The Economist ~ Notes on the global financial crash

Day 1,725, 09:31 • Published in Slovenia United Kingdom • by Spite313


Dear friends,

I just want to write a brief article today talking about the current financial crisis facing the new world. Most of you have probably seen the wildly fluctuating values in the money markets, the weapons industry and the job market. Obviously these things are connected, and the connection is hung around the introduction of the Q7 industries by the game administration. I’m mainly writing this article for newer players- since the crisis began there’s been a plethora of articles offering solutions, and I’d just like to try and give newer players a basic grounding in why it’s all happening.

So to begin- what was the background to the crisis? When the game was created, there were five qualities to each industry. The first 4 qualities (Q1-Q4) were quite heavily populated back then, with a small minority of players (and a larger number of countries) owning Q5 companies. As time went on, the game changed, and Q5 became increasingly common usage for military units and players. Even fairly weak players fought with Q5.

All this is connected to the simple driving formula of aggregate demand which drives all economics. As the number of Q5 companies increased, the profit margins in that industry fell. Eventually it fell to the point where other qualities of industry became unprofitable to hire workers in. This was hurried along by admin changes to how employment works and the gradual devaluation of currency caused by strength training.

The long and short of it is that Q5 dominated the new world. At this point the admins introduced Q6 companies. Q6 wasn’t a luxury good- it was a simple upscaling of Q5. It used 20% more raw material, gave 20% more hits and 20% more damage. This was a mistake by the admins, since it immediately killed Q5. By this point government owned companies were basically gone, and the majority of Q5 company owners were wealthy private individuals- either gold buyers or the super rich entrepreneur class which emerged through 2010. Most of these people upgraded their companies to Q6, causing Q5 to die. Again, supply and demand forced up wages and down prices until they met, killing the whole sector.


porn for economists

Moving on seven months and the introduction of Q7 weapons. The admins have made several efforts to resurrect the dead lower quality industries. However this change was a major error. Q7 was originally created with the intention of it being an elite product for division 4 players. It was an attempt to screw some more real money out of these older players by forcing them to upgrade. Realistically, the production cost per unit of Q7 means that they’re not intended to replace Q6, just coexist alongside them.

Unfortunately the marketplace is not controlled by logic, it’s controlled by market forces. Demand for Q6 dropped rapidly, and as hundreds of gold buyers rushed to upgrade, the actual number of Q6 weapons on the market dropped as well. Q7 became the new King.


Admins say oops

The most obvious effect of this was the sudden surge in prices for weapons raw material. At one point they topped the 0.4 mark, having dwindled to below 0.07. This is the clearest example of the dominance of the Q7 industry. A Q7 costs 200 raw materials to produce, whereas a Q6 requires only 60. Overnight demand escalated, which forced up the prices fivefold.

The secondary effect of this was a flooding of the market with Q7 weapons. High prices and the collapse of Q6 made Q7 the attractive option for business owners. Despite a truly enormous investment cost most players were used to it by now and upgraded, and we saw a massive influx of Q7 guns.

What happened next is obvious. Supply suddenly outstripped demand, and there was a world-wide collapse of the entire weapons industry. The effects of this were incredibly far reaching.

First of all you had the obvious- prices collapsing from highs of over 100 currency to below 50. This was a race to the middle, as they say, between the market and the manufacturer. The minimum cost per unit of any product is determined by the value of the materials used to make it and the wage of the person who built it. For Q7 weapons this combined cost is usually around 45 currency, which when taxes are taken into account puts the cost per unit at around 50. This means that most people are breaking even on production, making it actually a waste of time doing.


Anyone want Q6? Anyone??

In this situation the two variables- weapons raw price and wage price- both come under assault from the market. First of all the wages begin to drop as business owners try and cut costs. Despite a minority who don’t seem to be able to do the maths to calculate profit margins, the market has dropped and is still dropping. A few weeks ago a worker could earn 300 currency a day working in Poland, now it’s more like 65 in most countries.

On the other hand weapons raw material has become suddenly very profitable. Working there yourself costs just 10 health and produces around £80 a day provided you have the right bonuses and saltpetre factories. This might not sound like much but it’s actually one of the best ROI (return on investment) in the game right now. People with money to invest rushed to buy them, and players with a lot already started using them again. In addition a lot of players (myself included) stopped using workers in their factories due to the tiny margins, meaning that the amount of WRM on the market grew a lot. This meant that prices have slowly depressed down to 0.22 or so. Now this would normally mean an increased profit margin in weapons, but weapons prices are so depressed they’ve just followed every drop in price.


Cheaper (and more useless) than ever!

Some of you probably see where this is going now. Obviously a sudden surge in demand for WRM caused a sudden demand for currency to buy WRM factories. Hence we’ve seen the gradual fall of the value of gold from 1800 cc to something closer to 1200. This has also been influenced by the admin “stealth bot” which buys a percentage of every currency listing on the last day it’s listed. On the other hand demand for gold to buy companies is low, since the profit margin in high quality companies is low, and the enormous cost of acquiring a Q7 company means that actually saving up gold a few gold at a time (as a new player might manage) will never generate the mind-blowing amount of gold required to buy a Q7.

The future is uncertain at this point. I predict that eventually the supply of WRM will more or less match demand, meaning these high prices are a temporary situation. This will have a knock on effect on the price of gold- so this too is temporary. The value of Q6 companies and weapons looks to be forever trashed, with Q7 replacing it. Whether Q7 ever becomes a full replacement for Q6 is uncertain. It costs hundreds more each day to supply an army with Q7 per player, so most armies are either sticking to Q6 or giving mixed supplies. I don’t see a surge in Q7 value anytime soon, making them a very poor investment from that perspective- though as always if you already have everything else it’s a better investment than fighting or training, which are nothing more than a gambler’s trap designed to draw people into buying gold to give them the ‘buzz’ of tanking.

Hope this has cleared things up for the newer players amongst you

Iain




Ps. Hello Slovenia! I will do a proper article soon saying hi and so forth. It's lovely to be here 🙂