Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2.fluke 9/24/84; site vax2.fluke.UUCP Path: utzoo!watmath!clyde!bonnie!akgua!whuxlm!harpo!decvax!tektronix!uw-beaver!fluke!kurt From: kurt@fluke.UUCP (Kurt Guntheroth) Newsgroups: net.invest Subject: Re: Questions about implications of World Banking Crisis Message-ID: <804@vax2.fluke.UUCP> Date: Tue, 9-Jul-85 11:31:13 EDT Article-I.D.: vax2.804 Posted: Tue Jul 9 11:31:13 1985 Date-Received: Sun, 14-Jul-85 09:15:32 EDT References: <2969@decwrl.UUCP> Organization: John Fluke Mfg. Co., Inc., Everett, WA Lines: 35 How will nonpayment of Latin American Debt affect banking? BOOM! Actually it depends on whether it all defaults at once (BOOOOOOM!) or a little at a time (small pop). In any case it will be very sad for certain greedy banks which bought a bunch of these loans because of the high interest rates. If the defaults happen slowly enough it will probably not be a major problem unless you are a stockholder or VP in one of the affected banks. But remember, you are never safe from the world banking crisis. How long will your munis keep you fed when your company goes out of business due to inability to finance its operations or raw materials? How good will they look if wild inflation destroys the currency? We are talking about a crisis that could, in its worst encarnation, cripple the world economy, cause a depression that will make 1932 look like a mild downturn, and generally make for "interesting times" as the old curse goes. Think of the world banking crisis as the instigator of a major recession or depression affecting the entire world. Presumably the same things that do well in recessions will still work. Chances are the induced recession will not be unmanageably severe. But remember, the potential is there for an unprecedented economic disaster. In this case you will see just what risk is all about. It is this potential for gross disaster that is what worries people so much about the world banking crisis. Even if the possibility is relatively remote, it has to be accounted for. And lets not forget political actions aimed at bringing it on. Watch Fidel Castro, who is currently making news by trying to get Latin America together on a debt moritorium. Some of these countries may have nothing to loose by getting their credit rating ruined. Watch for economic terrorism to be the next big financial story. -- Kurt Guntheroth John Fluke Mfg. Co., Inc. {uw-beaver,decvax!microsof,ucbvax!lbl-csam,allegra,ssc-vax}!fluke!kurt