Kalistan

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Chancellor to Investment Class: "Drop Dead"
"All Investments come with Risks," says Chancellor
Kaliburg, Grand Duchy of Ananto
May 17, 5714


In a combative mood, Chancellor Alvarez fields questions around failed Englian Bid

In a tense round of questions, the Chancellor of the Empire, Lady Melanie Alvarez-McLinn fended off several reporters demanding to know if the National Government planned to help institutional investors who flooded into the market ahead of the failed New Englian bid recover from the bath they took when the bid failed.

"No," she said. "Not a chance. Our job in the Government is not to help capitalists who made bets that didn't pan out for them. We are here to move Her Imperial Majesty's fiat into law. That's it."

Mike Connor, of the independent newspaper Finance Today, insisted that Her Imperial Majesty's Government had a responsibility to investors because the bid failed on account of the National Government's unwillingness to agree to terms more attractive to New Englia. The Chancellor shugged this off. "What do you want us to do? Transfer public money to private pockets? Who are we? Capitalists?" she asked rhetorically. "Look: The terms of the contract were made public months before the matter was considered in New Englia. We didn't hide anything. Lots of people invested in KPO, and drove the stock price up, and when the deal went south, now you get to see all the rats run for the exits. That's the price you pay for speculation. Sometimes you hit the gold mine, sometimes you hit the skids."

The Chancellor insisted that there was nothing to be done about the bid. "Her Imperial Majesty honestly believed that Kalistan's bid was competitive. Unorthodox, yes: Few bid on oil concessions with the aim of permanently capping them. KPO knew this, KPO's investors knew this. The bid and its terms were out in the open. I am sorry if a number of capitalist hedge fund managers lost their shirts, but all investments come with risks, and to insist that one is entitled to compensation for the that risk not paying off is simply ridiculous."

To emphasize her point, she noted that Miramar, the publicly traded investment holding company that is majority controlled by House Ananto was one of the firms that lost money on the matter. "Miramar itself bet on Kalistan's bid, and yes, even House Ananto lost money on the deal. We can audit the time between when the bid was formally rejected in New Englia and when Miramar began selling to demonstrate that Miramar was not trading on privileged information: They merely acted like every other fund, but the difference is, Miramar lost about $1.6 billion Imperial Pesos on their sales. So would you people be arguing that we should bail out Miramar of all companies? I don't think anyone has ever called for that. What's fair is fair."

Others suggested that the wealth fund which was intended to be delivered to New Englia starting this year be liquidated to help investors make up for their losses. "No, that money is already earmarked for Conservation projects. It's just going to sit there," the Chancellor said, "until Her Imperial Majesty is good and ready to spend it, and when she does it will be used as it was intended."

Following another heated exchange about the National Government selling out institutional investors and launching lawsuits in National Court, the Chancellor cleared the air. "You people all seem to think this is a democracy. You don't seem to understand what country you live in. Our Solicitor General is in the Court right now arguing for dismissal of these cases as frivolous lawsuits, because the National Government was not a party to the investment and KPO is, as a nationalized industry, shielded from civil lawsuits due to its strategic role in the National Economy. And here's what will happen: Our independent court system, who will follow the law, because they are required to do so, will throw those cases out and in doing so, maintain the precedent that Nationalized firms can not be parties in civil litigation. If our investors are so upset, they should take it up with the people who actually made the decision on the bid and sue the New Englian Government, not the Kalistani Government."

Reaction to the Chancellor's dismissal of the complaints around the investments sent a shudder through the markets. KPO, already suffering a 7.05% loss in stock price following the rejection of the bid and not recovering since, dropped another .83% on the day after the Chancellor's Comments. Other organizations associated with the bid, including Miramar are also down, though Miramar has largely recovered its price due to moves in other parts of the markets. The failure of the bid hit large institutional investors, hedge funds, index funds, and derivitives traders the hardest, as they fled safer waters in favor of this speculative bid, while opening the doors to smaller investors to enter the market after them at much lower prices. Many of those involved in the trades, and subsequent losses were in the Kalistani nobility, who had hoped their station in the social order in Kalistan would grant them some privilege. Other large institutional investors who lost money on the deal included KMD, Sulari Photovoltaics, Bank of Kalistan, Bank of Suldanor, and Sun Coast Resorts who were making a play to diversify their assets. The refusal of the National Government to help compensate large investors for their losses is likely to discourage future speculation from large players.

Lady Alvarez said she did not gain anything or lose anything from the bid. "As public officials, Her Imperial Majesty has formally banned us from participating in stock trades on any level while we hold a position of public trust to avoid any hint of unethical behavior. So I don't have any money in the stock market." She added that the Empress also did not directly engage in stock trades, though Miramar itself, as a company that is legally and fiscally separate from its majority shareholder, House Ananto, was heavily leveraged and lost a significant sum of money on the bid.

One major institutional bidder who actually shorted the bid was the Kalistani Bookmakers' Association, who sold KPO and several other stocks short as everyone else was buying in, and ended up earning about $450 Million Imperial Pesos in the bid's failure. "I hate to say it guys, but you all should have listened to the Punters," said the Chancellor as she ended the interview.

@TheRepublic