Chapter 464: Fishing in troubled waters
Chapter 453 Fishing in troubled waters
Russia and Austria negotiations have begun, Alexander II is not reckless, reneging mainly because of the lack of money, does not mean that he is not aware of the consequences of losing credibility.
Even if it is to renege on the debt, it is necessary to minimize the impact as much as possible, sometime in the future the tsarist government or to re-establish credibility.
The worse the impact caused now, the harder it would be to clear the slate in the future. The Russian Empire still needed to export its grain, and relations with European countries could not afford to deteriorate completely.
Otherwise in the future, even if the price of cabbage, people will not want. When the time comes, it will be a tragedy to realize that food overcapacity can also lead to economic crisis.
The Russian Empire’s own market alone does not have the strength to maintain an economic circle. The era of playing by yourself behind closed doors has been over since the Industrial Revolution.
Austria was not only the Russians’ biggest debtor and part-time ally, but also the most important link in their foreign relations.
If you can’t even get Austria to work, don’t do the work behind it. There would be nothing left for the Russians to do in future activities on the European continent.
There are still many people in this era who consider Russia to be an Asian country; after all, the seven continents are also artificially divided, and the Asian-European dividing line is not yet recognized by the world.
Most of the territory of the Russian Empire was in Asia, and the European part was a little more than a quarter of it, so there was not much of a problem in saying that they were an Asian country.
Of course, the Russians will not recognize themselves as Asian countries, even Franz will not recognize, according to the territory of the location of the division, he will become a “non-chief”.
This name alone is very unpleasant, so it is scientific to divide the country into states according to the location of the capital, but never according to the location of the main land area.
At the Foreign Office in Vienna, Weissenberg called on the Russian Minister to discuss the Franco-Austrian debt.
“Mr. Sorez, I am afraid that the sudden declaration of financial insolvency in your country is a little excessive! As far as I know your country’s finances, though difficult, are not at the point of immediate bankruptcy.”
It was true that it had not reached the point of immediate bankruptcy, it was just a few more months of bankruptcy. After the end of the civil war, the debt that the Tsar’s government had to pay every year was already more than half of the current financial income.
Under these circumstances, reneging on the debt was arguably inevitable. Of course, if the Tsarist bureaucracy suddenly became clean and honest, it might be able to fill the hole.
Obviously, this was not possible. Bureaucrats in the governments of all countries in this era are not that clean, and the so-called clean government is only relative.
Compared to the Russians, European bureaucrats were considered clean. It’s not that they are less corrupt or bribe-taking, it’s just that they have evolved and know what money they can take and what money they can’t touch.
There are still very few fools who want money for their lives. There are basically oversight bodies that exist in all European countries, and bureaucrats who are bound, naturally perform better than those who are not.
Minister Sores very frankly cried poverty, “Your Excellency the Minister, you are not aware of our suffering. With years and years of war, our domestic economy has been devastated.
I’m not going to lie to you, I’m afraid that this year’s revenue is less than 200 million rubles, a return to twenty years ago.
However, the debt that needs to be repaid every year is as high as 120 million rubles, and the remaining money is simply not enough to keep the government running.
From the outbreak of the Russo-Prussian War to the present time, our annual fiscal deficit has exceeded our revenues, and this is the detailed information Your Excellency, please take a look at it.”
Looking at the thick documents, Weissenberg did not reach out to pick them up. These were all open secrets, how bad the financial situation of the Tsarist government was, the Vienna government was well aware of it.
Now the revenue is less than 200 million rubles, that is also the normal situation. Having lost so much territory and smashed the Moscow region, it would be a problem if the revenues did not decrease.
“Mr. Sorez, today we are not discussing your country’s financial problems, this is an issue you should respond to your Ministry of Finance, they are the ones in charge.
The purpose of our meeting today is only to discuss the debt of the two countries. Debt repayment is recognized by God, and your country must give a clear answer.”
Failing to take the topic off-topic, Soreth was not dismayed. Fudging the past got him a moment, but not a lifetime. A debt of this magnitude could not be settled by just talking about it.
“I’m sorry, Your Excellency the Minister. With our current financial situation, we are unable to continue honoring our debt, and we request a delay in payment.
This period is tentatively set for five years from now, and at the same time, we would like to be able to waive the interest on the loan, as well as the default penalty on the debt, or else we won’t be able to afford to pay it back five years from now.”
Repayment of the principal without interest, the total debt between Russia and Austria directly reduced by half, the Russians need to actually pay the amount is shrunk to less than one-third of the original.
This clearly exceeds the bottom line of the Vienna government, according to this standard performance, the Vienna government will have to lose money for the Russians.
Weissenberg shook his head and said seriously: “Sorry, Mr. Minister, this condition is unacceptable to us.
We have provided guarantees for many of your government’s loans, otherwise you would not have been able to borrow money at such a low interest rate.
Now that you have defaulted, this debt will need to be borne by us, and as an ally you can’t be so pitiful.
We demand that the contract be carried out in accordance with the agreement, and the postponement of the loan payment can be negotiated. The interest rate on the loan we offered is already very favorable and cannot continue to be reduced.”
No one would do a money-losing deal, and the Vienna government naturally could not be the wrongdoer. The tsarist government did not want to declare bankruptcy credibility, that was forced by reality, Austria can not dare to follow suit.
……
Negotiations are still in a stalemate, both sides want to fight for more benefits. This news, for the Austrian financial sector, is not a good thing.
Especially the securities firms that took on Russian bonds privately, and the banks that provided loans to the Russians. This kind of private transnational debt is never the most difficult to collect.
Originally, compared to commercial loans, national bonds were actually the most secure, and it was generally rare for a country to renege on its debt.
Unfortunately, when it comes to the Russians, if it were a small country, even if it wanted to renege on its debt, the most it could do would be to announce a moratorium on payments, and then take the initiative to come over and negotiate an extension of the debt.
Now, tragically, the Russian representatives have disappeared. If the Tsarist government had not recognized the existence of this debt, they would have wondered if they had been cheated.
Admittedly, there is no money or no money anyway. When the money will be paid, no one has given any answer to this question.
Their only hope was this Russian-Austrian negotiation. If the Russians are not taken care of even by the government in Vienna, then this debt is a bad debt for everyone.
Who in finance doesn’t have a few bad debts in their hands? If it were not for the Vienna government’s overly strict regulation, they would have dumped their losses on private investors and reopened with a new vest.
Unfortunately, Austrian law is too strict, even if they escaped punishment. The law also stipulates that after the bankruptcy of any financial institution, all management and shareholders are prohibited from engaging in similar business for three generations.
This is a very big restriction on financial predators, and the trick of getting away with it doesn’t work anymore. Speculation must consider the risk, in case of problems hiding behind the curtain is also likely to be implicated.
Otherwise, it would have been a wave of bankruptcies of Austrian financial institutions starting with the announcement of Russia’s debt default.
As of now, because of the Russian debt default, the entire European continent has more than triple-digit financial institutions declared bankruptcy, while the Austrian financial industry is still struggling to hold on.
Looking at the long term benefits, no capitalist but can make it through, no one wants to get out at this time.
Philippot was just one of them, and after a lot of running around, he still didn’t get the answers he wanted.
High profits are always accompanied by high risk, want to reduce the risk is also simple, when peddling bonds do not make a promise of capital preservation, the risk of clearly inform investors on the line.
Issue bonds, and not by reputation, but to come up with a guarantee. As long as after a rigorous review, even if the final debt problems, it is unlikely to lose all their money.
Muddled back to the company, Philipotent sat in the office and smoked a cigarette. The heart has begun to calculate, is not to raise funds from other places to fill this hole.
The high commissions plus the default payment for early redemption, after calculating the company’s operating costs and taxes, the loss this time was about more than 5.6 million divine guilders.
As for the company’s operating costs and taxes, the commissions that were actually obtained in the first place, and the gains brought by rolling in the financial market, could have made up for it a long time ago.
If calculated comprehensively, the loss of this business could be even smaller, or else the financial industry wouldn’t be called a profiteering industry.
Even if all the bond holders, who needed to be cashed in early, the amount of money that needed to be expended right now was only 6,600,000 or 7,000,000 God’s Guilders.
Half of the funds on the company’s projects could be solved, and selling off a portion of the long term holdings of stocks and bonds could raise another one and a half million Shendongs.
Selling a few mansions under his name could also raise four or five hundred thousand God’s Guilders, and the final shortfall would be a million or so God’s Guilders.
As long as the company was preserved, all of this money could be earned back. After all, Philippot’s securities company didn’t exist alone and also held shares in a bank.
The profits that Philibert obtained from the company, out of which a part was used for personal consumption, the vast majority of them were invested in other fields, the bank was one of them.
Even now, he has no intention of selling his shares in the bank. Without the identity of the bank’s shareholders, the securities company wants to raise funds will be difficult.
While he was thinking about how to raise funds, a familiar voice came from outside the door.
“Mr. Philippot, good news, good news!”
Philippot pretended to be calm and said, “Alpha speak slowly, don’t get excited.”
Alpha’s young man panted, “I just received news that Wells Fargo Securities is in the market to acquire Russian bonds.
Only the price is a bit low, they’re only willing to offer two tiers of face value, less than the current market value, and they’ve limited it to only exclusive bonds issued by the Russians to Austria.”
The Russian bonds depreciated in value after the Czarist government announced that it was reneging on its debt. It didn’t become scrap paper all at once; after all, there was still a possibility that the Russians would cash them, just a faint hope.
There was a price to be paid, but unfortunately there was no market. No matter what the price, no one in the market dared to collect at all. Collecting debts from the Russians, people don’t think they have that kind of ability yet.
The action of Wells Fargo Securities was undoubtedly an injection of good medicine into the market. But this has little to do with Philibert, repurchase Russian bonds are killing, and then collect bonds from the market to earn the difference, or forget it!
This kind of high-risk money, only the predators dare to play. As a pawn in the capital market, it is better not to join in the fun.
“Immediately make contact with them, we have a large number of bonds in our hands, ask them if they want them. As long as they may offer a 50% discount, not 40% I’ll sell it to them!”
This is a test, and compared to the financial predators, Philippot’s information is still not well-informed enough.
Whether it is a smokescreen put out by Wells Fargo Securities, or things have really taken a turn for the worse, is a complete unknown.
After all, the number of bonds held in the hands of large institutions can be much more than them. It’s not like there’s one or two financial institutions that are forced to buy back bonds early.
In order to stabilize people’s minds, deliberately releasing a message, that was also entirely possible. It wasn’t just Philippot who was suspicious, many financial institutions in Austria were suspicious.
It’s an open secret that the Russian-Austrian negotiations are at an impasse, and most people in the financial sector, who are paying close attention to the negotiation process.
It’s not even hard to know the specifics, it might be difficult to get information from Austrian diplomacy, but it’s just a matter of money to figure out the negotiation process from the Russian side.
But there was no way for anyone to judge whether the information was true or false. Under normal circumstances, the Russian bureaucrats had a good reputation, and it was their good work ethic to take money for their work.
In case things don’t work out, it’s likely that they’ll also enjoy a refund, which is something many people have experienced.
But this was a different situation, and there was too much at stake. If someone offered a high price to make them play along, it wasn’t impossible.
The best thing to do would be to ask the Foreign Secretary to confirm it himself, a stupid thing that no one has ever been known to dare to do. Looking for death does not bring so, the dignity of the Vienna government can not be provoked, dare to pry into state secrets that is to die.
Test Wells Fargo Securities has become the only option, in case of progress in the negotiations, then we hold a large number of Russian bonds in the hands of the big money, and vice versa, the big deal is the same as now.
(End of chapter)