FINANCIAL CRISIS: Securities Exchange Simulation Sebastian Alex Dharmawangsa, MOS (cert.) 15/376878/SP/25627
img: Ravand Institute
What is Money?
The Securities Market
BONDS What is Money?
STOCKS
The Republic of Dummy People a i p Uto
Government: Republic Stability: Stable Population: 5,837,678 2 Size: 108,453 km 99% Literacy Rate Low Poverty Rate
 Low Unemployment Level (Services Based Industry) Low Domestic Tourism
DMEX
Dummy Exchange
img: Ravand Institute
Sanora-Tevi Detergent Company (Fast Moving Consumer Goods)
Fills Mega Land Corporation (Land & Housing Developer)
Started from a detergent company, now Sanora-Tevi produces most of D u m m y C o u n t r y ’s h o u s e h o l d cleaning products. The company constantly wins the ‘Top Brands’ awards.
Top land developer company in the nation, deals with projects ranging from shopping malls to govt. subsidised housing. The owner of this corporation is listed as the nation’s richest man.
Transit International Airline (Transportation - Airline)
Securities Exchange Cooperation (Finance - Insurance)
The company is the flag carrier of the nation. The company also is the holder of ‘DumEx Air’, the low-cost subsidiary of the airline. They also own part of the Airport Management company’s share.
Top land developer company in the nation, deals with projects ranging from shopping malls to govt. subsidised housing. The owner of this corporation is listed as the nation’s richest man.
STD
Sanora-Tevi Detergent Company
Fills Mega Land Corporation
TIT
SEX
Transit International Airline
FML
Securities Exchange Cooperation
! N I G E DMEX B S ’ T E L Dummy Exchange
Month ONE
Airlines Prepare Extra Flights and Airports Anticipate as Summer Holiday Nears
Sanora-Tevi to Take a Huge Leap Into Personal Hygiene Products Line
… airlines’ demand for tickets rises up to 500% and airports foreseen to see an increase up to 3,000,000 passengers in the period.
… the products produced would include soap, shampoo, facial wash, and 2-in-1 products. This will be another huge leap post the ‘detergent’ leap.
What Happened? Stock Price
Demand2 Demand1
P2
Supply
ę?Œ
1) Demand for the particular stocks increase as there is a positive speculation on longterm profit. 2) Both markets find itself a new equilibrium between supply and demand; with higher price level.
ę??
P1
How about the quantity? Story for another month (slide). Quantity
Month TWO Govt. Signed Reclamation Deal with Fills Mega Land Corp. *proposed reclamation site
The President To Visit Japan: Talks About Investing In Stronger Domestic Transportation
The Government has approved Fills Mega Land as the vendor for the long debated reclamation plan. This reclamation plan will begin mid this month, just a few days as the bid is passed. The reclaimed land, spanning an enormous three provinces, will first begin on the north most, Quabra region; shutting down the coastal activities. All coastal infrastructures are going to be replaced accordingly. However, the main focus of the project still lies in the coastal housing projects.
Month THREE
Sanora-Tevi New Personal Hygiene Products Instantly Tops the Toiletries Market Sanora-Tevi products, yet again, top the market; this time with their new personal hygiene products just introduced last month.
Transit International to Expand Services to International Rail Services ‌ as agreement on creating International Rail Services signed by the Dummy Government and the neighboring countries. The president director of TI has refused to confirm involvement in the project.
What Happened?
Speculation. “As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.� - John Maynard Keynes
Month FOUR Prices of Coastal Apartments and Houses Released Last Week
SUDDEN BOOM: THE HOUSING MARKET Fills Mega Land released the new prices of the houses to be built on the reclaimed land Sector 1, Quabra last week in a Progress Press Conference. The market has reacted positively towards these prices as the demand skyrocketed. This even made the FML Website crashed for 3 consecutive days. The Phase I Project itself has been slanted to finish on early 2020.
Transit International to Purchase 10 new Airbus A380 To Suit International Demand The order includes: - Ten A380 Purchase - Five XWB Purchase
-
Five A380 Option Five XWB Option
What Happened? Price
P1
P2
Demand
Supply1
Supply2 ę?Œ
Vertical Supply: Naturally limited supply; where the a fixed number can only be supplied. 1) Expansion of land results in more area to build houses; especially in saturated areas. Thus, fixed supply can increase.
2) New equilibrium is formed ę?? between fixed supply and demand; with lower price level. Quantity
Month FIVE Chillax: Housing Instalments Lax Out To Push Sales of Sector Two
SOLD OUT: Current Phase I of Fills Mega Land’s Reclamation Project
With a high demand of the reclamation housing market, and the soon opening of sales on the Sector II of Phase 1, investment securities and banks lax their loan requirements (especially on the housing market). This easing of loan policy is done in the hope to increase the market demand and saturation, for a more positive future long-term investments prospects. The Financial Services Authority has given a green light for this loan policy, to be formally passed tomorrow in Utopia. This could double the market’s portfolio.
*proposed finished reclamation site plan
Sector Two of Phase One to be opened for purchase by end of the month.
What Happened? Sub-Prime Mortgages / Loans
Predatory Lending Practice
Mortgages approved in riskier individuals than normal; this might happen due to the high demand of loans and high prospects of returns in defaults.
Usually happens in a competitive based banking activities; where the banker would use long-term tricks in agreements that debtors wouldn't be able to keep up in the end.
Collaterised Debt Obligations
Debt Ratings
When a group of loans are then sold by banks towards finance firms and investors, to reduce the risks taken by banks. The payment, and interest, then becomes a profit towards these debt investors.
AAA
BB+
- Prime - Non-Investment Grade - In Default
D
Month SIX Saturating Signs? Slight Decline of Purchase Fills Mega Land released the new prices of the houses to be built on the reclaimed land Sector 1, Quabra last week in a Progress Press Conference. The market has reacted positively towards these prices as the demand skyrocketed. This even made the FML Website crashed for 3 consecutive days. The Phase I Project itself has been slanted to finish on early 2020.
DMEX Reached New Record Heights as Housing & Securities Markets Skyrocket
What Happened?
MARKET FLOODING
MARKET SATURATION
Month SEVEN Banks & Insurances: “Prepared for Worst” Still Easing Loans DMEX Shows Growth; Sluggish. When asked, the President Director of the nation’s largest bank DSB requoted that his consumers should never worry as they are too big to (be permitted to) fail.
Some economic advisors have warned the government about incoming recession if the housing bubble bursts. However, banking institutions and insurances companies have deemed themselves “Ready for the worst, IF it does happen.” When asked, the President Director of the nation’s largest bank DSB requoted that his consumers should never worry as they are too big to fail, the government will always take necessary actions to reduce any potential failures.
“TOO BIG, to fail”? The "too big to fail" theory asserts that certain corporations, and particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by government when they face potential failure. Professor Tom C. W. Lin “Too Big to Fail, Too Blind to See” (2012)
Month EIGHT
THE HOUSING BUBBLE HAS COLLAPSED THE ECONOMY SEES A MAJOR RECESSION LOOMING Major Defaults of the Housing Loans as the Driving Force of Collapse
Month NINE Black Christmas:
Recession - Low Holiday Turn Out
Failing Company: INVESTORS BAILS SECURITIES EXCHANGE Lorem ipsum dolor sit amet, consectetur adipiscing elit. Etiam tincidunt euismod mauris, a pharetra arcu viverra vitae. Integer id luctus tellus, a auctor ante. Phasellus nec ultricies dui. Nulla quis cursus mi. Mauris dolor ipsum, porttitor condimentum iaculis vitae, elementum ac elit. Etiam quis sem eget ex suscipit vestibulum sed eu nisi. Ut volutpat metus et neque aliquet malesuada. Etiam feugiat arcu turpis, sit amet egestas mauris dapibus eu. Suspendisse porttitor velit sapien, sit amet faucibus elit tincidunt molestie.
Month TEN As Demands Shrinks - Companies Cuts Variables Huge Layoffs Everywhere Across The Nation As the nation falls under recession, customers have cut spending in all sectors, creating a more protectionist companies due to the low demand. To save their variable costs and cut spendings, companies has started to lay off its workers. This created a huge unemployment bubble in the nation, especially for low skilled labours. Some companies have also opt to sell out their assets to dampen the fixed cost.
What Happened? LRAS
Aggregate Price P1 P2 P3
D2
D1 ꍌ
1) Aggregate Demand Falls, S1 ꍎ
S2
2) Short-Run Changes in Equilibrium, 3) Overtime, Supply Curve follows natural LRAS,
ꍍ ꍏ
4) Thus, Output returns to natural state, with new price level. Aggregate Quantity
Month ELEVEN
DMEX To Suspend Trading For A Week Due To The Recession
Month TWELVE The Sun Shines With Pain: New Fiscal Year Approaches
Bleak GMSs Across Nation As the new Fiscal Year looms in most companies, Shareholders across nations are called into what might be the bleakest General Meeting of Shareholders in the half century.
The Government To Take Actions In The Recession The President to speak to the public early tomorrow after a rigorous meeting with the house to decide the future of the financial market.
With most companies actually losing much in the recession, shareholders are not expecting any great turnouts. However, the government said that they are ready to intervene, giving a last minute hope to the economy.
What’s Next?
The Bright Future BANK BAILOUT GOVT. SPENDING
GOVT. TAX CUTS Dummy Government
BANK POLICING
How & Why Did Indonesia Survive?
GDP growth (annual %)
16 12 8 4
-4
2006
2007
2008
Indonesia
2009
2010
Singapore
2011
2012
United States
2013
2014 World
data.worldbank.org
0
2015
How & Why Did Indonesia Survive?
data.worldbank.org
>50% of Indonesian GDP Made Up By MSMEs + Positive Government
Intervention Using Available Reserves
(Cadangan Devisa)
2008
The Looming Danger: 2017 Global Financial Crisis
Brexit
The United Kingdom, is a country focused on the financial services sector. The City of London is also a major financial hub for the European Union, even the world. The withdraw of the United Kingdom from the European Union, creates hardship for financial services to continue their business in the UK.
Deutsche Bank Crisis
Remnants of the 2008 Financial Crisis: The United States Department of Justice is seeking a $14 billion civil settlement with Deutsche Bank over its alleged role in artificially propping up the U. S. housing market in the lead-up to the financial crisis of 2007–08 and the Great Recession. (USA Today)
The Looming Danger: 2017 Global Financial Crisis
Brexit
The United Kingdom, is a country focused on the financial services sector. The City of London is also a major financial hub for the European Union, even the world. The withdraw of the United Kingdom from the European Union, creates hardship for financial services to continue their business in the UK.
Deutsche Bank Crisis
DMEX
Dummy Exchange
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