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Austianese economic turmoil; debt & stagflation
Topic Started: Jun 3 2015, 07:43 AM (71 Views)
Anglea
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The Federated Kingdom

The Governor of the National Reserve Bank, Dwight Kunder, sat quietly behind a pair of thick prescription glasses. His broad hands rested on his briefcase on the mahogany conference table, as he and six executives of the NRB looked coldly at President Westerwelle as he entered the room. Disingenuous pleasantries were exchanged, loose and sceptical hands were shaken, and the extraordinarily rare meeting commenced.

"Mr. President, I'm afraid the news isn't good." Kunder began, adjusting his glasses as he shuffled in his leather seat, "The botched pipeline deal with Zaliviya, a slow down in steel production and a housing market teetering on collapse. Mr. President, we're forecasting negative economic growth in the next month, one of under -0.9%. Inflation has doubled, the media hype is very accurate, sir... I'm afraid the worst is yet to come."

Westerwelle shrunk back into his chair. This 'news' certainly wasn't new, Austiana's economic standings had been in a state of dismal decline in the last two months. After trade negotiations with Zaliviya fell apart, the housing bubble 'burst' and many of Austiana's key industries went into a rapid death spiral. The significantly lower than expected demand for manufactured goods across the country, a slow down in projected growth of Austiana's natural resource industry and incredibly low consumer confidence saw Austiana's national economy hit a low point. Immediately, Westerwelle enacted austerity measures - balancing the budget, it was said, was a key priority. But, political backlash and defection within President Westerwelle's own party saw only some of the measures pass, not only barely balancing the budget but accelerating Austiana's economic malaise.

"Negative growth?" Westerwelle frowned, appearing almost disinterested at the problem at hand, "And your pending decision on interest rates? How will that decision ail our economic woes?"

"A drop in the ocean, Mr. President." Kunder retorted, "They're at record lows already, to drop below 2% would at this stage probably do very little. We're facing a recession, sir, a recession driven by public confidence. Interest rates could be 0%, but consumers would still be hesitant - unemployment this month will reach 11%. People are afraid. We've got geopolitical instability and communist encroachment to our East, we have almost no government investment in infrastructure, an unwilling and hesitant financial sector that doesn't want to make any serious moves or risks, we have a retail sector in decline for the first time in history and we have no prospective growth markets. Prices are high, wages are low - Sir, we're staring down the great recession since the late 50s!"

"Public expenditure could ail the issue, no?" Westerwelle asked, himself uncomfortable with the thought but very clearly willing to sacrifice his own ideology to save his own skin.

"Well, er, sir." Kunder stumbled, "Continued expenditure would go to great lengths, the implementation of Keyensian style police may stimulate our present situation - it may see a reversal of negative growth, but that is dependent entirely upon the cooperation of your, er, rather dysfunctional Congress, sir. I mean, the Congress needs to meet tomorrow's deadline to extend debt repayments."

Westerwelle, in the last two weeks, had seen more moderate and left-leaning members of the Conservative Party defect, with some joining the Liberal Democrats and others remaining Independents. He had lost a majority in the Congress, so his attempts at passing cuts to services to balance the budget were thwarted, and now the next hurdle is to pass an extension of debt repayments. Something vehemently opposed by conservative and leftist members of the Congress and his very own party. The situation was seemingly hopeless, and as Guido's popularity dipped below 30%, so did his political stamina.

"I will ensure that extension shall be passed. We're not defaulting on our debt, that would be disastrous under current economic circumstance." Westerwelle reassured, "We can't afford, however, a Keynesian style recovery. It would be too expensive, and at a trillion dollar debt such an extravagant expansion of government expenditure would not be feasible. We need to focus on private sector growth and boosting public confidence."

Kunder wanted to protest and advise against what he felt was Westerwelle's attempt at deflecting responsibility. Westerwelle's approach to government was infamously minimal, and Kunder felt that doing nothing was not advisable at this stage.

"Sir, uh, we're not sure even the most radical measures could, actually... erm." Kunder fumbled, sweating and adjusting his glasses on his nose, "Do anything. This recession is not avoidable, we're already in it and it's abound to get worse."

Westerwelle shrunk further into his chair.

"Well, shit."

THE FEDERATED KINGDOM OF ANGLEA AND CAMBRIA | KING JOSEPH J. POWELL | POPULATION: 69M | CAPITAL: THE CITY OF CASTRATENEPosted Image
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Anglea
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The Federated Kingdom

All 143 members of the Federal Congress returned to the chambers after a 1 hour interval; it was now time for the legislature to vote on the future of Austiana's debt repayments. The economy had shrunk twofold within two weeks, the uncertainty surrounding the Congress' decision, combined with an obliteration of the Austianese dollar, driving down expenditure and slashing jobs. The unemployment rate had sky-rocketed to above 25%, and was growing. The national sentiment was dismal; the general consensus was that government had let the public down, the unanimous view was that President Westerwelle was responsible for the totality of the economic woes faced by the country of 112 million.

"All members rise." Instructed the House Sergeant, who lead the Speaker into the chamber. The Speaker, a Conservative MP Donovan Blach, gestured for all members to sit down. He began to read what was on the agenda.

"Appropriations & Financial Duties, Section 203 - Financial loan repayments. It is the Congress by majority to satisfy all debt and interest repayments. A division is required to decide the continuation of debt repayments. Voting shall take place for 3 minutes. Time begins now."

Blach sat down in his tall chair at the head of the room as all members began interacting with the electronic voting systems in front of them. The House was divided - Conservatives, which won the election only 6 months ago with a 94 seat majority, were now split in half after a month of factional dissent, with 30 left-leaning members of the Conservatives joining the Opposition Liberal Democrats, and 11 right-wing members becoming independents, two of whom eventually joined the Nationalist Party. President Westerwelle had lost his majority in the house, with legislative power now back in the possession of the Liberal Democratic Party.

The President sat on the balcony of the Congressional Chamber, surrounded by family and advisers. He desperately needed the bill to pass - otherwise Austiana would default on it's debt, and that would be terrible news for the President's future. He hoped his presence would sway some of his former party faithful, but knew it was rather futile - even the most loyal of members knew that siding with the President was political suicide.

The Liberal Democrats knew the dangers of defaulting on their debt, but their own internal factional disputes and a unified need to undermine the President persuaded their party to support the ceasing of debt repayments. It was also politically popular to do so - it was a general misconception among the majority of the public that defaulting on the debt would allow for a 'restart' to the economy, a means of putting the collapse had starting fresh.

"If this doesn't pass, I will resign." Westerwelle whispered to his wife, who tensed, "There is no way I can maintain any form of dignity if I carry on for the next 4 years without a Congress and without an economy."

Westerwelle wasn't nervous, rather sombre. He knew the outcome would not be in has favour, he had accepted that defeat was inevitable.

"The result of the motion..." Speaker Blach rose in his seat as the members quietened down, "42 in favour, 101 opposed. The motion has been defeated and repealed, the Treasury will now proceed to cease repayments. The house is adjourned."

Guido rose in his seat, exited the chamber and prepared to front the media.

THE FEDERATED KINGDOM OF ANGLEA AND CAMBRIA | KING JOSEPH J. POWELL | POPULATION: 69M | CAPITAL: THE CITY OF CASTRATENEPosted Image
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