Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Stock Farmer who wrote (4959)	6/15/2001 9:10:10 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 74559

Saving LTCM was all about counterparty risk. The issue we have today is how nutsy interrelated the whole thing is. Add the instant communication of the internet and we are sitting on a tinderbox. Imagine what happens if the Forty Second bank of Albequerque suddenly folds because of a runaway hedge on olives. No big deal on its own. Maybe a day of inconvenience for the folks in Albequerque who can't withdraw any money until the FDIC arrives to save the day. But what about the exposed counterparty risk now that the Second Unknown Bank of New Mexico faces on its pimento futures? Or The Last Bank of New York with its bet on continued consumption of vermouth. The whole 3 martini lunch thing could unravel in a flash. Not to mention what happens when AlbequerqueTattler.Com posts a story about bank collapse due to an olive virus, (that fails to mention the name of the bank), gets picked up by a routine search bot and sent out as a flash warning amongst the computer virus warning community. Sparking a run of the most unimaginably instantaneous kind. Oooh... I don't like this scenario. But it might make a mediocre plot for some novel co-authored by Tom or Clancy or somebody of that nature. Anyway, how I see it, the Fed's got no choice but to keep the banks afloat. All of them. John.