| Friday, December 24, 2004 - 07:04 pm |
The problem with corporation loans is so severe because we aloud them to go into huge debts. They even kept paying out their profits to their shareholders and dividendns while their debts are so high and their assets deep negative.
The problem will be reduced if we force the debts down.
Read the game news today (Dec. 24). We have made the first step in debt reduction and in the coming weeks, corporations with high debts will stop divident payments and we will be able to lower the debt limits.
There is a difference between state and private corporations and public corporations.
If we succeed in limiting the loans and in preventing abuse, we can start thinking about limited liability in public corporations which is a realistic concept in the real world but could not (yet) be applied in SC.
We cannot introduce limited liability without a true money market so that high risc corporations will pay more interest. Each loan has two sides and the loan provider should know he might not get his money back and have the capability to make the trade off between risc and interest rate.
Loans are also the result of the huge orders and we have already reduced the orders size.
As processing time is reasonable now, we can try and reduce order size even more.
If we gradually enforce lower loan limits, corporations will have to receive money from the counry or enterprise to prevent bankruptvy or if they do not get it, go under.
Public corporations cannot receive cash transfers but they can issue and sell new shares and reduce their debts.
We plan short term changes in share trading by public corporations that will make it possible for them to trade more easily in their own shares and buy them back if cash is available. These changes are nearly done and will be part of the game in the first or second week of january.