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From: wmartin@brl-tgr.ARPA (Will Martin )
Newsgroups: net.invest,net.misc
Subject: "World Banking Crisis" -- what is it?
Message-ID: <11154@brl-tgr.ARPA>
Date: Thu, 30-May-85 11:50:25 EDT
Article-I.D.: brl-tgr.11154
Posted: Thu May 30 11:50:25 1985
Date-Received: Sat, 1-Jun-85 10:55:28 EDT
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Xref: linus net.invest:623 net.misc:6540

I just watched the PBS "Frontline" program on the Continental Illinois Bank
debacle and federal bail-out. (This was aired locally [St. Louis] on Tuesday,
28 May.) It was an interesting and informative program, but there was one
aspect that was infuriating. Repeatedly, throughout the program, it was
stated that Continental was saved by Federal intervention (and extraordinary
measures taken to protect the depositors; more than was done for those at
Penn Square Bank in OK, for example) in order to prevent a "World Banking
Crisis". This phrase was repeated over and over. It was never defined.

What, pray tell, would happen in a "World Banking Crisis"? What possible
scenarios would occur? (I assume that more than one possible situation
might evolve.) Just how would this affect the small depositor in the
US, those covered by FDIC? (Yes, the FDIC can't handle a mass failure
of many banks, but how many would actually "fail" versus just having to
cut executive perks and turn off the fountain in the lobby?)

Are we speaking here of a repetition of the '29 crash? Or would the stock
market not be directly involved? (If a general bank failure would dry up 
credit sources, of course the stock market will drop like a rock, but that's
an indirect effect...)

I mean, does a "World Banking Crisis" mean mobs rioting in the
streets and mass starvation, or does it mean that a few hundred people
now earning $350,000/yr will lose their jobs? (In the latter case, I might 
be in favor of having one...:-)

Will Martin

USENET: seismo!brl-bmd!wmartin     or   ARPA/MILNET: wmartin@almsa-1.ARPA