Capitalism 2 and Capitalism Lab Forum

I think the debt system would be far more realist, strategic and fun if we replace loans by corporate bonds. There was a nice bonds simulation in Railroad Tycoon 2.

1) The issuer has to repay the nominal amount on the maturity date. During a credit crunch, it could lead to serious deleveraging problem, even full collapse.

2) The yield the market is asking depends on :
a) Fed's monetary policy & expansion/recession (out of control, the player has to anticipated the economic cycle)
b) Company's debt/equity ratio (the more debt already issued, the more it will cost to add debt)
c) Company's free cash flow,
d) maturity (chosen by the player, long maturity cost more but could be safer).

Thus, players will be allowed to use massive debt leverage, with the associated risk. More choice = more fun !

Kamino72 wrote:I think the debt system would be far more realist, strategic and fun if we replace loans by corporate bonds.

It will be hard to argue that "it would be far more realist if loans were replaced" since loans do exist in reality.

There are a few threads about bonds.
http://www.capitalismlab.com/forum/view ... ond+market

Considering that there are still reports of the stock market being too easy to manipulate, I don't imagine the bond market will be a quick addition to the game, although hopefully it will be eventually added since there are many players in favor of it.

Esoteric Rogue wrote:It will be hard to argue that "it would be far more realist if loans were replaced" since loans do exist in reality.

Ok, not fully replaced then.

Esoteric Rogue wrote:Considering that there are still reports of the stock market being too easy to manipulate

That's an obvious issue. IA needs to do better evaluation of the true value of a company. When I see a market value < 50% of net cash (cash minus all debt) of the company, it is a joke, it happened only at the bottom of the great depression before Benjamin Graham published the first rational investment book. Maybe a market volatility parameter could be added too.