BACKGROUND PAPERS FOR PEPAB

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001102640011-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: March 15, 2007
• Sequence Number: 11
• Publication Date: September 7, 1982
• Content Type: MEMO

Approved For Release 2009/04/01 : CIA-RDP84B00049RO01102640011-5
ROUTING AND RECORD SHEET
SUBJECT:
(Optional)
Background Papers
for PEPAB
FROM:
1
EXTENSION
NO.
Maurice C
Ernst
~
.
NI0/Econ
0
DATE
7 September 1982
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
RECEIVED
FORWARDED
INITIALS
to whom. Draw a line across column after each comment.)
1.
2.
3.
7.
9.
10.
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11.
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 Approved For Release 2009/04/01 : CIA-RDP84B00049RO01102640011-5
THE DIRECTOR OF CENTRAL INTELLIGENCE
WASHINGTON, D.C. 20505
DDI #7226-82
National Intelligence Council 7 September 1982
MEMORANDUM FOR: Director of Central Intelligence
FROM: Maurice C. Ernst
National Intelligence Officer for Economics
SUBJECT: Background Papers for PEPAB
1. Attached is some material for you on the international financial
issue that you may want to read before the PEPAB meeting. I particularly
recommend article on the LDC cash flow crisis, which does a
good job showing how the big recent increase in LDC short-term debt has
greatly increased their vulnerability to a weakening of bankers'
confidence. When confidence flags, the relevant consideration is not the
traditional debt service ratio on long-term debt, but rather the total
amount of debt coming due, plus interest.
2. Walter Wriston's piece on international lending appears to me a
bit too sanguine. it largely ignores the entire issue of systemic risk.
Moreover, it does not consider the short-term debt problem, which, together
with the big increase in interest rates, is the main source of LDC
difficulties in the past two years.
3~ drafting our own paper, but has little in
shape to show you at this time. I have attached some hypothetical
scenarios for financial panic that prepared for the interagency study
chaired by Treasury that is also un er way. These are admittedly extreme
cases, but some, in particular debt repudiation by Argentina, or as part of
a broader borrowers' revolt, are within the realm of possibility.
Maurice C. Ernst
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Attachments,
As stated
 Approved For Release 2009/04/01 : CIA-RDP84B00049R001102640011-5
DDI #7226-82
7 September 1982
SUBJECT: Background Papers for PEPAB
DCI:NIO/Econ
Dist:
Orig - DCI (w/atts)
1 - DDCI (w/o atts)
1 - ExDir (w o atts
1 - SA/IA - (w/atts)
1 - ER (w/o atts)
1 - DDI Registry (w/o atts)
2 - NI0/Econ (w/atts)
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Approved For Release 2009/04/01 : CIA-RDP84B00049R001102640011-5