O, I know. If we do the Interest vs upkeep where governments can dismiss the bonds for the year.

Give them the incentive to pay the bonds every year. So think of this.

I made a deal (as a creditor) and I pay $20,000 for 20 bonds with 10% (doesn't mean that's true for what I really did)

When the first year comes where the Government pays me interest, it's 2,000 he will pay me in interest.

Well, he decides to hold off and not pay it this year... Alright, fine. Well, here comes the second year and pays me interest..... Well.... Guess what.... You gotta pay me this. 22,000 times Point 1 is 2,200...... $2,000 plus $2,200 is $4,200...... He now has to pay me an extra $200 because what I was supposed to get the first year was added onto the $20,000 worth of bonds and then it is multiplied by point 1.

Now think on a bigger scale. Someone did 20% max on bonds for a big risk. and did 75 bonds. 15k for the first year, you skip that... It's a total of 33k to pay to the creditor. That's 3k extra for not paying when you were supposed to.

unless they make a deal with the bond holder... cause otherwise the govt will just tell you to piss off, and you will get no interest nor any bond re-paid...

@Ora: bonds use straight line not compounding interest. If a government chooses to hold off on paying the interest of bonds for the year, he wont have to pay more the following year (unless he chooses to), the disadvantage of holding off payments is your credit rating goes down and creditors probably wont lend you any money in the future.

Remember, as the game goes on, it will be harder and harder to fund all your units (since non-home scs give you less income), so pissing off investors in the early game may have consequences later on...

Not compounding, it's just, 2,000 plus another 2,000?

Don't bonds in real life have compounding interest or something? Or am I thinking of some different type of bond like thing?

talked a few things over with Donquigleone, here are our suggestions:

1.) End of fall turn: income -> taxation for all centers held.
2.) Middle of Winter: Bond Auction -> all investors bid for bonds.
3.) End of Winter: Adjustments -> all expenses are paid, this includes upkeep (but not for any disbanded units) and interest.

Details:
Bonds can be announced at anytime (via pm to the moderator, fasces) but getting them in early is to be advised. (previously declared but unsold bonds will by default still be available, but can be withdrawn if the player wishes)

Predicted expenses should be made at the end of fall, based on current units and loans (ie interest that will be owed, for ease of play)
Cost of new units, upkeep, and interest is paid at the same time. (interest for new loans deferred until the next year, no upkeep for newly raised units, as suggested above)

If a govt can't afford all upkeep and interest payments then he must choose what to pay for.

In the case of no message being sent to the moderator upkeep is paid first, and interest second. (in the case of civil disorder no payments are made but units will respond to orders when a new player takes over - because they've already stood still for two phases)

The interest gets paid direct to creditors each year. Doesn't compound.

Of course, it's entirely possible that countries will have to take out *more* loans to cover current interest payments.

Personally, I think missed bond payments should get noted down, and rolled over to later years, at a harsh interest rate. Creditors might require countries to honour outstanding debt payments to get access to further funds.

@Adammaa: paying interest on interest IS compound interest - this is what you are suggesting.

I'd prefer for the govt to owe $4K in the second year. (back payment of unpaid interest) by default, with arrangements to be made in private if you wish to negotiate a lower interest rate or deferred repayment/interest...

'if a government chooses to hold off on paying the interest of bonds for the year, he wont have to pay more the following year (unless he chooses to)'

yes, this is what i thought, Adammaa is suggesting the change to compound interest, not me. I'm just suggesting interest due be paid if the government agrees.

Also, I agree with Orathaic's post.

Compound interest might be better, but could also be overly complex. Tricky.

I think the incentive is to not been seen as such a risk you can't raise any funding.

'predicted income' should include a note on not being able to pay.

Previous payment failures should be marked, so investors know how much interest the govt currently owes (that is so it can easily be tracked) I can create a web-page with a linked spreadsheet (which fasces can edit, if he'd like) it could auto generate interest and note defaults... (with private sections for detailed calculation for simplicity)

I really think that if you do the way your talking about. The back interest that the government chooses not to pay back should be held and added onto the bonds when they mature.

Maybe just keep simple and no interest on top of the back interest on the final year of the bonds. So just all the back interest you didn't pay added on which you have to pay. (I really think that the final year when the bonds mature should have to be paid)

Or as DonQuig said, add a harsh rate on them. Maybe like, like. 0 rate when paid on time and each year the rate will go up 3 or 5. But the rate doesn't do anything until when you go to pay the back interest.

After 10 years if you decide to not pay at all, it could be about 30 or 50 depending on 3 or 5 rate each year. So............ 20 bonds, 10%... Don't pay the 10 years that's 20,000 back interest which you now have to pay. if it's 50% due to 5% each year. that's 30k plus the 20k mature.

It really doesn't seem that hard to do the math. Plus I don't see Orathaic's way that realistic. I think the way I tried to interpret DonQuig's harsh interest rate on the back interest would be what he means.

Well, you know.... What ever, maybe I should stop talking about things that have nothing to do with me actually playing the game.... I'm not sure if I'm helping or just making this more annoying/frustrating.

The problem is that if you try to charge the govts too much they will ignore you and refuse to pay anything, if enough choose this tactic then there would be no profit to be made at all (while they spend their income on upkeep, which for 6 units still breaks even, except for russia who has an extra home sc so breaks even at 8 centers) and as any power can make it that far they just need one ally to be very strong (and don't need to borrow if they don't raise more capital, they just have to raise fewer units... But while they have 12 units between them that need not be a problem)

If every government doesn't pay up then nobody has the advantage of investor confidence.

I think you have to keep the threat of losing investor confidence up, so that means encouraging lots of borrowing (and perhaps low interest rates) extra punishments can't be enforced (plus there is no inflation to excuse the charging of interest, you're just charging interest too offset the risk of lending)

Never mind that if the interest is low enough then it might be wiser for investors to hold onto their $$$. (or just invest it carefully)

This does raise one problem. What a country can pay off some interest, but not all. We could assume that the investors will colaborate, and each earn to same fraction of interest owed. However i think it would be more interesting to give the investors the power to make side-deals and thus have reason to talk to each other (the personal relationship between investor and govt should be important, private bonds are more personal while public may get the better rates - that is a fair rates based on the market - however a personal relationship allows the govt guarentee future funding and offer a higher rate as an incentive, plus the govt knows the investor now cares about the success of their investment.

Bringing us back to the point of interest/bond defaults. You want to know your govt will be able to pay, and you need to keep him alive if you possibly can - even if that means higher interest rates... The other option is selling their bonds to someone else so you can recoup some of your loses - that is giving up on a failed investment.

I imagine that rates offered on the secondary market will be pretty poor. Still start out with an interest rate which you think is FAIR and covers your risk, then this will have to cover your risk of not being paid interest in some year.

That makes for a much simpler calculation.

But don't be put off, keep talking i think we all benefit from the discussion, a better understanding of the rules - though we should try to keep it as simple as possible. Clear and simple.

Well, we shouldn't offer a pay back interest that's lower than what the creditor would have gotten if the government paid it on time. That would encourage governments to hold off on the interest payments.

Maybe, the only possibility of making the pay back interest lower is either
A) Interest payments have to be paid on time like unit maintenance unless if paying for both will result in going into debt, which then the government at that point has the option to hold off on paying interest for that year.

B) The creditor talks it out with the government.

The only point in which secondary marketing would make sense for bonds is if the creditor sees he might not make full gains off of a bond to make up for it. So he sells it getting him most of his money back and meanwhile it could even turn out good for the creditor who bought it from him.

i wasn't talking about selling bonds and changing the interest rate... i was talking about dumping your investment (perhaps at a secondary auction where the interest rate paid on the bond does not change, but the amount the investors bid for the bonds is up to them... thus, if you expect to sell off bad bonds you're likely to get less than 100% of what you paid for them - while the new investor will get all interest paid by the govt, if any)

This might make sense if the investor has enough influence and can profit by making sure that the gov in question can survive (again this would likely depend on personal relationships)

As an investor you are not going to offer bonds in yourself, where you get to set whatever interest rate you wish, these are the govt's bonds, they have agreed a set % rate. You can sell the bond - ie the right to receive these interest payments AND to be paid the FULL bond value upon expiration - if you wish, especially if you're given up on being repaid by a govt.

It also creates a similar mechanic to Bourse, where the value of a given investment changes over time, and it is more valuable to players who are already heavily invested in a country... because they are very interested in that countries survival.

However if everyone has given up on a country there will be no value in the bond, so it will not sell (except perhaps to another govt.)

"Not compounding, it's just, 2,000 plus another 2,000?"
sorta, they can choose to pay it at a later date or not pay it at all, at the risk of loosing the trust of investors...

Re Interest rates on missed payments: I guess its entirely up to the government issuing the payments, they can choose to give a compensation of whatever they want...

Re processing times: I guess that makes sense. all income happens as soon as the build phase progresses, bonds are then raised and then all the expenses happen after builds.

Re secondary markets: I wrote a section of the rules on creditors selling bonds to other creditors:
Secondary Market: Occasionally, a creditor who purchased a bond may wish to sell this bond rather then hold it to maturity. Every spring phase (except 1901) sees a secondary market, in which creditors may choose to sell bonds they currently hold to other creditors, other creditors will receive all remaining interest payments as well as the repayment at maturity.

The advantage of trading at a secondary market is in the case of junk bonds (bonds where a country is clearly not going to pay back its creditors, most likely due to elimination) is that a player may sell the bond, and recover some of its value.

On the other hand, a player who managed to get a high interest rate on a safe bond (a bond in a country doing well), they may be able to find creditors wishing to pay more then the maturity value for the bond, and sell it then.

It is unlikely that much action will be seen on the secondary market, however it is still there to be used as an option.

hope that covers everything and sorry if I missed something.

I think that clarifies everything, thanks Fasces!

Ok, so how will creditors know if they don't get their interest payments. Fasces receives the word and passes it on?

Same thing if the government decides to not pay them at all?

In the case of default on bonds, there's 3-5 options, as I see it:

1. All bonds are equal, in the case of a default, the player pays out everything, nothing, or some proportion of all outstanding debts.

2. Private bonds are preferential to public, Private bonds are usually the result of a country not being able to get a bond through the conventional means (the public auction), in this case they have to go to a creditor or country, cap in hand, looking for money. Logically countries and creditors in this situation would demane priority "class a" bonds.

2a: allow countries to stipulate the class (and hence the order in which they get paid) of all bonds they sell, public or private.

2b: Give public bonds priority over private bonds.

3: governments can pick and choose what they pay and don't pay off. I could see their being exploits from this approach. For instance, governments might only pay back loans to people they like. They could borrow all of a creditors money, and default on it with no consequences.

I personally like the idea of 2 or 2a, I think it makes things somewhat closer to real life. On the other hand, there's also things that recomend 3 as a possibility, namely it's simplicity and that hews closer to the diplomacy spirit. I'll leave you guys to discuss.

real life is not the aim. make the too complicated and nobody will really know what's going on.

I'm in favour of 3. Simple, if a govt favours one investor over another then all of the investors will have something in common, they don't want to be screwed over by other governments and thus need to share information about who is untrustworthy.

My policy as a government would be to treat all bonds equally. No special treatment for investors (beyond the % interest rates i've already offered) Not the new Rome will be defaulting or anything... i doubt the barbarians will ever reach Moscow. ( for your viewing pleasure: www.youtube.com/watch?v=hWTFG3J1CP8
)

I sold 20 more bonds correct?

I will also make a private deal with a Creditor because i need $20,000 ill negotiate the intrest rate if someone will be willing to lend me money :)

I'll lend at 200% ;)

Also the public auction has not been revealed pubically...

yeah but i didn't gain any money. Only what i borrowed and used. he calculated the left over which i also calculated.

the public auctions have not yet been finalized, creditors are still allowed to invest and governments still don't know how many bonds they sold or how much they raised.