Spice and Wolf 03

Spice and Wolf Episode 03: Wolf and Business Sense
MORE SCREENCAPS FROM "Spice and Wolf" Episode 03 HERE

Lawrence and Holo enter the port city of Patzuille where they are supposed to meet with Zeelen. Lawrence expresses some concern that someone might recognize Holo as the wolf deity from the legends, but she doesn't agree.

On their way to sell Lawrence's Marten furs, Holo spies an apple stand and gets completely enamored by it. Lawrence gives her a Thoreni silver coin and Holo buys a bunch and gorges on them.

Later at Milone Company, Lawrence strikes a bargain with the merchant: 70 Marten pelts for 140 silver coins. But Holo does some sales-talk about the furs' superior quality -- they are durable and have a fruity smell (because of the apples) -- and tricks the merchant into buying them for 210 silver coins.

Lawrence and Holo then finally meet up with Zeelen. Earlier Lawrence has been asking around about the new silver coin issued but it seems no one has heard about that rumor. So now he wants to know if Zeelen is in fact telling the truth. But instead of guaranteeing profit, Zeelen says that he is not sure also.

In exchange for the information on which coins are revalued, Zeelen proposes that Lawrence give him 10 silver coins, which he would return in case of a loss, and 10% of the profits in case of gain. Lawrence thinks this is a "safe" risk and agrees to it.

That evening, Lawrence gives a tipsy Holo a lesson on the different kinds of coins. She listens attentively at first, but soon gets bored. She says that there are too many; there should be a limit. Lawrence goes on to lecture her about currency only to find that Holo has fallen asleep.

Zeelen and Lawrence talk about their trade scheme over wine

The next morning, Lawrence and Holo see Zeelen off, after getting information on which coins are revalued. Lawrence again tries to explain to Holo the subtle mechanics of currency valuation. Politics is apparently a major factor as currency is one definite way of flaunting power. He adds that Philling silver, the coin that Zeelen earlier identified, is a rival of Thoreni silver. In order to gain some advantage over Thoreni, it is therefore likely that Philling would try to increase the purity of their silver. Thus, Zeelen's story actually makes some sense.

But just to be sure, Lawrence goes to see Weiss, a friend of his in the money-exchanging business.

On their way there, Lawrence explains that coin purity is always changing so one can never tell whether the money you have now is still worth its face value. For that, they need the help of money-exchangers.

Whenever there is a need to issue new coins, countries change the purity only a slight bit and then judge people's reaction to it. If it turns out fine, that's when they would make the necessary percentage of increase or decrease of purity.

Upon seeing Lawrence, Weiss expresses his delight but proceeds to flirt shamelessly with Holo, much to Lawrence's annoyance.

But Holo is unexpectedly affected by Weiss' amorous attention. She decides to keep her tact when she finds out by ear that the silver content in the new coins is low, even as Weiss claims that it is impossible to tell.

Later, as they make their way back to the inn, Holo confronts Lawrence about his jealous behavior, at the same time, soothes him by saying that she is perfectly aware of how the game works.

Lawrence changes the topic back to the purity of the silver and Holo confirms what he fears the most: that the silver content is not going up, as what Zeelen claims, but actually going down.

Holo of the Wise: "Men are all stupid and jealous. And women are fools for being happy about it."

Lawrence supposes that he can still profit from the scheme by exchanging the new coins he got once the value lowers some more.

(NOTE: Remember that new coins are issued in increments, with different levels of purity to lessen any negative impact to trade. So if the aim is to decrease the purity, the later issued coins would have lower silver content than the earlier issued ones).

But it would take Lawrence longer than half a year to make some considerable profit out of this particular scheme.

While he mulls over this, Holo points out that Lawrence has been tricked. At most, he would only get a return of his investment: the 10 silver coins he gave to Zeelen, if the currency goes down and he incurs a loss. And even if by a stroke of chance the currency goes up and Lawrence makes a profit, he would still have to give Zeelen 10% of his total gain, per their agreement. So either way, Zeelen will not lose while Lawrence's chances of gain are based on the contingency of fluctuating currency valuation.

Then again, Holo wonders if decreasing valuation of currency is normal. Lawrence tells her that on the contrary, the value of currency is often increased, not decreased. What is unusual is that Zeelen came up with such a scheme.

Holo then poses the question whether there is, in fact, someone else backing Zeelen on this because it's unlikely a mere kid would come up with it.

At this, Lawrence has an epiphany and exclaims that he knows a trick of buying weakening currency to make a profit. Having said that, he and Holo prepare to go to Milone Company.

COMMENTS:

Well, that was some interesting third episode. The fansub for Episode 4 is actually out, but I wanted to blog about this first before moving on to the fourth one in order to make some sense out of the whole business stuff.

That said, it's CONFUSING! I had to re-watch the entire thing to get even the gist of it.

So here's what I understand: what Lawrence and Zeelen are actually doing is gambling on the outcome of fluctuating currency values. It's not unlike the stock exchange, only instead of trading stocks, Lawrence is trading coins.

The problem is that the value of the coin is actually going down instead of going up. So now Lawrence is stuck with a bunch of coins that are worth less than what he paid for them. He speculates that if he held on to the coins until the deflation stops, he could probably profit from the slightly higher value of his coins by changing them back to the later-issued ones. But the problem with this set-up is that he has no way of knowing how long before the currency valuation becomes stable again and meanwhile he is incurring a loss just by keeping the coins in his possession.

Okay, that part I understand but I do not understand what possible trick there is in making profit by buying weakening currencies. I guess we'll find out next episode, won't we?