Paradise Burning (The Virtagwalla Series Book 2) (2 page)

              Rove crossed his arms and paused for a moment as Zhang mauled it over. Rove quickly paced towards his door and opened it, “I would go and figure out a way to make miracles happen Mr. Zhang, because if I am not in that room when Jacqueline begins her report, legally that is, than let’s hope Ms. Sensado is a fast talker, because the National Guard will be busting down the door before she can even take a breath. And you better be preparing not only your lawyer, but also your resume,” he turned to Sensado, “Jacqueline you may come back in, Artimus was just leaving.”

              Scowling and glaring at Rove as he exited the room he growled, “This isn’t over, Rove.”

              Smiling he said out loud, “How’s that little bit of political wit for you? I’ve be working it out recently,” he joked as the enraged Prime Minister drudged out of the office.              

3

              Jacqueline Sensado greatly disliked being called before the Parliament to give financial reports. She, on the other hand, thrived in the positions of Minister of Finance, and found great enjoyment in her work. When she was appointed to the position, it had long been a run down, cushy job that was typically occupied by a friend of the Prime Minister. However, when Artimus Zhang called her out of the blue to discuss with her that she was on the short list of candidates being considered for the position, she was shocked. Jacqueline was raised by one of the very few poor families in Ponchertrain. Having been raised in a two-bedroom apartment with her parents and older brother, she found pleasure in the small things. Money was always a scarce commodity to her family. In fact Jacqueline had been working since she was eleven years old in a variety of different jobs all over the lower east side, outside of the highway loop in the shipping yards. Her father was a day laborer – a dirty hard job that Jacqueline knew she could never do. Her brother was grandfathered into the system, and up until recently had found minimal fortune in smelting steel. Her mother died of diabetes early in her young adult life, leaving her to raise herself.

              Having been pressured to do well in school by her ailing mother, she graduated from her high school as the Valedictorian, and was brought to the University of Virtagwalla on a full ride academic scholarship. Jacqueline would later find out it was her mother’s greatest dream to see her daughter go to college, get a degree, and move out of the slums of the lower east side. However, her mother never would see her graduation because the illness took her from the world before that day.

              Life at the University was challenging at first for Jacqueline. She became familiar with concept of big money very quickly. Working her way through college, she continued to learn the value of a hard earned dollar. Graduating top of the business school in finance, she went on to work for the Virtagwallan World Bank as a lowly teller. She was quickly promoted through the ranks, and after only ten years she had made her mark as the rising star in the Virtagwallan World Bank. She was even recognized by the outgoing President, as an up and coming pillar of Virtagwalla’s future. The award was flattering, however Artimus Zhang, the newly elected Prime Minister’s phone call was flabbergasting. She never imagined she would be the one put in charge of the entire nation’s bank account, when she, for much of her life, was challenged to sustain one of her own. Sensado took the job by the horns, and ran with it. Finding it easy for the first three years, only up until the last couple months did the job begin to see hardships. The decision to assist the RPC was something that bothered her, each and every night, as she lay awake in her bed waiting to fall asleep. It went against her very gut, and the public’s negative reaction didn’t help. After all, she was a pure capitalist at heart.

              Thus is why it made it so difficult for her to report to the Parliament. She would joke to herself, that it would take a woman to explain to a large group made up of primarily men, how to use their checkbook wisely. She also was surprised to find that not one of the Ministers had a business backing of any sort. The vast majority of them found their educational roots in the humanities. ‘Great help those are in a financial crisis,’ she mumbled to herself, arranging her papers, and settling in at the front desk of the sealed Parliament chamber.

              She was entertained by Rove earlier in his office as she listened from the lobby how he blackmailed the Prime Minister, and felt that she had a small part in his political scheme. ‘You can teach a financier how to be a politician,’ she rolled her eyes, ‘Let’s hope the reverse is likewise.’

              The President sat on the high bench along the Prime Minister; however he did not wear a fancy robe like the others on the high bench. He sat simply in his sharp pin-stripe suit. The Prime Minister rose and spoke vibrantly, “Ministers, we have for us today a special occasion. Recently there has been much plight about this nation’s financial situation, and the integrity of this government’s treasury. Therefore, I wish to yield the floor to Minister of Finance Jacqueline Sensado such that she may paint for us a picture of what we are facing economically speaking in this nation. Minister Sensado you may have the floor.”

              He sat down, and looked down at Sensado. Turning in her chair to look at the Parliament, she began, partially reading her script, and partially free styling, “Good afternoon ladies and gentlemen of the Parliament, Ministers of the Cabinet, Prime Minister Zhang, and President Xavier Rove. I am of course, honored to be here before you this afternoon in order to relay to you concerning information regarding the economic state of our nation,” there was a sigh in the audience, and people’s faces blanked as she slowly, and eloquently continued, “Today I will tackle three main issues. First, we will discuss the givens. These are the facts, or the status quo of our situation. Then I will articulate some recent occurrences that seem to be making people rather uncomfortable about their fiscal futures, and finally we will end with my forecast and outlook of what we, as citizens of this nation, could be facing in the very near future.

              “Let us begin with information we all may know, but I feel should be repeated so that we are all on the same page. First, income taxes and other fees are the primary funding mechanisms for the National Government of Virtagwalla. These taxes and fees both reflect the very health of our economy. The economy of Virtagwalla has grown consecutively, every quarter for the past 37 years. That means that for the last 147 quarters, the net wealth of this island has increased. Some quarters we have seen massive growth while in some we have experienced modest expansion, but we have not seen significant economic shrink in more than 37 years. In addition, the Virtagwalla Stock Exchange has seen consistent year over year growth for the same period. Second, the National Government’s budget is annual - meaning that each year, a new fiscal budget is put together by myself, the Finance Committee, presented to this body by the Prime Minister and myself, approved by this body, and signed by President Rove. The dollar total of each budget is a floating average of the last ten years of budgets. This process is by all accounts extremely basic. However, because we bring in more and more money each year, we have coincidentally run surpluses for the past 37 years. Up until six years ago, we would simply roll one year’s surplus over into the next years’ budget, and lower taxes. Six years ago that policy changed, and now we spend everything we take in. Most of the extra money goes towards subsidies for farmers in Villaggio, or other societal projects.”

              Sensado took a breath, and she could see the glazing of people’s eyes, “Now, Virtagwalla’s a weird bird in terms of our tax collection. For some reason it has been our heritage method to collect taxes quarterly. My best estimation and explanation I can give for this system is such that the treasury can moderate cash flow. Regardless, since we collect our income tax every quarter it requires a devastating amount of work for the banks and corporations to collect, examine, and pay each quarter the income taxes based off of their prior quarter’s performance. Third, much to me and my processor’s dismay, there is a clause in the Constitution that says that this body cannot – let me repeat myself, CAN NOT spend money that is NOT in the budget, unless in terms of a surplus of collected taxes,” Sensado took a brief paused and looked to see if anyone responded to that statement. A few junior Ministers perked up, but it didn’t seem anyone was blown away. Carrying on, “What that means, is that this Parliament, and indirectly the entire National Government, cannot carry long-term debt of any sort on its books in the name of the nation of Virtagwalla. What I’m afraid this also means is that we cannot function as a government unless tax dollars are rolling in each quarter. Let me explain to you the deeper ramifications behind all of this. As a body we cannot sell bonds, take out a loan, or acquire funds outside of those appropriated in the Constitution. Put simply, our only paycheck as a government is from the taxes and fees we collect from the citizens and business of this nation. Legally, we are not permitted to borrow money.”

              This last comment made some more people’s heads to perk up, as Sensado droned forth, “Now, as politicians have done for ages, our government’s founders and constitutional writers found a loophole to their own rule. Instead of selling bonds or selling debt to a bank or another nation in the name of Virtagwalla, we have been forced to become creative. Over the past half century, this body has started nearly twenty-seven different corporations, which acquire debt, perform the tasks and duties of this body, and are then nationalized by this body. To put it simply, we start a company, we the government, and then we “aquire” all of its shares. The company, in its name, holds the debt, and we hold the company. Examples of such are the Metropolitan Foundation Service and the University of Virtagwalla, both of which are corporations that cost us money in the end. These corporations, that we operate basically as agencies of this government, do not make us any money, but instead drain our budgets. Many of these organizations carry with them billions of dollars of debt. The Metropolitan Foundation Service, the oldest of these tools, has currently a half trillion dollars of debt in its name. This debt was sold years ago to help finance the ambitious project to design and install the most elaborate civic security project in history – which due to recent decisions is now lying uselessly under the streets of this city. It is continuing to cost of us money each year on the interest owed on its debt, not to mention the annual operating budget. Our newest creation is the Virtagwallan Asset Relief Program Corporation or VARP is one such example of a government controlled corporation that sold bonds in order to fund the loans to the Republic Power Company and the University of Virtagwalla,” she paused and looked away, “It is this debt that our predecessors, and ourselves, are guilty of never even thinking about paying back.  As of this morning the amount of interest we pay on this debt is approximately 42% of our annual budget. That means that 42 cents of every dollar we appropriate to help to run our society is earmarked to pay the interest on the debt that helped us to pay for projects generations ago. The other 58% of the money is then considered the “active budget”, from which we appropriate for healthcare, educations, etc. Instead of realizing this practice is bleeding our treasury, we simply sell more debt in its name to pay off the old debt. It’s like using a credit card to pay off another credit card’s debt. We are in a destructive cycle, and could be facing some extreme challenges if our credit rating were to fall for any reason or heaven forbid we default on one or multiple of our outlaying obligations.”

              “Fourth and finally,” Sensado stood slightly bellowing. Her voice stirred a couple of the elderly ministers who were dozing off. Sitting down and smoothing her skirt, Rove smiled, “The process in which this body approves special funding. It was written into the Constitution, that Parliament could, if necessary, allot special funding. This special funding must be in the form of a resolution, and if passed by the Parliament the resolution need not be signed by the President or the High Courts to be considered law. This was done many years ago in order to make the movement of these funds speedier and timelier.”

              She coughed, and turned the page clearing her throat again, “Now for the fun stuff. Currently, it is easy to say Virtagwalla is facing a challenging time. The end of the second quarter is next week, and the preliminary signs are not promising, especially when there is speak of potentially breaking our 37-year streak. Let me walk through with you a series of events that have led us to today. Six months ago, approximately two quarters ago, the three biggest economies in the world, the United States, China, and Europe all began to experience rapid negative growth. During that time their economies faltered and subsequently lost vast amounts of wealth. Miraculously, and I thank the Ministry of Finance and the Virtagwallan World Bank for their timely and appropriate actions because we actually saw positive expansion. It was small growth, but it was growth nonetheless and the Virtagwalla Stock Exchanged rallied when that was announced pushing our gains even higher. There was optimistic speculation that Virtagwalla due to its smaller manufacturing and agricultural sectors could skate by relatively unscathed. Large amounts of foreign money flooded our markets. However, that belief began to melt away as global economies continued to falter and crumble. In a three-month span the entire net worth of China and Europe nearly halved, and the United States has seen nearly the same effects as dictated by their major stock indices’ performance and their slumping Gross Domestic Profits. Luckily at the beginning of this quarter, approximately three months ago, we began to see some reigning in of the crumbling economies and have even seen some growth from the big three. But the damage had already been done. For instance the dollar’s value had been greatly suppressed, hurting us considerably because as you know we use the United States dollar as our official currency. Furthermore their unemployment rate spiked to near 12% from its historic low of just around 4% six months prior. Here on Virtagwalla, up until very recently, we’ve seen our unemployment rate stay somewhat level.

              “However, not all news is good news,” She sighed, turning another page, “Unemployment escalated globally, meaning there was much less cash for imports like those from Virtagwalla. We have begun to see the demand for our exports slip, and our manufacturing is expected to post record losses next week. Assuming those three economies have all seen shrinkage again this quarter, the globe has officially been ushered into its first macro-recession. Of which Virtagwalla, contrary to popular belief and speculation, has really little or no chance of hiding.”