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aventador577

The iron bank will go bankrupt

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The iron bank has lent a lot of money to the iron throne and the rest of westeros. And the direction of the story doesn’t make it likely that the IT will pay back the money. Stannis is stuck in the north and would need a miracle to win the IT. The investment in the IT should be the biggest of the iron bank at the moment. (I can't think of anything else on this scale) And the war of the five king should have increased it even more.

Westeros and Essos are in financial turmoil.

Westeros is a total mess at the moment and it will only get worse. The riverlands are a total disaster, the north is secured too.  And it looks like the war is coming to the reach. I don’t think any monarch will be able to repay the iron bank anytime soon even if he wanted. And I don’t think Dany or Faegon would even consider it. And on top of all of this is the problem of the long winter.       

And in Essos is Dany on a crusade against slavery, which will lead to the collapse of the economic system of the free cities, if she is successful. Especially if she moves on to Volantis, Lys and Tyrosh. This will lead to bankruptcy for many braavosi merchants. These traders can't repay any loans to the iron bank.

It's the perfect storm to bring down the iron bank. A giant amount of money loaned to the IT, that they will probably never see back and lots of smaller investments that also won't show any revenue because of Dany.

And it makes sense, if you lock at real medieval history. The two richest banking clans in Europe the Fuggers and Medici's went bankrupt because of bad investments in wars. The Medici were lending to Edward IV during the Wars of the Roses and the Fuggers because of the thirty years' war.

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Slavery isnt an economic system though. Forced labour mightbe, but itsanother thing anyway.

Plus, of all the banks in Essos the Iron Bank is the one least likely to be involved in the slave trade.

Also societeis dont crumble due to slavery being abolished but rather the opposite. 

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Given Braavos's militant opposition to slavery, I doubt that the Iron Bank is heavily invested in locations heavily dependent on slavery.  Also, while the elimination of slavery trashed the economy of Meereen, that was because it was dependent on the slave trade itself, which disappeared when slavery did.  Other areas use them as forced labor. In those cases, a transition to a paid economy n be made, at least in theory.

With regard to Westeros, the Crown is sending an envoy to negotiate with the Iron Bank.  There are plenty of ways an agreement can be reached, especially as Cersei has indicated that she is merely suspending payment, not ending them entirely.  I expect some arrangement will be reached, possibly involving the Iron Bank getting a cut of revenues from a source such as a mint or customs house in exchange for extending new loans.

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Possible.

But I'm wary of making too many connections between the real-life financial institutions and the Iron Bank.

Unlike the real-life banks, the IB/Braavosi/FM has roots in slavery, dragon-opposition, possibly had something to do with the Doom, and FM magic and there are hints at more. All resources real-life banks don't have. If someone can't pay them back, they put in someone who can and they have the resources to make sure this happens.

And another difference between real-life banks and the IB is that real-life banks are all about profits whereas the IB looks primarily like a way to fund Braavos' continued freedom and ending slavery. I suspect this because Jaqen goes against the rules we've been taught for the FM perhaps hinting at two different branches of the FM: one to work against slavery and threats to Braavos where the FM rules would hurt this mission, and one to fund this operation via contract kills where the rules increase likelihood of success. If they accomplish this mission (ending slavery and an assured end to magic which is so often used for harm in this world), then losing the IB is a small price.

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2 hours ago, Sigella said:

Slavery isnt an economic system though. Forced labour mightbe, but itsanother thing anyway.

Plus, of all the banks in Essos the Iron Bank is the one least likely to be involved in the slave trade.

Also societeis dont crumble due to slavery being abolished but rather the opposite. 

I agree.  The freedmen will borrow money for capital.  A lot of them have skills with which they can build a livelihood from.  They will need capital to build shops and equipment.  Some will become fishermen and they will borrow money to buy boats.  Weavers and tailors will need shops.  These were the people doing all the work for their masters.  They now have the chance to work for themselves.  This new economy has a lot of potential.  All that need be done is to get rid of the harpies.  

Mind you, I'm only saying a free economy is better and will actually expand the economy.  Both good for a lending institution like the Iron Bank. 

The problem for them will mainly come from the loans they made to Westeros.  The land of ice is not going to be able to pay back those loans.  

Edited by Geo Da Ray

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Many of the depositors were slave owners.  Many of these will die when the slaves rebel in Volantis.  The Iron Bank will just transfer these to its own accounts.  

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Only slaver cities got an economic collapse in essos, the rest of free cities is doing just fine.

Also, Casterly Rock got gold, I think the gold of Lannisters could repay all the crown's debts in full.

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9 hours ago, Gendarrion said:

Only slaver cities got an economic collapse in essos, the rest of free cities is doing just fine.

Also, Casterly Rock got gold, I think the gold of Lannisters could repay all the crown's debts in full.

Tyrion signed it away.

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On 12/11/2018 at 2:27 AM, Geo Da Ray said:

I agree.  The freedmen will borrow money for capital.  A lot of them have skills with which they can build a livelihood from.  They will need capital to build shops and equipment.  Some will become fishermen and they will borrow money to buy boats.  Weavers and tailors will need shops.  These were the people doing all the work for their masters.  They now have the chance to work for themselves.  This new economy has a lot of potential.  All that need be done is to get rid of the harpies.  

Mind you, I'm only saying a free economy is better and will actually expand the economy.  Both good for a lending institution like the Iron Bank. 

The problem for them will mainly come from the loans they made to Westeros.  The land of ice is not going to be able to pay back those loans.  

Yes, there are lots of positives to economy. Slaves are products but freedmen are consumers, imagine all the stuff all the the freedman will suddenly have to pay for and all he will now produce on the books and put it all together there would be a dramatic rise to everyones coffers. Same like countries where women and men both work - they have a ridiculously big economic advantage just because housewives don't do anything "on the books" either.

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The bank may collapse but it will have been worth it to pay that price to end slavery.  Keeping slavery going is not the right thing to do even if it contributes to the success of the bank.  

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Iron bank should have another assets like land, ships, right to collect taxes and custom revenues, monopolies of selling or buying certain stuff (like salt) and they could even take their cuts of existing businesses. So there is a possibility that IB would survive even if Westerosi won't pay back their loans.

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On 12/12/2018 at 9:42 PM, Moiraine Sedai said:

Tyrion signed it away.

If the Lannisters can afford to lend three million dragons to the Throne the hundred and fifty thousand or so that Tyrion promised is small change. 

 

8 hours ago, Dorian Martell's son said:

THe IB is quite rich and powerful with a diverse investment portfolio. They are not going anywhere 

Not only that, it seems almost certain that their rivals will be hit worse. 

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On 12/15/2018 at 6:41 PM, Sigella said:

Yes, there are lots of positives to economy. Slaves are products but freedmen are consumers, imagine all the stuff all the the freedman will suddenly have to pay for and all he will now produce on the books and put it all together there would be a dramatic rise to everyones coffers. Same like countries where women and men both work - they have a ridiculously big economic advantage just because housewives don't do anything "on the books" either.

I feel like most of the troubles that bank will face is coming from uncollected loans from the noble families of Westeros.  

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9 hours ago, Geo Da Ray said:

I feel like most of the troubles that bank will face is coming from uncollected loans from the noble families of Westeros.  

Iirc, the Iron Bank called in all their loans from Westeros to pressure the crown, so that wouldnt be an issue.

Also if the bank had taken a down swing, why would they invest in the Nights Watch or Stannis?

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On 12/20/2018 at 5:44 AM, Sigella said:

Iirc, the Iron Bank called in all their loans from Westeros to pressure the crown, so that wouldnt be an issue.

Also if the bank had taken a down swing, why would they invest in the Nights Watch or Stannis?

It's coming.  I didn't say came.  :)

Troubles are coming for all.  It's not just the bank who will have difficulty keeping its lights on.  No production happens in winter but yet consumption must continue to maintain life.  Winter kills debtors.  Many powerful institutions will fall.  

Gold will lose its value if winter should also come to Essos.  Animals and humans can't live on gold.  

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On 12/21/2018 at 4:02 PM, Geo Da Ray said:

It's coming.  I didn't say came.  :)

Troubles are coming for all.  It's not just the bank who will have difficulty keeping its lights on.  No production happens in winter but yet consumption must continue to maintain life.  Winter kills debtors.  Many powerful institutions will fall.  

Gold will lose its value if winter should also come to Essos.  Animals and humans can't live on gold.  

Exactly, its still to come so naturally nothing is set in stone. Whats to say the Long Night will stretch decades this time? Perhaps it will be over way faster due to Dany and/or season changing magic.

Also we know quite little about how winter affects Essos and the rest of the world.

 

Value is a funny thing, steel can take gold - but enough gold buys a lot of steel to keep the gold safe and steal/earn more. Paper can buy both gold and steel if it has the right writing on it. So value is always fleeting and Im guessing the most prominent bank in the known world isnt completely unprepaired for fluctuations.

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