USA Today poll reveals threat to banks : LUSENET : TimeBomb 2000 (Y2000) : One Thread

A question on the recent USA TODAY/Gallup phone poll has been commented on fairly little in reporting on this poll -- the question on individuals' plans to withdraw cash from bank accounts before 2000 (16% answered affirmative). In some reporting of the poll results, this has been left out altogether.

It's debatable how much meaning you can draw this type and size (~1,000 persons) poll, but the following interpretation is unsettling (understatement!) (There is no URL for this; apologies for the length.)

------------- The following is a free Y2K alert + analysis from Y2KNEWSWIRE ____________________________________________________________

USA TODAY POLLS REVEAL THREAT TO BANKS [News] USA Today proudly announces, "Y2K bug fears subsiding," quoting from a poll that indicates only 35% of those polled expect "major problems" compared to 48% last June.

Story details at:

BUT WHAT'S THE REAL STORY? [Commentary] But the headline belies the right story. There are only two ways rational people reduce fear: they either see evidence of Y2K repairs being completed or they reduce fear by getting prepared. And what we're seeing in this case is a dramatic *increase* in the number of people planning to undertake major preparations. (Poll numbers quoted below...)

It's also important to note there are two categories of questions the pollsters asked here: 1) Questions about personal preparedness, which the respondents are highly qualified to answer, and 2) Questions about the general impact of Y2K on society, which the respondents are almost universally not qualified to answer.

Once you realize this, the poll responses start to take shape. On the answers the public is least qualified to answer, the picture shows that Y2K fears are subsiding. But on the answers the people are qualified to answer, it shows that things are headed into the danger zone. We'll explain in great detail why this is true. Keep on reading...

THE WILD GUESSES On the questions the poll participants are not qualified to answer, their answers still reveal a trend toward concern. The USA Today headline mentioned only one statistic. There are many others that paint a different picture, such as:

* 16% of the general public is now "very concerned" about the Y2K problem, compared to only 7% a few months ago (taken in a different poll)

* Over 1/3 think the Y2K problems will last for several months. Another 1/3 think the problems will last several weeks.

* 6% of the respondents now believe Y2K will result in disasters that could cause loss of human life (a few months ago, almost nobody believed this. A year from now, everyone will believe it.)

* 25% think Y2K will seriously affect the U.S. economy in a negative way

.. but as we've pointed out, these numbers are all but worthless. No member of the "general public" is qualified to provide meaningful answers about what will happen to the world when Y2K hits. Even the best "experts" agree that the end result is largely unpredictable. In addition, the opinion of the public has rarely been a reliable gauge of what will happen in large, complex, unprecedented situations.

THE IMPORTANT ANSWERS But there's a part of the USA Today poll that *does* provide meaningful information. And when you look at this information closely, you realize how little the public really understands Y2K. That's because their own answers of what they're going to *do* about Y2K contradict their wild guesses about what those actions will *cause*.

Here's the best example: the poll revealed that 16% plan to withdraw ALL their money from the bank. 31% plan to withdraw and set aside a "large amount" of cash. While previous polls have revealed similar plans from people in the information technology industry, this poll shows that not only is the general public planning on withdrawing their cash from the banks, it provides numbers that, if followed, would without question deplete the entire banking system of its cash. Bank runs and bank holidays would likely follow.

Here's how the numbers work out: the banks currently hold approximately $44 billion in cash reserves. This is reportedly going to be shored up by the Federal Reserve at some point in 1999 with up to $200 billion in cash reserves that they claim to have set aside.

Banks currently owe depositors approximately $3.7 trillion. That's money the banking customers have deposited with the banks. The USA Today poll reveals that 16% of the customers plan to withdraw ALL their cash. 16% of 3.7 trillion is $592 billion.

In cash.

Look at the numbers again: the banks have $44 billion. The Fed has an extra $200 billion. The people want $592 billion. But the banks don't have it.

THAT'S NOT THE END OF IT, THOUGH This is only considering the 16% who said they would take out everything. What about the 31% who said that would withdraw and set aside a large amount of cash? What impact might this have?

While it's difficult to put a number on such vague statements, we'll suppose that $2000 is a "large amount of cash" for the average American household. You can run the same calculations with $1000 if you wish: the results still lead to massive bank failures.

If 31% of the 100 million households each withdraw $2000, you'll need another $200 billion in cash. While there's some overlap here with those in the 16%, we're still talking about hundreds of billions more in U.S. currency than exists on the entire planet. (Less than $400 billion in U.S. currency is currently in circulation around the entire world according to Federal Reserve estimates, and only about 1/3 of that is in the United States.)

WHY HAS THIS CONCLUSION SLIPPED PAST EVERYONE? The polls are now nationwide news, but the conclusions we've just demonstrated here are only being pointed out by a handful of people. If the people answering these polls are to be believed, their actions will, without question, deplete the entire system of cash. The banks and the Fed are going to have to come up with a solution here, and there are only a few months remaining.

Think about this: to run a nationwide poll that concludes people will withdraw *at least* $600 billion in cash from a system that currently only holds $44 billion, and then to print a headline that claims fears are subsiding completely sidesteps the important point here. It is time to ask that question: what will the banks give people when they run out of cash?

THE REAL HEADLINE Had USA Today considered the obvious ramifications of the poll results, the headline *should* have been this: "Y2K To Collapse Banks." Of course, this would have been *far* too frightening for the general public to handle, so a positive headline was chosen instead. Nevertheless, the underlying truth still exists. We are now facing a monetary crisis of unprecedented proportion. Our current banking system has never been faced with a global, simultaneous forced conversion of the money supply to cash. These things aren't supposed to happen in a stable economy, and the fractional reserve nature of the banking system simply wasn't designed to deal with this event.

Make no mistake: the banking system as we know it will soon be history. It *must* undergo radical changes to survive. The USA Today poll numbers demonstrate this with uncanny clarity. It doesn't necessarily mean you'll lose any money, it just means you might find yourself using electronic money at some point rather than cash. Cash obligations are quickly becoming a deadly liability to banks. But in the turmoil, nobody really knows what might happen. That's why other people are taking their cash out: just in case.

Remember, on the questions the poll participants are most qualified to answer, (that is, what will they DO) they've indicated they will collectively bankrupt our current banking system. This is no longer mere speculation. The public has spoken, and they have said they will bankrupt the system in their desire to withdraw their cash.

Y2KNEWSWIRE has predicted the Federal Reserve will not allow this to happen. It can't allow it. Cash will somehow have to be restricted, rationed, or made illegal. The mass conversion to cash will be halted, and it will happen in the next 12 months.

OTHER USA TODAY POLL RESULTS The poll also reveals that 26% plan to stockpile food and water. This is very encouraging, and it perhaps explains why some fears are subsiding. This number is MUCH larger than what we've seen in the recent past. Now a full quarter of the population is planning on taking action. Once Clinton addresses the nation on Y2K, that number will leap to 50% - 75% of the population. Remember, the Red Cross is now recommending a one-week stockpile of critical supplies, including cash. This recent announcement was a great leap forward in Y2K preparedness progress, because it liberated "preparedness" from the realm of whackos into the mainstream.

As it turns out, the only crazy people are now those who aren't getting prepared.

NOT GONNA FLY Almost half those polled revealed they plan to avoid air travel on or around 1/1/2000. Smart choice.

CONFIDENT THE GOVERNMENT WILL WORK Here's the most fascinating result of the poll: over 2/3 are confident the U.S. government, including all federal offices and agencies, will have corrected the Y2K problem in time.

This is again strong evidence the general public is poorly qualified to comment on anything other than their own private plans. To see that 2/3 of the people actually believe the entire federal government will operate without a hitch is to understand how little these folks really understand about Y2K. For the record, the federal government continues to award *itself* a failing grade on Y2K progress. Several agencies won't be finished until 2002 or later, and even the best-prepared agency, Social Security, won't be finished until June of 1999. And it's been working on the problem for two years.

There's really no question here: the federal government will experience some Y2K-related problems. Perhaps large ones. Two-thirds of the general public are going to find out they were wrong.

KOSKINEN SPEAKS ON RAILROADS Y2KNEWSWIRE applauds Koskinen for his remark on the railroads, as printed in the USA Today story. He says, "We are deeply concerned about the railroads. We have no indication that they are going to make it."

This takes real courage. The view of most people trying to put a positive spin on Y2K has been to say, "We have no indication that 'x' might fail, therefore you should trust that it works."

This is an incorrect stance on Y2K. By default, all systems must be considered suspect until they are proven compliant. You do not trust a software package or hardware system until it has been proven it will work. Koskinen has taken the *correct* line in describing the situation with railroads: we have no evidence they are going to make it.

That's a sobering quote, especially coming from John Koskinen, who is perhaps best known for claiming that the federal government will have little or no Y2K-related problems.

But again, USA Today doesn't take this to its logical conclusion. What exactly does it mean to the country if the railroads don't work?

Read our "Circle of Dominoes" report to get a hint of this:

Bottom line: if the railroads don't operate, power is in serious trouble. Industry is in serious trouble. The economic health of the nation would be threatened. USA Today goes so far as saying, "If railroads are forced to slow down so automated functions can be carried out manually and to provide a greater margin of safety, then a broad cross section of the economy, from heavy industry to fresh foods, could be affected."

Notice something CRITICAL in that paragraph: it assumes the trains can be run manually.

This is another common Y2K myth. Y2KNEWSWIRE has already established, with plenty of evidence and expert testimony from railroad veterans, that the trains cannot be run manually at anywhere near the efficiency and safety level now achieved on a daily basis in the railroad industry. The problem lies in the switches. The track switches are controlled by computers, and the manual levers used to switch the tracks have long since been removed. The only way to switch the tracks manually is to take a crowbar to it, and even then, you risk derailing the train.

Then there's the communications issue: how do you tell the people with the crowbars *when* to switch each section of track? How do you coordinate the shared use of rail track without computers?

This issue alone is worthy of an entire issue, but USA Today assumes the problem doesn't even exist. Like most people, the author, M.J. Zuckerman, assumes railroad tracks can be operated by hand.

Nevertheless, we still support his coverage of the issue, and the article was indeed very informative. However, as we've shown in the alert, there are several points not covered by the author that are crucial to understanding Y2K. Those include items like:

* If 16% of the people withdraw all their cash, this is three times more than necessary to deplete the national banking system of its cash

* The railroads cannot be operated manually

* A full quarter of the population is now planning to stockpile food and water

* Koskinen is now stating there is no evidence that railroads will make it

These points, if studied carefully, overshadow the rest of the story. Without trains, for example, coal doesn't get to the power plants. Without power, nothing else in our civilization really matters much. With no power, it's not even meaningful to talk about the "impact" on the U.S. economy. There would be no national economy to impact.

AREAS THAT NEED WORK Obviously, as this story and poll results reveal, we are in serious trouble in at least two important areas: the banks and the railroads. And while railroads need to work on their internal compliance, such a status won't matter much to banks. The public's desire to withdraw cash will render the internal compliance of banks absolutely meaningless.

Change is definitely upon us now, and the one-year countdown begins. (

-- D B Spence (, January 02, 1999


Oops. (quoting from above) "even the best-prepared agency, Social Security, won't be finished until June of 1999. And it's been working on the problem for two years." [sic]

I think they meant to say *ten* years. They've been working on it since 1989, is my understanding.

-- D B Spence (, January 02, 1999.

from c.s.y2k Paul Milne post 12/31/98:

The phone survey of 1,032 people was taken Dec. 9-13 and has a margin of error of plus or minus 3 percentage points.

About a sixth, 16 percent, said they will withdraw all their money from the bank and 31 percent said they plan to withdraw and set aside a large amount of cash.


If 16% actually did withdraw all their cash, it will undoubtedly spark bank runs. And those ohter 31% standing there in line while the other 16% are pulling it ALL out will very quickly be pulling ALL of theirs out.

I related a couple of months ago how my mother-in-law went in to liquidate her entire account and the bank could not give her her money. They told her to come back in two days when they would have the cash. This was not some cardboard box local branch.

This poll indicates that over 50% intend to withdraw all or substantial portions of their deposits. The banking system will not be able to handle it. It will hit the news and panic swill erupt. The amount of extra cash being printed amounts to only $250 per person. Out of those 50% who have said they will withdraw all or a substantial amount, I have to believe it is more than $250. The banks will not be able to hold up. Period.

So you go ahead and play 'good little citizen' and leave yours in for the good of everyone else. But all the rest will be lined up while you are home and everything you worked for your whole life will vanish.

No skin off my nose. The one thing Y2K 'WILL' do is weed out the morons. OH, and it won't be 'last one to the bank is a rotten egg'. It will be 'EVERYONE BUT THE FIRST' one will be the rotten eggs. It is like a footrace. There is only ONE winner. The first one across the line. The rest LOSE.

It does not matter why the panics will occur.

It is like John Wayne said as he played 'Big Jake'. "Your fault, my fault, nobody's fault at all, you'll be just as dead."

And just remember, when Dan Rather describes the bank run that begins in Pukeweasel, Michigan; all the nice people will just sit on their butts and do nothing, right?


It will be a free-for-all.

But, the few people who liquidated out and forwent that HUGE 3% interest for a a few months, to be on the prudent side, will sleep well. They know that if nothing materializes THEY HAVE LOST NOTHING AT ALL.

No matter what happens, they have the 100% assurance that they have everything that belongs to them INTACT. No ifs, ands or buts. If the assurances that banks will hold up intact are correct, they have lost NOTHING. In ANY case, they are 100% safe. They do not have to rely on 'assurances'.

Only an abject idiot would risk what he has in the bank under these circumstances.

Now, will the infinitessimal minority that liquidates their accounts in advance spark or CAUSE a bank run? ROTFLMAO. In NO way. They will be a tiny tiny fraction of 1%. It is when the herd begins to move towards the banks and panic that the runs will begin. It will be the HERD that causes the bank runs, not the infinitessimal minority that gets out first.

The bank runs WILL occur. The only question is whether you want to be a part of the runs or you want to sit back and watch them on CNN, laughing your '*ss' off, while they panic. -- Paul Milne If you live within five miles of a 7-11, you're toast.

-- a (a@a.a), January 02, 1999.

CNN Today (Yesterday) Bankers Putting in More Than Bankers' Hours to Combat Y2K Crisis Aired January 1, 1999 - 4:12 p.m. ET



LOU WATERS, CNN ANCHOR: There's less than a year now until the much- anticipated Y2K -- as it's called -- computer glitch happens, or does not happen. With banks relying so heavily on technology, is it time to close your account and stuff your cash in the mattress?

CNN's Rick Lockridge tells us how banks are working to keep your money safe.


RICK LOCKRIDGE, CNN SCIENCE CORRESPONDENT (voice-over): Ringgold (ph), Georgia. A picturesque main street, a wedding chapel, the Northwest Georgia Bank. Like all banks, large and small, NGB survives because customers are willing to trust it with their money. No bank can afford to risk that bond over the Y2K or year-2000 computer problem.

LADON BANDY, NORTHWEST GEORGIA BANK: You know, to us, probably one of the worst things that could be would be a run on the bank, where everybody -- "I've got to have my cash."


LOCKRIDGE: This pile of loot may look impressive, but banks say they generally keep a relatively small amount of cash on hand; not enough to handle a large number of panic withdrawals. That's why banks are making such an effort to publicize their progress on the Y2K problem.

SCOTT TALBOTT, BANKERS ROUND TABLE SPOKESMAN: As of the last round of examinations, 94 percent to 96 percent of banks received a satisfactory rating, which is the highest rating you can receive on Y2K. Banks have taken an aggressive role in addressing the Y2K

LOCKRIDGE (on camera): Including this full-page ad in "USA Today" by the American Bankers Association, which says: "Your bank is working now to keep your money safe tomorrow."

(voice-over): At Northwest Georgia Bank, software testing is under way to identify any computers likely to be victimized by the year-2000 date-recognition flaw.

UNIDENTIFIED MALE: This system currently supports the year 2000.

LOCKRIDGE: The bank's mainframe, which handles all major transactions, has passed all of its tests so far. Loan payments and check-processing look to be OK, but some ATM software needs to be upgraded, and other complications are still revealing themselves.

BANDY: Well every day's a school day; we learn something new every day.

LOCKRIDGE: If you'd feel better with cash on hand, bankers say you should keep it in a safety deposit box at the bank, and not in your house.

Rick Lockridge, CNN, Atlanta.


WATERS: And for more on how the Y2K problem could affect you, and what's being done about it, tune into our special: "COUNTDOWN TO THE MILLENNIUM BUG." That's later today: 5:30 p.m., and again at 10:30 p.m. Eastern time.

-- Diane J. Squire (, January 02, 1999.

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