On 16/1/22 15:07, Ian Whitchurch - ian.whitchurch at gmail.com (via tml
list) wrote:
> Really low.
>
> The Third Imperium is a very low growth economy, with mostly stagnant
> technology and a parasitic noble class.
>
> It's implied that most of the good opportunities are dominated by
> people who know people, and that internal security isn't particularly
> high (cf all those internal wars leading to planetary merc contracts
> around who gets to exploit the profitable exports).
>
> Additionally, any positive growth rate means the economy has grown far
> beyond what the 3I has ie assume a 1.5% growth rate and get the
> economy increasing by 4.4 times every century. So, 3 centuries of
> uninterrupted growth and you have an 3I thats about 85 times the GDP
> size it used to be.
>
> So. Yeah. I'd assume that the combination of the exceptionally hard
> money of the 3I, the lack of any sort of Development Bank for member
> worlds, the cost of keeping the nobility to the standard to which they
> have become accustomed and so on means you've got an Imperium where a
> 2% return is considered a sign of excess risk.
>
> Ian
> -

Ian,

I follow your thesis, but there seems to be a slight problem with it. 
And thank you for knocking a couple of things loose.

Would those internal security issues not increase the risk that
investors perceive they are bearing, with attendant upward pressure on
demanded rates of return?  Acts of double-parking (and war) sodding up
insurance coverage and the like?

That isn't incompatible with the sub-1% pa growth stated in GT:FT.  The
total and partial losses endnig up paying for the apparently
supra-normal returns.

As for "uninterrupted", at the very least, the Solomani Rim War required
(IIRC) very widespread Imperial mobilisation and caused significant wear
and tear on Imperial shipping and manufacturing capacity.  This was
above and beyond that dust-up coming hot on the heels of the 3rd
Frontier War.

As for the bitz you've knocked loose:

Given SPA bonds are 3% pa at par, and Ethically-Challenged Merchants can
sell secured debt at 5.57% pa (ie, ship mortgage), I would tend to say
the other thirteen Imperial megacorporations can borrow at around 50
basis points over the SPA rate (given their option to default that the
remaining Imperial megacorporation doesn't have).  It is quite tempting
to add another 50 basis points for each step down in astrographic size -
domain (4% pa), sector (4.5% pa), subsector (5% pa).

Hell with it.  Hobo, ham sandwich, starving dog, pork chop, etc.

With average _debt_ prices coming together with a loud ringing crash,
the corresponding _equity_ prices now have a lower bound at each size range.

Re-interpreting your "a 2% return is considered a sign of excess risk"
as "a 2% risk _premium_ is considered a sign of excess risk",  that
gives an upper bound on equity prices at each size range.

Beaut.

Alex