Chapter 465: The Secret Possession of a Position
Chapter 454: Crossing the Stripes in Secret
The turmoil in the Austrian financial markets was still within control. It is clear to everyone that the Russian-Austrian alliance has not yet broken down, and even if the Russians renege on their debt, they will end up relying on their allies.
Now that the Russian-Austrian negotiations are at an impasse, it’s good news in a way. Something to talk about is always better than nothing.
Prior to this, the Russians have communicated with several countries in succession to no avail. Many financial institutions have been pitched into tears, and capitalists have been forced to choose to go for the jugular.
Among them, the two financial markets of Paris and London had the greatest impact, and don’t think that if you are the enemy, you don’t have a loan. In front of the interests, the capitalists do not care to cooperate with anyone.
The Russians used the grain proceeds from their exports as collateral for their loans, and beforehand, no one was at all concerned that the Tsarist government would default. As long as the Russians sold in their grain, they could collect the money.
However, plans don’t change fast enough, and with the loss of the grain silos in the Plain of Bordeaux, and the civil war hitting the feeing Moscow region, the Russians now didn’t have much grain to export at all.
The Great Reclamation was physical work, and naturally, when you do a lot of work, you have to eat a lot, and the demand for food has likewise increased.
From the outbreak of the Russo-Prussian War, the Russians stopped exporting agricultural products to Britain and France, and even imported grain from Austria for a time in the middle of the war.
The Russians withdrew from the grain export market, and this part of the share was naturally occupied by someone for someone else. The so-called pledge of the proceeds of grain exports now became a joke.
Expecting the Russians to pay back the money by selling grain, it would be better to say that the Russians lost the market, and want to return to it in the future, and want them to help open up the sales channels.
Otherwise, if the grain can’t be sold, what will be used to pay off the debt?
The way things are going, the Russians won’t be able to get back into the international market for two or three years. Investors can’t wait that long, and capitalists naturally play along with the Russians.
By declaring corporate bankruptcy outright, these losses are passed on to the general public. When these bonds hit rock bottom, they can still manipulate the vests to recover them again and wait to collect the debt from the Russians in the future.
Of course, debt collection is very unlikely. The difference between the power of an individual and a country was still very large, and even the consortium was not willing to go up against a great power like the Russian Empire.
Without the government stepping in, these problems were very difficult to solve. Only if you think about the poor international relations between the two sides, everyone knows it’s hopeless.
Restricting the entry of grain from the Russians looks good. However, when it comes to profit, capitalists have no sense of propriety.
As long as the Russians are willing to lower their prices, Britain and France want the internal grain capitalists to cooperate in getting the grain in. By the time it reaches the market, who knows where all this grain, actually comes from?
If the economic crisis hadn’t just passed, the financial turmoil that has broken out in Britain and France now would be enough to trigger another economic crisis.
The telegraph brought people closer together, and the financial turmoil in London and Paris soon reached Vienna.
A larger market upheaval took place, and speculators could do no more, preferring to default on their Russian bonds and pay them off early.
If not for the fact that securities firms had opened up their default payment windows, and Wells Fargo Securities was buying Russian bonds at low prices to calm the public, Austria would be buzzing right now.
In Paris, for example, at least one hundred and eighty thousand people participated in demonstrations against the Russian default.
Under normal circumstances, there would never have been this many people in Paris buying Russian bonds, even with the addition of family members.
To Franz’s surprise the scene was also played out on the streets of New York, and it seemed that the Americans were also being punked by the Russians.
Once again, it proved that being an ally with the Russians was risky. The U.S. and Russia didn’t even come close to an alliance, and the Americans were all passively hit.
It wasn’t the securities firms that got the worst of the pitfalls, but the banks that took on the Tsarist government’s loans. The Russians’ bonds were, by any measure, one of the toughest sellers of treasury bonds, and that sale has always been touchy.
Worldwide, the limit is reached when one or two hundred million s.d. can be sold. Even if there was a pit, it couldn’t pit everyone anywhere.
Bank loans are different, although the money loaned out is the depositor’s, it is also the bank’s own bad debt.
And yes, the Tsarist government did mortgage a messy pile of taxes that the Russians aren’t going to honor now.
The Czarist government played the fool and left the debtors to collect their own taxes. No debtor is so headstrong as to run to the Russian Empire to collect their own taxes.
Not to mention whether or not they could receive the tax, even if they did receive the tax, could they safely take it with them?
No one wants to test the integrity of the poor and crazy tsarist government, this kind of death-defying thing.
In front of the high interest rate, the bank did not resist the temptation. It was always assumed that since the Russians had joined the civilized world, they would abide by the rules of the game.
The only thing that was overlooked was that once the Tsarist government had gone mad with poverty, it was capable of doing anything, and now they were paying a terrible price for it.
Securities firms can be golden, banks can’t follow suit, can they? The investment costs of both sides are not at all of the same order of magnitude, and the social impact they bring is also very different.
In this era, securities companies do not have many customers, basically the middle class to start, not yet to the point of pulling people all over the street to sell financial products.
Even if the bankruptcy, the impact is only so many thousands of people, can have tens of thousands of customers that is a large company.
Not everyone bought Russian bonds, even if the bankruptcy, the social threat is not big.
Banks were different, their standards for depositors were not as high. Their customer base was much larger, and once they declared bankruptcy, it could easily have a bad social impact and cause the government to intervene.
Besides, the losses this time, though not small, were not to the point of killing everyone. It was easy to create a bank, but it was not easy to build up credibility to pull in depositors, and it could not be given up easily.
Now was the last era of the aristocrats, the era belonging to the capitalists hadn’t fully descended yet, and with the exception of the two United States, most of the countries were dominated by the aristocrats.
Including Britain and France are no exception, both aristocrats have suppressed the capitalists. Only their dominance was not obvious enough, unlike Austria, Russia, and Prussia, where this kind of government was held entirely by the aristocracy.
Having encountered large bad debts, it was inevitable that banks would have to contract their monetary base for a period of time to cope with the possible outbreak of a run on the bank.
This undoubtedly added insult to injury for securities firms trying to raise capital.
Inside Wells Fargo, Philibert growled, “What? Two percent monthly interest, why don’t you guys go grab it?”
Not all the way, not on a boat. Philipotent held shares of the bank, also caught up in the debt crisis with Russia, now busy self-preservation simply do not have the ability to save him again.
Forced to come to Wells Fargo. There is no other reason, mainly because Wells Fargo has not taken on loans to Russia, but at the same time it is also one of the four major Austrian banks, capital strength.
Albert, the account manager, said without changing his face, “I’m sorry, Mr. Philippot. This is a high-risk loan, and we have to add the cost of risk to the funds.”
A sentence of high-risk loan made Philipotent wake up as if from a dream, and hurriedly asked, “Is it still going to be issued at a 90% discount on the loan amount, and it is still a monthly repayment of the principal and interest, and even the first year’s principal and interest and will be deducted?”
Albert, the account manager, smiled and said, “Yes, Mr. Philippot. I didn’t realize you knew so much about the banking industry, have you been to another bank before?”
Although Philippot did not show it on his face, he had long cursed in his heart. He was at least a shareholder of a bank, how could he not know about this kind of pitiful routine?
Only when he first saw these routines, Philipotent was still very happy, after all, it is used to pit others, now it is his turn the situation has changed.
In accordance with a series of sets of operations down, to be able to get a loan degree of sixty percent of the money, that are God blessed.
If the luck is not good, directly on a discount, can only get a loan half of the funds, is also the normal situation.
The actual hand funds less, but the debt principal and interest still have to be paid in full according to the agreement, less a shilling can not.
Philipotent did not return directly out of the door, this kind of usury to take advantage of the fire, if he borrowed, it is estimated that the future will have to work for Wells Fargo.
Instead of that, he might as well sell the bonds in his hands and cash out from Wells Fargo Securities to get through this crisis.
Thinking about it, Philippot was even more depressed. It seems that Wells Fargo Securities is also a subsidiary of Wells Fargo Bank, how can you not avoid it.
As for going to other banks, or not to dream. Philipotent has visited more than a dozen large banks, everyone gives out the conditions are similar.
The banks all have the same face when it comes to taking advantage of the fire. This can’t be blamed on the banks, in the case of a possible run on the crisis, the risk factor of issuing loans to the outside world has greatly increased, and the interest rate has naturally increased.
As for the so-called interest rate of a few points loan, only exists in theory. In practice, in addition to policy loans, otherwise such a low interest rate, the bank is very difficult to accept.
Things have come to this, naturally, can only cut the meat. Philipotent’s capital gap is not too big, as long as the sale of the hands of the Russian debt, you can get through the present this pass.
In this way his loss is heavy, but the risk is reduced. If he relies on loans to get through the crisis, holding a large number of bonds of unknown value in his hands, in case the Russian-Australian negotiations fail, he will have to go bankrupt.
There are many others who have made the same choice, basically the capital strength is not strong enough, forced by the life and death crisis, had to cut meat.
Meizumi Palace, looking at the hands of the ever-increasing Russian debt, the Palace Minister Mirabelon the whole person is not good.
Yes, this is again Franz tossed out the trumpet. Only the development of some unexpected, became one of the four major banks in Austria.
In the opinion of Mirabellon Palace Minister, this is a high-risk investment, and the current Vienna government simply does not have the means to make the Russians fully fulfill the contract. Now the acquisition of Russian debt, the possibility of being able to pay in a short period of time is almost zero.
If we wait ten or eight years, it would be a big loss. The time cost of the funds also needs to be taken into account.
Franz comforted: “Palace Minister, do not worry. The Russians will honor these bonds, just not in our hands.
Now the low price can be purchased, and when the collection is almost over, we will be returned to the Russian Empire. The Russian aristocrats won’t mind making a small fortune.
The big deal is that we sell it to them at half price, that’s double the profit. After getting these bonds, this gang of nobles won’t mind taking them to offset their taxes.”
This kind of trick can only be used once, once the Russians are prepared and after the legislation prohibits bonds against taxes, then they really won’t be able to sell them.
Waiting for the tsarist government to cash out in the future, this time is at least ten years later, and can not guarantee full payment. Such a long time, what others think Franz do not know, anyway, he can not wait.
Listening to Franz’s explanation, the Palace Minister Mirabelon fell into a stupor, which is completely beyond his imagination.
Originally, he thought that Franz had insider information and could use his contacts to make the tsarist government prioritize the payment of this debt.
Did not think, the means is actually so rough, directly use the nobles’ greed to solve the problem.
(End of chapter)