cross cascading bank defaults seem to be the most likely cause of the Gary North scenario.It seems quite convienent that Koskinen and his ilk always forget to mention the way banking is international and interconnected.

-- zoobie (zoobiezoob@yahoo.com), August 28, 1999

Answers

Hey, zoobie, thanks for the food for thought. I have always wondered about interconnectedness myself and would love to hear why I can 'rest assured' when the date rollover comes with regards to this particular issue. Moreover, is this another one of those non-verifiable, 'just take my word for it' situations?

Lastly, the cascading effect is an even more worthwhile issue when one stops to think about foreign banking systems. Since it is a given that the rest of the world is behind us, how reliant are we upon their economies and banking systems? And will January 1st be the true 'date with destiny'?

regards.

-- Bad Company (johnny@shootingstar.com), August 28, 1999.

zoobie,

I have come to the sad conclusion that the majority of people can not be taught to understand what a cross-cascading bank default system is no matter how many charts you drew or witty analogies you came up with.

Perceiving the level of interconnectedness in the banking industry requires a certain kind of intellectual skill which is all but eradicated in the curriculum of public schools. Critical thinking is shunted aside in favor of rote learning. Meanwhile the media caters to short attention spans and plays upon fears of social rejection.

I suspect that Koski could start blathering about cross-cascading bank defaults from the highest mountain and the response would be a collective "Hunh? Whadid he say? Crossing the Cascades is the banks fault?"

-- R (riversoma@aol.com), August 28, 1999.

Had asked this same question at our local so-called "Y2K Town Meeting": "Why are cross cascading bank defaults out of the realm of possibility?"

The local bankers couldn't even understand the concept.

Interconnectivity was totally glazed over. They swore up and down they were "compliant, tested and ready".

When I asked them how they were going to process a check from one of my clients from Germany post Jan 1 - if the Deutche banks were down, they simply said "The same as we always do".

I said, "No you don't understand. The Federal Reserve rep Jeff Dale had stated in his presentation that the foreign financial systems were behind in remediation. If my client's bank in Germany has their systems down or data corrupted, how are you going to be able to receive payment on that check?"

They couldn't answer the question. Basically, the answer is NO. Which means Y2K will DEFINITELY affect me and my business.

But it got worse from there. After they "Officially Adjoruned" the meeting, sending the townsfolk home before I could finish asking the questions I had, I had a heated discussion with Jeff Dale from the Fed about cascading cross defaults.

He said that was a "Non-existant issue, because EVERYONE in the world is working on it. They have too much to lose to allow it to collapse."

I said, "Not according to the most recent State Department documents on overseas banks", wherin I showed him the State dept. report. he laughed and said they "Didn't know what they were talking about". he said they had already "tested" with their foreign bank partners and everything was just fine. They were almost 99% ready he assured me.

I told reminded him about his boss' (Greenspan) admonition that 100% of the system must work, that 99% won't cover it, the whole system would eventually collapse in cascading cross defaults.

He laughed out loud and called my assertion "misguided". "1% of the banking system, if it's not ready is not going to cause a collapse of the rest of the system. We won't allow that to happen, we have families to support."

"If needed, we will go to pencil and paper and conduct business if that 1% fails." he said smugly.

To prove what an idiot he was, I asked him "How many transactions are conducted each day in just the United States?"

He said he wasn't sure, but he had heard 'about a trillion'.

I asked him what was 1% of 1 trillion.

He said he "Didn't know", (This is the represenative from the federal reserve, and he DIDN'T KNOW?)

"Try a billion" my brother offered. "Is it humanly possible to conduct a billion manual transactions? Do you have the manpower?"

He shrugged us off with "We aren't going to allow that to happen, you are just a couple of paranoid worry-warts."

Yes, the spin campaign by these morons is amazing.

They are like musicians on the deck of the Titanic, playing soothing songs to keep the crowd sedate. When the crowd wakes up and realizes that the ship is sinking, it will probably be right when the ship breaks in two and goes under.

Many will be lost in the process.

These "officers" will be responsible for millions of ruined and possibly lost lives.

Let's never forget that.

-- INVAR (gundark@sw.net), August 28, 1999.

INVAR,

Ummm... was your brother trying to be excessively helpful and optimistic? I thought that 1% of 1 trillion was TEN billion, not one billion.

-- Ed Yourdon (HumptyDumptyY2K@yourdon.com), August 28, 1999.

No Ed, actually I was being the optimistic one.

My brother actually first pointed out that 1% of a trillion was ten billion.

Mr. Dale's eyes glazed over and said "It's less than that I think".

Then I asked him, "Okay, what about just a billion?"

"Is that even humanly possible?" my brother asked.

Obviously it isn't. Dale's answer was (paraphrased) "Our job is to make sure that doesn't happen, and it won't because we won't let it."

"Keep your money in the bank where it's safe. Scams are a much bigger threat to your money than Y2K is."

That was echoed by the State Police rep.

It's almost as if these guys are carnival barkers anymore.

-- INVAR (gundark@sw.net), August 28, 1999.

INVAR, thanks for illustrating to me that my fears are basically reality....that the 'just trust us' approach is standard operating procedure these days. From my spot on the fence in this issue, I am summized that this is where the true test will take place: the spot where corporations, etc inherently MUST do business with their dreaded, lax foreign counterparts.

And from where I sit, no flowery answer will suffice when the question is applied to the energy conglomerate. Does anyone really know what will happen if an energy supplier's colleagues in 'grid-dom' don't all have their respective acts together. Once again, it seems that the average citizen is told that it's all being taken care of, but...

I tend to look at things optimistically with regards to y2k and feel that to avoid an ulcer, I simply must believe that foresight and professionalism have been embraced by the corporate and governmental geniuses doing the overseeing of these issues. But it would be folly to say that everything is going to go smoothly, and if the cascading effect digresses from there, even the most ardent optimist must be forced to wonder just how many dominoes will fall in succession.

Regards.

-- Bad Company (johnny@shootingstar.com), August 28, 1999.

Do you think that "cross cascading defaults" will work in a similar way with the gas/oil industry? How long after the first before we run out of oil if the refineries arene't working and /or we stop getting crude (provided the power stays up of course!)?

-- Valkyrie (anon@please.net), August 28, 1999.

R,

"Crossing the Cascades was the banks fault?" LOL!

-- Leslie (***@***.net), August 28, 1999.

Given the actual cash to "deposits" ratio, even if Y2K starts out just as a "1" and people get a little nervous, if you're number 3+ in a line of 100 at the bank to withdraw your cash or even a few thou, you'll be S.O.L. That will cause banking collapse -- or a banking "holiday". Then where will the Y2K scenario go when the public sniffs a problem? The people are no less sheeple nowadays than they were in the 1930s, but I think they are a lot more "testy" than they were then. Yee-Haw!

-- A (A@AisA.com), August 28, 1999.

"As I understand it, Mr. Kemp is simply suggesting we take precautionary measures to provide an anchor for our currency and all the world currencies that wish to link with the dollar in order to simplify financial transactions and record-keeping. The simple fact of the matter is that the global banking network, which not long ago relied on calculators and pen-and-ink ledgers, is now completely reliant on computers. "Money" is now largely electronic. Even if our financial markets are the most Y2K compliant in the world, a breakdown anywhere in this incredibly complex system may feed back to us in ways we cannot foresee or imagine. We need to think through what steps we can take right now to ensure the integrity of this system."

Dan Quayle...

At least one of 'em is a GI...

-- Andy (2000EOD@prodigy.net), August 30, 1999.

INVAR,

You know, if they weren't so pathetic, these guys would be clowns.

Bad Company,

While you're sitting on your fence (on your ass) today, you BEST be getting some food and WATER before TSHTF. Because if you don't, don't come crying to my house, or Faith's or FLAME AWAY's.

Unlike many people out there, you have all the information you need right in front of you.

-- nothere nothere (notherethere@hotmail.com), August 30, 1999.

Actually, Invar, if you take the movie "Titanic" as your source, I think that the musicians KNEW the ship was going down. They chose to "go down playing", as it were.

Like many techs who will hold their desks up till the rollover. My hat is off to them.

-- Jon Williamson (jwilliamson003@sprintmail.com), August 30, 1999.

There's not much wrong in not knowing off the top of your head what 1% of 1 trillion is. I didn't, but I'm just an average citizen who doesn't need to know this everyday.If you'd have asked me, I'd have at least tried to compute it. But it is an incredible show of lack of competence in a rep. of the fed reserve who instead of whipping out his calculator to give the right answer will simply wing it to fit his ostrich-spinner opinion and wishful thinking. I'm more and more convinced that we're sinking simply because of such demonstrated attitude by those "in charge". Wishing my computer to work has never fixed it, no matter how hard I tried. Wishing for the world to be better hasn't worked either.

I wish Dale is right!

-- Chris (%$^&^@pond.com), August 30, 1999.