wrote:
> According to an article by Lynn Arditi of the Providence Journal 1/17/1999
> (http://projo.com/report/pjb/stories/01670831.htm):
> "Bankers want to send the public a message about the Year 2000
> problem: Your money is safe with us -- so please, leave it in the bank!
> "Perhaps more than any other institution, banks have a lot to lose if there
> is anything approaching widespread panic over the new millennium.
> "Bankers know they can't count on survivalists who are building bunkers
> in the woods to keep their money in the bank. But what about the rest of
> us in this generally anxiety-ridden society? What if we all decide to stash
> away some extra cash, 'just in case?' What will that cost the banks?"
> The answer should be obvious: vault cash plus Fed cash reserves (~ $160
> billion) cannot cover more than a small fraction of all the accounts that
> are supposedly redeemable on demand (~ $2,150 billion). Even if the Fed
> expands its cash reserves by $50 billion as promised, there will still be
> less than 10% backing for all the accounts in existence. It won't take
> much "anxiety" to drain the system of every last penny in its possession,
> which of course is a strong incentive for anyone with a modicum of common
> sense to get their cash out now.
> "Nationwide, experts say, banks are among the best-prepared to handle
> the millennium problem, in part because the industry is so heavily
> regulated."
> What data do Ms. Arditi's "experts" have that suggests that the banks are
> prepared? The very same regulators are destroying confidence in the
> financial system by requiring banks to conceal the status of their Y2K
> repairs. If an individual depositor is unable to ascertain for himself how
> well prepared the banks are, or how well prepared other key institutions
> that the banks depend on are (like electric power and telecommunications),
> he may well conclude that the convenience of checks and electronic money
> and the paltry returns earned on savings aren't worth the risk of gambling
> on the uncertainties of Y2K, not to mention the risk of other people
> getting "anxious" about the Y2K risks.
> There is no way around the inherent instability of fractional reserves in
> an environment of uncertainty. In theory, the Fed could print up more
> dollars to bail out the banks, but it could just as easily slap
> restrictions on cash withdrawals. If the public is clamoring for cash, how
> much are you willing to bet that the Fed will satisfy their demands and not
> the contrary demands of the bankers to keep the public's money in the system?
> "A recent USA TODAY/National Science Foundation poll found that 31
> percent of Americans intend to set aside a large amount of cash in
> anticipation of the Y2K problem."
> Which means, of course, that the system is doomed. Anyone who has their
> wits about them will realize that the Fed can't print its fancy new notes
> fast enough to satisfy this kind of demand for cash. If a third of the
> people draw down a third of their deposits, then it is mathematically
> certain that the cash runs out. Long before that happens, of course,
> everyone else will want to join the run, so that virtually 100 percent of
> the people will want to withdraw 100 percent of their deposits. Keep in
> mind that less than 10 percent of that redemption demand can be satisfied,
> and probably a lot less if bank holidays and restrictions on withdrawals
> are put in place.
> Knowing this, the rational thing to do is to get your cash out now *before*
> the 31 percent begin to act on their stated intention. Otherwise, you run
> the risk of not getting your money out at all, thereby losing it or at
> least having it tied up for the duration of a Y2K crisis (when its
> purchasing power could be hyperinflating away).
> "The new money is scheduled to be ready by the end of September."
> What if the withdrawals begin before September? Will $160 billion be
> enough to stem the tide?
> "Consumer groups advise people to keep detailed, up-to-date records of
> all transactions so you can reconcile problems if they arise, and carefully
> inspect all bills and payments due that contain interest or penalty fees,
> such as credit cards."
> And what good are detailed, up-to-date records while your money is frozen
> in the system? You can't use detailed, up-to-date records to buy
> ammunition or canned food.
> "Even if the worst happens and some bank branches or ATMs
> temporarily closed, industry experts say, no one is suggesting that the
> entire U.S. payment system is going to shut down."
> Then let me be the first to suggest that the entire U.S. payment system is
> going to shut down when the grid goes down and the phone lines crash. If
> your average Baby-Bell lineman knows that telecommunications remediation is
> hopeless, and the electric industry in its latest NERC report confesses
> that it is falling behind schedule, then it doesn't take much imagination
> to realize that
> banks that do achieve Y2K compliance won't be able to function. Even
> old-fashioned pen-and-paper checks can't be honored or cleared by paralyzed
> financial institutions.
> Ms. Arditi's quotes from PR flaks from Fleet Financial and BankBoston only
> reinforce the impression that the bankers themselves are beginning to
> panic. They know that their promises to redeem our money on demand are
> fraudulent, and that a simultaneous 10% redemption demand will expose their
> frauds for all the world to see. They look at those 31% statistics and are
> desperately worried that Y2K-inspired withdrawals will turn into a run that
> will absolutely, positively crush the entire system. Now that you know it
> too, there is one simple question you have to answer: how much of your
> money will be a part of the 10% that can be redeemed, and how much will be
> a part of the 90% that is frozen? Will you live dangerously and blindly
> trust the promises of the bankers, or will you play it safe and preserve
> your spending power through the crisis?
>
>
There is not the slightest possibility that global banking and therefore US
banking will remain intact. Not the slightest. The CSC has warned once again
this week that if even ONE foreign exchange bank went down, the costs would
be up to TEN BILLLLLLION the first week alone. There are dozens and dozens of
them that will not make it on time.
Banks go down for a myriad of resons. One is their own complinace. You have
no reason to believe that their assurances of compliance are accurate. I have
personally spoke with representatives of over ten banks that had claimed
compliance only to find that the claims were false. One even admitted that
their 'spokes-person had lied'. If a bank imports bad data from another bank,
it can cause catastrophic problems. If a banks customers go belly up, the
bank has catastrophic problems. If the bank's vendors go belly up, the bank
has catastrophic problems. If people panic, the banks have catastrophic
problems. If foreign banks go under, the effect on ours is catastrophic.
There are far too many related or even unrelated things that can slam ANY bank
at all at any time.
The ONLY rational thing to do, is to make sure that your property is in your
possession, safe and sound. It does not matter what ANYONE else does. It
only matters what YOU do. If you want to trust your bank, its customers, its
vendors, foreign banks and the banking system, and every Joe Sixpack out
there, to be in possession of what amounts to all of your hard earned money
and work, be my guest.
I don't. Guess what. No matter WAHT HAPPENS, I can not be harmed. No bank
excuses. No "Oh, it was a big mistake, we're sorry but you can't have your
money." No "The government shut us down or limited your withdrawals." No
nothing at all. My money in my hands.
If I am a hair brained macadamia bozo and am DEAD wrong, Nothing happens to
me. NOTHING. NOTHING either way. If you are wrong, if you assessed wrong, if
you trusted wrong, If you guessed wrong, you loose it all. Their fault, your
fault, nobody"s fault at all, YOU LOOSE IT ALL. Just one small pack of bozos
in Pukeweasel, Wisconsin makes a run on their bank, for no good reason at
all, and you loose it all.
Be satisfied when you go to sleep tonite, that you made a wise choice upon a
certainty that you will have your money. Leave it in the hands of everyone but
yourself at the mere whim of the rest of the population and bankers who
'assure' you that eveything will be alright. If everything was going to be
alright, bankers would not have to come out and assure you of it. Nothing
actually 'could' happen. But, it can. They know it, and they are scared.
Be my guest, leave your money in the bank.
Paul Milne
If you live within five miles of a 7-11, you're toast.
-- a (a@a.a), January 19, 1999