Ed Yourdon wrote a Computerworld article on the problem entitled Data Corruption: The Silent Y2K Killer. Gary North calls it "the biggest unsolvable problem of the y2k challenge".

Here's Yardeni's view:

This is the likelihood of what will happen in the year 2000. The information may still actually be available, but it will be contaminated. It will be corrupt. I can't tell you how many chief information officers I've spoken to over the past year or so who had this as their number one concern that they will spend hundreds of millions of dollars fixing their own system.

And then come January 1, 2000, some systems 50 degrees of separation away will send some contaminated data that will ultimately wind up passing through their system, and information will be filed in the wrong place because of the lack of coordinating the fix of the year 2000 between the systems, and then you're still going to have one heck of a problem.

Finally, Joel Willemssen testified:

Examination of data exchanges is essential to every Year 2000 program. Even if an agency's--or company's--internal systems are Year 2000 compliant, unless external entities with which data are exchanged are likewise compliant, critical systems may fail.

I have yet to see a solution to this problem, yet it gets little attention. When Pollies say Y2k will be, at worst, a "3-day storm", they either fail to understand, or they completely ignore, this crucial issue.

-- Steve (hartsman@ticon.net), December 25, 1999

Answers

I should add that International Monitoring has called this problem "Herstatt Risk", labelled it "the largest Y2K risk threatening institutional banks at the international level", and released a "secret" 44-page report detailing the risk. This report was so "secret" and "sensitive", that it was thought best not to discuss it at a recent Senate hearing.

The media, meanwhile, ignores this problem as well...

-- Steve (hartsman@ticon.net), December 25, 1999.

Check out my "VISA is toast" thread, and follow ups, under Banking...

This is the "embedded chip" problem, if you will, of the Banking system of systems. It has been largely ignored, just like the embedded problem.

The reason?

There are NO effective firewalls which can detect corrupt data. NONE. Cannot be done.

The ***ONLY*** way to protect a system from incoming corrupt data (which will then be data processed, modified (naturally) and then returned, filed or sent on it's merry way to some other schmuck in a more corrupt state) -

Again,

The ***ONLY*** way to protect a system from incoming corrupt data is ISOLATION...

And if yoy do THAT you have no Banking syste. Period.

Hence the denial and tight sphincters of all in the payments industry.

-- Andy (2000EOD@prodigy.net), December 25, 1999.

Andy, I remember that thread. Do you have the link?

-- Steve (hartsman@ticon.net), December 25, 1999.

Constant backup and an army of clerks?

-- Mara (MaraWayne@aol.com), December 25, 1999.

Steve

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000FMj

-- Andy (2000EOD@prodigy.net), December 25, 1999.

Is this The Tower Of Babel in the bible? All the computers not being able to talk to each other.

-- Mr. Pinochle (pinochledd@aol.com), December 26, 1999.

Steve of the underworld, Herstatt risk refers to something else, a purely financial thang, although I can see how imported data problem could bring it about. You are, though, correct to remind us of this particular huge y2k problem. Mr. Pinochle could be right.

-- number six (!@!.com), December 26, 1999.

Perhaps I misinterpreted IM's definition of Herstatt risk, but it seems to me to boil down to the same issue: the inability of computers to exchange data.

-- Steve (hartsman@ticon.net), December 26, 1999.

"Herstatt Risk is named after the German bank whose closure, in 1974, occurred after it had received Deutsche marks due to it on FOREX trades, but before the corresponding dollar amounts were paid in the United States. One result was a temporary but severe disruption of payments across the CHIPS payment system; for the next few days banks withheld payments, resulting in a chain reaction of other payments not being made." [P. 12]

Don't know whether this clears things up or not.

142 1/2 hours...

-- counting down (the@hours.now), December 26, 1999.

You saw a prime example of what I'm talking about two or three weeks ago when Deutchebank went down for 24 hours after loading bad y2k code. to me knowledge that code has not been relaoded and we have 5 days to go.

They are cutiing it very very fine. What's German for kamikaze?

It was not pretty - neither was the fallout which was cleaned up manually by back office crews.

When y2k hits there will be potentially thousands of similar situations hitting at the same time.

-- Andy (2000EOD@prodigy.net), December 26, 1999.

As soon as most of the electronic money in the US is wipped out by the Y2K bug (lost in the crashed banking/financial systems, never to be seen again), the US can go back to a Gold Standard. The ratio of electronic dollars to US gold is currently...oh, 100,000,000. to 1? (An uninformed guess there, as to the ratio.)

After most of the electronic dollars are wipped out by the Y2K bug, the US will be in a position to back the dollar by 20%? gold. This will remedy the huge looming financial problem (should Y2K be painful) of maintaining foreign investment in the "new dollar".

The euro being backed by gold is the #1 problem (IMHO) the US financial system faces early in 2000. Ironically, Y2K may turn out to be the "fall guy" for Greenspan, who indeed has "a plan" to weather any Y2K induced storm.

Just my 2", FWIW.

-- GoldReal (GoldReal@aol.com), December 26, 1999.

Hi Goldreal,

you are assuming we have gold in Fort Knox...

check out the recent articles on this at gold-eagle.com...

-- Andy (2000EOD@prodigy.net), December 26, 1999.

link at

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0026Qj

Gonna ramble a bit here, but there is much to discuss. What is sticking in my mind are some of the comments made to R. Reagan's GRACE COMMISION in the 1980's. The Commission members interviewed the leading financial experts and government finance personalities in many of the South American countries. When the Commision asked, "How long did it take your economy to go from a state of normalcy to hyperinflation?" the answer was, "One week".

"One week", think about it! We have just gone through an 18 year bull market for bonds and stocks. Commodity inflation has not been much of a problem during this period. In fact commodity prices have been remarkably stable in spite of record money creation by the Fed and the banking system. They have been stable dispite the fact there exists a massive and rapidly increasing amount of $US currency in circulation throughout the world. It even more remarkable that commodity prices have remained under control given the enormous float of counterfiet currency in circulation (estimated at between 10-20% of the total currency float).

The commodity complex has been a relatively unattractive investment compared to bonds and equities over the past 2 decades. The lack of investment/speculative interest can partially explain this lackluster performance as can the disinflationary policies of the last real central banker, Paul Volker. Manipulation is one other means of suppressing prices. The commodity complex has recently been showing signs of life while also giving us glimpses of a massive secret campaign to keep commodity prices in check. The best illustration is the blatant manipulation of the gold market. (please refer to www.lemetropolecafe.com for detail). Last week it was disclosed that in an attempt to keep the price of palladium in check (a price increase of any precious metal will spill over into the others) the US Government has liquidated virtually its entire stockpile of this very strategic metal. Now Russia remains virtually the lone supplier of palladium to the world market. Incredible!

No doubt the same powers are working overtime to keep the oil complex in check. It is a losing battle IMHO and this is being reflected in the bizzare behavior and statements being made by Richardson, Clinton and the rest. In fact, they have already lost the war (how do you fight a insoluble computer design error?) we just don't know it yet.

Indeed, I believe the Y2K problem will be the tripwire that releases the shackles from commodity prices and ushers us down the nasty and demoralizing road to hyperinflation. It will most likely start in the oil complex and rapidly spread to all other real commodites. This process should start within the next three weeks and keep going for years. Remember, it took the SA countries only 1 week to go from normalcy to hyperinflation.

Why? It is so simple. The lack of energy and a breakdown in the JIT process will severely impare our ability to create and process/refine new supplies of commodities. The exisiting stockpiles instantly become very very valuable as future deliveries are suspect. If your orginazation intends to remain in existance, it must stockpile all necessary supplies IMMEDIATELY. No choice in this matter! Add to this the incredible amounts of bank created funds and currency in circulation , what will stop this great price expolsion?

So as a civilization here we sit, going into the last year of the millenium largely ignorant and complacent about the economic ramifications of Y2K. We are in love with our grossly inflated paper assets and all the toys (SUV's etc.) they bring us. Things are so good, we cannot imagine bad times and we will not listen to any objective voices of caution. Technology has served us incredibly well and of course we humans have complete control over our high tech! - or do we? Boy are things going to change - and fast!

Likes: 1. gold coins 2. junk silver coins 3. 2-4 week deposits 4. Unhedge gold producers and junior golds 5. Commodity based companies

Dislikes: 1. bubble stocks (the whole high tech complex) 2. deposits and bonds with a maturity of greater than 1 month

More than anything else, I believe that liquidity is your friend.

"A commodity in hand is infinitely more valuable than a promise to deliver." Y2K mantra

-- Andy (2000EOD@prodigy.net), December 26, 1999.

Hi Andy,

Indeed I am clueless as to how much gold the US has.

Still, what goes great with financial disaster? A war, of course! (In other words, if we don't have gold now, we'll take it by force later, just like we do oil.)

-- GoldReal (GoldReal@aol.com), December 26, 1999.

If so the war will no doubt be over oil...

-- Andy (2000EOD@prodigy.net), December 26, 1999.

Yugoslavia comes to mind. No oil there. Lots of gold though.

-- GoldReal (GoldReal@aol.com), December 26, 1999.

Saw this on Kitco and it fits this thread - in other words AG and Co. realise cascading banking defaults are likely...

crazytimes (Greenspan pumping the bubble......) ID#351368: Copyright ) 1999 crazytimes/Kitco Inc. All rights reserved It appears that Y2K will cause liquidity problems with money being "stuck". If so, then he may have been right to pump up money supply. I read an analogy of the present economy as a ship that needs to speed up to get past a huge sand bar ( Y2K ) dead ahead. If the ship speeds up, it could make it past the sand bar without being stuck. Perhaps that will prove to be a useful analogy. What I do blame Greenspan for is the creation of this huge bubble and doing nothing about it for years. For that, he should be blamed. If Greenspan gets off the hook because Y2K will be blamed for the eventual bursting of this bubble, he should be made to eat hundred dollar bills until his stomach bursts. Now that's karma!

-- Andy (2000EOD@prodigy.net), December 26, 1999.

But there's mucho oil in Chechnya...

-- Andy (2000EOD@prodigy.net), December 26, 1999.

Of course, Plan A is to get through this "bitr". However, if it's more than a bitr, then what? Plan B, of course. (Plan B is what I am speaking of in my above posts.)

-- GoldReal (GoldReal@aol.com), December 26, 1999.

Yes, and so is Russia. How ironic.

-- GoldReal (GoldReal@aol.com), December 26, 1999.

Yes I realise that, the Chinese are also eyeing what's just over the border...

The USA is eyeing Mexico and Venezuela...

-- Andy (2000EOD@prodigy.net), December 26, 1999.

We already "control/influence" those two governments.

I can't help but notice the common denominators of our last two wars:

1) Oil

2) Gold

In each case, we established (or reestablished) a direct ability to influence foreign government policy that will be "friendly" to the US.

No coincidence, IMHO.

-- GoldReal (GoldReal@aol.com), December 26, 1999.