Wednesday 8 August 2001

Pic of the day: Liquidation in the somewhat harsh world of Master of Magic. But solidity and liquidity come in handy in any world.

Liquidity

Back in trade school (high school level economy) I had a very competent teacher. And he impressed upon us this wisdom: "Bankruptcy is not the result of running a loss. Bankruptcy is the result of financing long term investment with short term credit."

Of course, you may be unable to get long term credit because you're running a loss ... but according to my teacher it was just as likely to come from growing too fast. He didn't rule out plain old stupidity either.

***

Game nerd interlude: This week I've played Master of Magic as a 5/5 white/green wizard with alchemy. This is more challenging than pure white, because you don't start with Incarnation, the almost invincible hero. And my two main opponents quickly got Cracks Call, negating my investment in paladins with magic immunity: Cracks targets the ground beneath the troops, not the troops themselves. And they both had halflings, meaning they expanded quickly and had plenty of food. So how did I win?

Yes, by liquidity. After they had declared war on me, I waited till they were casting a big spell. While they were, I harassed them with small attacks designed to make them waste mana. Finally when they were empty of mana, I attacked. Finally I subdued my last and vastly superior opponent during a Mana Short, a rare but occasional total eclipse of all magic sources.

My opponents were richer than me (because the system cheats at higher difficulties) but I was more liquid. The principles of economics transfer to all areas where there are scarce resources.

***

These last several days, my browser has flashed me ads for a company called "Profina" or some such. They seem to offer debt consolidation. I don't know whether they are good or evil (massive advertising tends to make me assume evil) but the idea is good. If you have many small debts scattered around, it is easy to lose the intuitive feeling for your own economy. One month you have $1000 left after your rent. YES! You buy the dishwasher you've wanted ever since grandma died and you had to start washing your own dishes. Oh happy day! But the next month you only have $100, because all your creditors and their pet raccoon think this is the month to pay bills. Now what do you do? You promised to take the little darling out for dinner & a movie too ...

One of the truly nifty things about credit cards (apart from e-shopping) is that you have this one bill. Not one from here and one from there and two from Light knows where.

The downside of course is credit confusion, in which a credit limit is mistaken for money. "Hey, I've got a credit limit of $5000! OH MY DOG! I am rich, rich, rich! I can buy more clothes than I can carry, not to mention the furniture, and go out every night! I cannot believe it!" - You better not.

But the dawn is darkest just before night. Just as the credit limit hits your head like the sky on Chicken Little, and the monthly minimum payments reach a number of digits usually reserved for national budgets and car repairs, there it is in the mail: An offer from a competing card company. While you may not be able to pay credit card bills with it, you can still pay the bills on the first card from your wages (or whatever) and pay everything else with the new card. And still have credit left to buy everything the neighbors have got, only better. Wok wok wok!

The debt consolidation companies come in a bit later, when you no longer remember exactly how many credit cards you have. (That's why they say "not a credit card!" - otherwise people would assume they had it already.) At this point you view each new bill with suspicion: Is American Empress really a credit card, or is it another trick by your ex's lawyer? And you sigh and think back to when there was only one bill, one People, one Leader.

Given their clientele, I find myself wondering what kind of security the debt consolidation companies use. Your immoral soul? Future rent from the family burial plot? I guess there's only one way to find out. And here's a toast to never knowing.

But let us never forget the wise words of my old teacher, God keep his soul: Never finance long term investments with short term credits.