. As Monsiuer Dufraine said, they can try to amend the current legislation in attempt to mitigate current negative developments. But finance-wise, the Confederal government needs to restore the trust of citizens all across Gallia in financial institutions, in the national currency, and the trust of businesses as well. The Government will not benefit much from the financial sector as long as the stakeholders do not wish to invest and the state obligations are not worthy of investments.
Francois Vermillion: What is your opinion on the decentralisation that Monsieur Dufraine mentioned, and what are your thoughts of the Enclave?
Decentralisation certainly can benefit the finance field in certain ways but can also be a challenge if implemented incorrectly. Certainly, local stock exchanges can pump some money in the local economies, if the local stakehodlers show the desire to invest that is. When the local businesses are pressed like in the case of MAE, I doubt the local enterprises will be eager to do IPOs or to invest capital into each other. If done right, however, the state obligations of the local governments can be a cheap option with small but stable return to engage the population slowly into the finance sector, first locally, then Gallia-wide. THis would also revitalise the banking sector, in my opinion. And the competition, of course. Decentralisation will likely lead to every Confederate subject creating its own stock exchange, each fighting for every listing. Competition among those is good, and is more attractive to foreign investors should the those investments be legalised. Yet again, there is a question of the draconic laws that the Confederate regime imposed and which is a major obstacle to economic stability and prosperity of Gallia.
As for the Enclave - I do not possess enough credible information about their finance sector. I can assume that they still do have a lot of capital because of the Royal treasury and the hoards of wealth brought by the exiled nobility. Those funds in Francs are still subject to depreciation, unless Enclave uses their own (or I should say old) currency. However, a lot of royal treasures were in precious metals and stones, so those might be of huge value. I doubt the Enclave has a stock exchange, but that is something that they can change easily. Even the exchange, however, won’t work if there are no companies to be listed thereon. The Enclave badly needs companies that can provide services that the nobility can pay for to ensure their economy is stable, and they do need someone in the field of services to cater for the rich. Huge opportunities, but also high risks of company’s localisation and isolation. If such a company is not afraid of monopolisation, then it might be a good idea. The company can even have vertical integration and expand into multiple sectors, reaping insane profits. Enclave is sitting on huge yet unused or unsurveyed deposits of natural resources, has decent capital, and now only needs some regulation and opening up to some trade partners. I cannot really tell if their situation is as grave as in the Confederation due to not having experienced living there and lack of public resources, but there certainly are some prospects for progress, even an opportunity for the Enclave to run into a mini-House for the time being, should they ensure the stability of their domestic policy. At any rate, the Enclave is the continuation of the Kingdom and already have a track used before, they just need to adapt it to new realities, similarly to how the Confederation has to. Unlike the latter, however, they do not need to change the state apparatus, chain of command, etc. to make it work. Although, the state of permanent war and corresponding war time laws certainly would not benefit the business. Yet again, I haven’t seen Enclave’s legislation so cannot really make any remarks. If the Enclave opens up to certain trade partners and liberalises its commerce regulations - it can exploit vast natural resources it is sitting on and put the huge capital at its disposal to use.
Francois Vermillion: So you are saying that the economic perspectives of the Enclave are actually not that bad, it being isolated geographically and diplomatically?
Antoine Villefort: Look, Enclave at the moment possesses some rare resources, such as Bordeaux wildlife that certainly will be interesting to particular customers. Enclave has the infrastructure, albeit rather small, for construction of their ships and production of the resources for this construction. It still has a navy and army of formidable scope, harnessed in battles and ideologically ready to continue collecting combat experience to disadvantage of their foes. The Confederacy is too busy with their internal struggles and findings its own way after the war, like convincing the population that fighting Outcasts for their useless space is a valid national idea to counter Cardamine while the Minarchy is without any obstacles spreading Nox. Bretonia is absolutely devastated and decimated by the war in addition to some local conflicts like in Omega 49 system, their economy is at its worst level with the Leeds industrial powerhouse destroyed. Bretonians need to be concerned lest they get absorbed in an internal revolution because their population is mad at the results of the war, inability of the government to rapidly increase post-war quality of life, and their navy is weakened and susceptible to strikes of smaller parties, like the Coalition. Liberty is too far and would require to strain their diplomatic ties and threaten domestic support to engage in a meaningful crusade against some not finished Gallic Royalists - not having gained anything useful from the war and bled significantly for Bretonians, their domestic public simply won’t understand such a move, their finance indices will go down. Kusari is unlikely to attack Gallia or the Enclave, especially so soon after the end of war with Rheinland, while Rheinland is about to implode in interregnum and be absorbed by a destructive revolution. The Enclave is relatively safe and should it use this break to recuperate, repair old ships and build new ones, and attract more population from the weak Confederacy that is struggling to ensure public support - it has all chances to become a strong regional player with decent economy. Militarised heavily, but decent.
Francois Vermillion: Merci beaucoup, Messieurs. This is certainly an interesting discussion. I believe, it can give some thoughts to our viewers and, perhaps, motivate them to make changes to their lives, or even allegiances. We at Uxeau News Network will be following the economic and financial dynamics of Gallia and reporting thereon. Stay tuned, share your opinions, and keep safe! This was Francois Vermillion for UNN. Au revoir!
And now continue watching Charade of Thrones: Gallia in Blood Season 3 Finale.