Why would the fiscally savvy Iron Bank offer so much debt to regime that does not have the tax revenues to remotely have the ability to pay its debts?

[Bernie Mac]

6 minutes ago, John Suburbs said:

I'm not talking about vs the Targs or in terms of status or respect. I'm talking about vs. the other houses/kingdoms in terms of military strength.

That makes zero sense in the context of your reply and nothing in your reply suggests you were talking about military. 

argonak : We never see him itching for new lands or revenues, (like maybe becoming lord of the riverlands in addition to the westerlands), so what was his plan supposed to be?

YOU: Ultimately, I believe his plan was to produce a successive line of Lannisters who would marry and intermarry with the Iron Throne and other great houses, elevating House Lannister to first among equals in the realm, displacing House Tyrell in that role.

How exactly does lending the crown make House Lannister overjump the Reach in terms of military? 

[John Suburbs]

 

35 minutes ago, By Odin's Beard said:

It is worth remembering that she is only alive because Littlefinger wanted her to stay Queen, presumably because he had information that could be used to control her, and he knew she was unstable.  Littlefinger, who I think is an agent of the Iron Bank, knew that Jon Arryn was going to reveal that Joffrey wasn't Robert's son and so assassinated Jon Arryn, got Cat to capture Tyrion by lying about the dagger, and sent the kingdom into civil war.  And he is probably the one responsible for getting the crown into debt.  He is playing a much bigger role in all this than you are giving him credit for.

My thoughts exactly. Not only is he an agent, but probably a key-holder as well. But I think there is an even more insidious possibility here: that at the beginning, at least, in Gulltown and probably his first years as a customs collector in KL, he was actually being bankrolled by someone. How else to account for the fact that he is suddenly turning in revenues that far outdistance everyone else without a squawk of complaint by either the ship captains who are now paying full duty on their cargos, the merchants who are paying higher prices for goods, or the other collectors who are now being exposed as crooks?

And who might this generous money-supplier be? Mayhaps a certain powerful international trader of spices and cheeses who has designs on the Iron Throne?

Just food for thought.

[Blackfish Tully]

24 minutes ago, By Odin's Beard said:

That was in book 1, after 15 years of peace, before the war of 5 kings. 

Ned was aghast. "Aerys Targaryen left a treasury flowing with gold. How could you let this happen?"

 

After Robert's Rebellion the treasury was flowing with gold.  It all mysteriously disappeared and an additional 6 million were spent, as fall as we know there were no major construction projects or other big ticket items during this time.  Where did the money go?  Who was the master of coin?

 

the below quote tells you where the money went . Littlefinger turned the Iron Throne into an investment bank , he had investments and loans out  all over the world and that's how he was able to increase the revenue 10 fold but also why there was not a  huge stack of gold in the treasury . Why keep the gold in the treasury when you could loan it out and make some interest off it or invest it in some commodities and make a good return on the investment ?

 Oh, he was clever. He did not simply collect the gold and lock it in a treasure vault, no. He paid the king's debts in promises, and put the king's gold to work. He bought wagons, shops, ships, houses. He bought grain when it was plentiful and sold bread when it was scarce. He bought wool from the north and linen from the south and lace from Lys, stored it, moved it, dyed it, sold it. The golden dragons bred and multiplied, and Littlefinger lent them out and brought them home with hatchlings.

[John Suburbs]

9 minutes ago, Bernie Mac said:

That makes zero sense in the context of your reply and nothing in your reply suggests you were talking about military. 

argonak : We never see him itching for new lands or revenues, (like maybe becoming lord of the riverlands in addition to the westerlands), so what was his plan supposed to be?

YOU: Ultimately, I believe his plan was to produce a successive line of Lannisters who would marry and intermarry with the Iron Throne and other great houses, elevating House Lannister to first among equals in the realm, displacing House Tyrell in that role.

How exactly does lending the crown make House Lannister overjump the Reach in terms of military? 

Well, sorry, I was talking about military strength. My apologies if I wasn't clear.

As I mentioned earlier, lending to the crown provides economic stability at a time when the crown needs it most. The last thing Tywin needs, now that he's married his daughter to the crown, is a financial crisis that has lords and smallfolk throughout the realm recalling how much better things were when the Targaryens were in charge.

His control over the other realms, through marriage and conquest, give him the means to raise levies that would dwarf Highgarden if push ever comes to shove. We're talking the combined strength of the north, riverlands, westerlands, crownlands, stormlands and possibly Dorne vs. the Reach. I'd say the advantage goes to Tywin in that matchup. Meanwhile, his grandson will one day sit the Iron Throne and could even compel the Vale to join the fight if the Reach is in need of a smackdown.

But first, he has to put the new dynasty on a firm financial footing, thus the loans.

[Bernie Mac]

31 minutes ago, By Odin's Beard said:

That was in book 1, after 15 years of peace, before the war of 5 kings. 

Did Greyjoy's rebellion not happen in your books? 

Robert has just took half of his royal court on a six month trip to ask Ned a question he could have done by raven, shortly after a state funeral for Arryn and before that the Tourney of Joffrey's name day. 

It makes perfect sense that the royal treasury was running low at that moment in time. Nothing that it could not easily bounce back from. 

Quote

Ned was aghast. "Aerys Targaryen left a treasury flowing with gold. How could you let this happen?"

 

After Robert's Rebellion the treasury was flowing with gold. 

 

Sure, and then the capital and other settlements restored, the royal navy rebuilt, the armies paid, lords rewarded, wedding paid for... Ned did not hang around but Aerys treasury will have been used in the aftermath of the war. 

 

31 minutes ago, By Odin's Beard said:

  It all mysteriously disappeared

Citation? 

 

Quote

 

Who was the master of coin?

For the first decade of Robert's rule? We have no idea. Littlefinger is something of a late appointment, only been in the position for  a few years by the time the series starts. 

Quote

Barely being able to pay the interest on your debt is a problem, it means you are rapidly approaching insolvency.  He makes no mention of paying down the principal, only the usury.

It clearly was not a problem as Cersei, after a year long civil war, a hugely expensive wedding and grand state funeral still had the funds to make the payments. 

The Crown had the money, she chose to spend it on a new fleet.  That is a fact, I have no idea why you are ignoring this. 

42 minutes ago, By Odin's Beard said:

Tywin understood that if the crown was in debt to him that gave him power, the same thing with being in debt to the Iron Bank.  If they had any other alternative, who in their right mind would get in debt with the Iron Bank, knowing their reputation?

Everyone. Are you this confused about how banks work? 

 

42 minutes ago, By Odin's Beard said:

The crown's debt to the church is forgiven in exchange for political control.

 

Another idiotic decision by Cersei. Not done out of a lack of funds but Cersei convincing herself she was smart by arming the very people who would arrest her. 

42 minutes ago, By Odin's Beard said:

The passages about the Rogare Bank conspiracy, and Aerys II actually support my position, they are both  cautionary tales about getting indebted to foreign powers. 

Except they are not, the Rogares wealth prevented Peake, the actual threat to the crown, from taking control. 

 

42 minutes ago, By Odin's Beard said:

His father had gotten the crown so far into debt with the Iron Bank that he thought invading them and destroying the bank was preferable to paying back the loan.

His father funded the Nine Penny War with that loan. Aerys being insane does not change it. 

42 minutes ago, By Odin's Beard said:

It is worth remembering that she is only alive because Littlefinger wanted her to stay Queen, presumably because he had information that could be used to control her, and he knew she was unstable. 

Except Tywin was taking control, not Cersei. 

 

[Bernie Mac]

8 minutes ago, Blackfish Tully said:

snip

WTF! Have we ever been on the same side in a discussion before?

[Blackfish Tully]

9 minutes ago, Bernie Mac said:

WTF! Have we ever been on the same side in a discussion before?

I know , this has to be a first , I'm sure that somebody will start a pro or anti Robb Stark topic and we will go after each other again but that's what make this forum so entertaining , there are some many complex story lines in these books that we can keep arguing about them until the next book comes out (if it ever does) but it's nice to be on the same side for a change . 

 

 

[Fun Guy from Yuggoth]

 

47 minutes ago, Bernie Mac said:

The Crown had the money, she chose to spend it on a new fleet.  That is a fact, I have no idea why you are ignoring this. 

Quote

Cersei had heard his objections before. "Our lord treasurer is trying to say that we have too many gold cloaks and too little gold." Rosby's coughing had begun to vex her. Perhaps Garth the Gross would not have been so ill. "Though large, the crown incomes are not large enough to keep abreast of Robert's debts. Accordingly, I have decided to defer our repayment of the sums owed the Holy Faith and the Iron Bank of Braavos until war's end." The new High Septon would doubtless wring his holy hands, and the Braavosi would squeak and squawk at her, but what of it? "The monies saved will be used for the building of our new fleet."

You are wrong, they could not keep up with debt payments.  In my opinion, the fact that she had to choose between making loan payments to the Iron Bank or building the navy, proves that they were in a debt crisis.

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The World Bank and the IMF hold that “a country can be said to achieve external debt sustainability if it can meet its current and future external debt service obligations in full, without recourse to debt rescheduling or the accumulation of arrears and without compromising growth.”

 

1 hour ago, Blackfish Tully said:

Why keep the gold in the treasury when you could loan it out and make some interest off it or invest it in some commodities and make a good return on the investment ?

No financial advisor in the world would recommend having 0 cash on hand.  They couldn't even pay for a tournament without borrowing.

 

"Ten years ago, Jon Arryn had given him a minor sinecure in customs,  . ..Within three years of his coming to court, he was master of coin and a member of the small council"

The wording is ambiguous, but that sounds like 7 years as master of coin.

"He paid the king's debts in promises"

He wasn't paying down debt, he was deferring payment.

 

 

1 hour ago, John Suburbs said:

And who might this generous money-supplier be? Mayhaps a certain powerful international trader of spices and cheeses who has designs on the Iron Throne?

Agreed that Petyr is supported by the Iron Bank.  And Illyrio is a deep-cover Faceless Man, "Grossly fat, yet he seemed to walk lightly, carrying his weight on the balls of his feet as a water dancer might."

[Blackfish Tully]

1 hour ago, By Odin's Beard said:

 

You are wrong, they could not keep up with debt payments.  In my opinion, the fact that she had to choose between making loan payments to the Iron Bank or building the navy, proves that they were in a debt crisis.

 

Considering that we know that they actually had the debt payment in the vault and choose to use that debt payment to build a fleet of massive ships shows shows that i was correct . She did not have to choose between the debt payment and building a navy and considering the  navy has since  disappeared  that has worked out pretty awful for the Iron Throne . 

 

1 hour ago, By Odin's Beard said:

 

 

No financial advisor in the world would recommend having 0 cash on hand.  They couldn't even pay for a tournament without borrowing.

 

 

I doubt they would have 0 cash on hand , they would keep enough to pay the bills and make the loan payments but the rest they would keep invested and loaned out just like any investment bank would do . any extra cash in your vault is making 0% interest so why not lend it out and make a profit? 

 

1 hour ago, By Odin's Beard said:

 

"He paid the king's debts in promises"

He wasn't paying down debt, he was deferring payment.

 

 

he wasn't defering payment he was just conducting business as a bank would , he was borrowing from the Iron Bank at say 5% interest and lending it to at 8% (or whatever rate they could get)   interest and the Iron Throne was making a 3% profit on the loan . 

[John Suburbs]

Here's a question that is somewhat, but not entirely, off-topic:

If the bulk of the crown's debt is owed to the Lannisters and the Lannisters, as far as we know have lots of gold ore but don't mint their own coins, then why didn't the crown use this ore to start minting its own currency? Why still use dragons or continue to mint new dragons while reserving their sigil, the stag, for lesser-valued silver coins?

[Fun Guy from Yuggoth]

1 hour ago, Blackfish Tully said:

Considering that we know that they actually had the debt payment in the vault and choose to use that debt payment to build a fleet of massive ships shows shows that i was correct . She did not have to choose between the debt payment and building a navy and considering the  navy has since  disappeared  that has worked out pretty awful for the Iron Throne . 

That is not a coherent paragraph.  Cersei says, "the crown incomes are not large enough to keep abreast of Robert's debts."  Abreast means "along-side"--as in they can't keep up with the debt payments, as in the debt payments are larger than cash on hand.  So they were going to be short on the payment regardless.

 

Quote

"Aye, if we had gold," Ser Harys Swyft said. "Alas, my lords, our vaults contain only rats and roaches. I have written again to the Myrish bankers. If they will agree to make good the crown's debt to the Braavosi and extend us a new loan, mayhaps we will not have to raise the taxes. Elsewise—"

Unless a new source of coin could be found, or the Iron Bank persuaded to relent, he would have no choice but to pay the crown's debts with Lannister gold.

They are discussing who they can get a loan from to make payment on a loan from someone else, their credit rating is so bad and they are so overextended than no-one will loan to them.  Kevan would have to use Lannister money--not Crown money--to pay the Iron Bank.  That is paying one credit card with another credit card, i.e., "robbing Peter to pay Paul" and would put the Crown further into debt.

All of this spells out debt crisis.

 

57 minutes ago, John Suburbs said:

If the bulk of the crown's debt is owed to the Lannisters and the Lannisters, as far as we know have lots of gold ore but don't mint their own coins, then why didn't the crown use this ore to start minting its own currency? Why still use dragons or continue to mint new dragons while reserving their sigil, the stag, for lesser-valued silver coins?

Cercei floats that idea in Feast,

Quote

The Braavosi were demanding repayment of their outstanding debts, it seemed, and refusing all new loans. We need our own bank, Cersei decided, the Golden Bank of Lannisport. Perhaps when Tommen's throne was secure, she could make that happen. For the nonce, all she could do was tell the merchants to pay the Braavosi usurers their due.

I am thinking that the absence of a Westeros central bank was a plot device.

[Blackfish Tully]

13 minutes ago, By Odin's Beard said:

That is not a coherent paragraph.  Cersei says, "the crown incomes are not large enough to keep abreast of Robert's debts."  Abreast means "along-side"--as in they can't keep up with the debt payments, as in the debt payments are larger than cash on hand.  So they were going to be short on the payment regardless.

 

I don't think that Cersei is the best person to be quoting , she shows a serious lack of understanding what's going on at every turn , i doubt she has a clue of what the Iron Throne's finances are . Building 10 massive warships must have cost a fortune , surely enough to make the Iron bank's payments , not to mention that Robert had a Valyrian dagger that Joffrey took without anybody noticing , so what other treasures does the Iron Throne have that they could sell to pay their debts ? Why not sell the Valyrian sword that they gave Joffrey ? the money is clearly there but Cersei is just deciding not to pay . 

 

13 minutes ago, By Odin's Beard said:

 

They are discussing who they can get a loan from to make payment on a loan from someone else, their credit rating is so bad and they are so overextended than no-one will loan to them.  Kevan would have to use Lannister money--not Crown money--to pay the Iron Bank.  That is paying one credit card with another credit card, i.e., "robbing Peter to pay Paul" and would put the Crown further into debt.

 

 i would think that the reason they cannot get any loans is because the Iron Bank is pressuring everybody not to lend to them or face the Iron Banks anger . 

[Jon_Stargaryen]

On 10/9/2018 at 1:06 AM, honorable men said:

Why would the fiscally savvy Iron Bank offer so much debt to regime that does not have the tax revenues to remotely have the ability to pay its debts? In the real world, a lot of leaders are aware that the USA looks like it will have trouble paying back all its debt anything soon, but the USA has no trouble getting credit. The reason is three fold. One is that US government can always print more money to pay its debt. Two is that because of steady rate of inflation built into our economy by the Federal Reserve to lubricate the financial system, no matter how big the debt gets, as long as we pay the interest eventually the debt will become worthless. Three most of those people who buy bonds are just acting as intermediaries. They are banks and funds that manage people and business savings. These people don't really want a lot of interest income, they just want to park their savings someplace safe until they need to spend it. So these intermediaries are basically borrowing the money at 0% interest and as long as the US government pays something more than 0% they make a profit. However none of these fundamentals are true in Westeros, yet the Iron Bank kept lending them money. And these savvy bankers are clearly aware that if one regime can pay them back with tax revenue any replacement they come up with can't either. How are they going to get paid? Westeros is feudal system. That means that ultimately all the land belongs to the king. If a king can prove that a particular noble was disloyal he can seize that noble's lands without the other nobles reacting. And that is why backing claimants is a viable strategy. A civil war is a great way to prove that a lot people were disloyal. The new king can repay the Iron Bank with the seized property of the losers.

You forget that the Iron Bank owns the smaller of the three largest debts that the Iron Throne currently has. The other two came from other houses within Westeros, both of which are now tied to the throne - though one of them has been tied to it for years.

This denotes the ability to pay this debt down if given the proper incentive.