Panic, banking and the Great Depression : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I ran across this response in the Elec/Utilities Forum and thought it deserved to be reprinted here for those who hadn't seen it. Very interesting and well written. Has anyone else read, "A Nation in Torment"? Thoughts?

I am not a programmer. However, my husband has worked with both government and manufacturing companies' computer systems for over two decades. Based on his experiences to date, and my own research, many computer systems *will* fail. The major cause of those failures will be ignorance about how "a little date problem" could have much effect. What someone doesn't understand or believe could be a problem, doesn't get addressed or fixed. (Also, the assumption that all those who program or work with computers recognize the date and interconnection problems is an erroneous one in our experience.) The tally among my husband and his contacts in the IT world now shows that only 20% (yep, 2 out of ten) of the manufacturing companies they have had contact with are even checking their PC's, let alone anything else. (And many of these have international subsidiaries.) This comes down to a believe it or not situation, since insiders can give no proof of what they are seeing. You'll have to delineate between truth and rumor yourself.

There appears to be debate about whether panic will exacerbate the problems, but in our minds it is outright idiocy to believe that panic is the ONLY problem, or even the major one.

In the article you were interested in, the focus of the concerns about "panic" seemed to be that it might cause a stock market crash or banking failures. This presupposes that Y2K is the only looming problem which might impact the banking system and that everything else in the global economy is just hunky-dory. The Coalition mentioned in the article also appears to believe that the 1929 crash only happened because people panicked. This is naive in the extreme.

I submit that the many concerns being touted in the media about Y2K, re panic and banking, are a misdirection (deliberate or not, I don't know) away from the underlying instability in the economic markets which is there *without* any Year 2000 influence. It might be very convenient to have Y2K panic to blame instead of prior lousy banking practices.

Another journalist, Edward Robb Ellis, lived through the depression years, kept a journal beginning in the years prior to 1929, and wrote a book which is still in print and considered one of the best narrative histories of that era. The book is titled, "A Nation In Torment".

There is a chapter in the book called, "What Caused The Crash?" Panic is NOT listed as one of the contributors. Panic was the natural response of investors who became aware that the banking system was in severe trouble to *begin* with. Here is an excerpt from Mr. Ellis' chapter on causes:

"..findings of the impartial Brookings Institution of Washinton, D.C., after its experts had studied conditions in twenty-seven nations, including the United States. According to their report, before prosperity ended in the United States, it had terminated in eight other nations - Canada, Argentina, Brazil, Germany, Finland, Poland, Australia and the Netherlands Indies."

The International Chamber of Commerce of that era concluded that the following were what the crises could be blamed on:

"(1) overproduction; (2) decline in commodity prices; (3) world agricultural crisis; (4) industrial unemployment; (5) political unrest; (6) partial closing of several world markets, notably China and India; (7) varied bases for monetary circulation; (8) equilibrium between short- and long-term credits; (9) fall in silver prices; (10) dumping of goods by Soviet Russia; (11) unprecedented taxation to meet international indebtedness; (12) excessive state participation in private enterprises."

Some people in the thirties did submit that "mob psychology" caused the disaster. They were countered by people such as J.P. Morgan, who whenever he was asked what the market would do always replied, "It will fluctuate." Professor Irving Fisher said, "..the market went down because it went down." William Randolph Hearst said the Depression was caused by enormous overcapitalization which had stolen billions from small investors.

For those who believe Y2K is the only problem staring us in the face, read this summation by Mr. Ellis and ask yourself if it's possible Y2K will only be the straw which breaks an already sick camel's back:

"What caused the Crash? Greedy people wanted more than they needed. Foolish people thought they could get something for nothing. Impulsive people bought now in the hope of paying later. Income and wealth were distributed unfairly and dangerously. The rich regarded themselves as an all-knowing elite. The masses were not paid enough money to consume all the goods they produced. The economy was unsound. The corporate structure was sick. The banking system was weak. Foreign trade was out of balance. Business data were inadequate and often faulty."

With all due respect to President Franklin Roosevelt, the statement "We have nothing to fear but fear itself." was a calming balm for a citizenry which DID have plenty to be afraid of, and were being asked to PREPARE for hard times ahead.

In my opinion the myriad interconnection disruptions possible from the Year 2000 problem are as real as this keyboard I'm typing at. They are not the only problems facing the world, however, nor will Y2K be the *only* source from which possible woes might emanate. We can learn from history, but will we?

-- Bonnie Camp, January 25, 1999.

-- Scarlett (, February 13, 1999


One basic problem is anticipating WHEN the unavoidable PANIC which will consume America and other advanced countries will occur. The timing will be a COMPLETE SURPRISE TO US! Why? THE LIVING GOD will determine when His judgment happens! If you don't have a clue, you will be TOTALLY SHOCKED. If you are aware of the impending disaster, you will say, "Oh my! Glad I took precautions." THEN you will be prepared to help your family and neighbors survive the crises.

When foreign markets fail, our Stock Market will plunge, and then everyone will run for the exits. You'll remember the exact minute when it happens.

Prepare NOW! You won't regret it, and you'll help those who are experiencing the damnblasted wait-n-see attitude.

Why don't they wake up? Arrgghhh!

-- dinosaur (, February 13, 1999.

Scarlett, All that sure looks familiar. I'd agree that our financial situation is a little shaky right now. I also believe that the design of the system has built in much much more resiliency with deposit insurance and the massive government payroll/entitlement payout which is a steadying force in the markets. All of this is why y2k could be a real kicker. If the infrastructure fails, then the fact that deposits are legally insured and the fact that billions in federal payouts are legally due won't make a hill of beans worth of difference.

There are many things which could cause great financial pain right now. But a lot of those things would fall into the pattern of the "last war" (Great Depression) and we are actually pretty well prepared to win that war, with some causalties.

But as in actual warfare, the new war is always fought on its own terms. That's why y2k is so frightening. It is most definitely a new enemy. The programmers know very well how to deal with it, but that like saying that soldiers know how to shoot guns. The upper echelons of government and business appear singularly unprepared to deal with this threat.

The upper echelons are people used to dealing with their loaded decks, backroom deals and big money politics. They're expert at "handling" threats from a political and marketing standpoint. Y2K is a technical problem. Clinton can't sail the Seventh Fleet to y2k territory and make y2k pop back into its nasty little box like he's so used to doing with Saddam. In short, we have the wrong set of leaders for this problem.

I don't think we'll have another great depression in the US in the foreseeable future so long as our supply of oil is steady. That's the main thing that concerns me about y2k.

-- Puddintame (, February 13, 1999.

I don't totally agree with some of Puddintame's take. Do we know how to deal with a depresssion? No. We know what would have worked in 1925-29, had we done it then. Historians in the future will be able to map out a program that would have worked in 1980-99, except -- fools that we are -- these things were never implemented "because we know how to deal with a depression." It's called "20/20 hindsight." People never recognize what it is that they're undergoing -- until they're through it.

"..findings of the impartial Brookings Institution of Washinton, D.C., after its experts had studied conditions in twenty-seven nations, including the United States. According to their report, before prosperity ended in the United States, it had terminated in eight other nations - Canada, Argentina, Brazil, Germany, Finland, Poland, Australia and the Netherlands Indies."

Let's see, where has prosperity ended today? Perhaps: Japan, Malaysia, Thailand, Korea, Hong Kong, Brazil, Argentina..... Russia doesn't count, since they never made it to the prosperous list. We import depression. It's coming soon to a town near you, regardless of whether Y2K effects the oil supply. Just much worse if oil is cut off.

There are a lot of sharks in that there water.

-- De (, February 13, 1999.

Geez, I pity anyone who thinks (as the author of the piece quoted in this thread does) the Brookings Institution is objective and has no political ax to grind. Duh.

And the same author whines about income being distributed "unfairly." Well, sheesh. This isn't the Soviet Union, folks. You get what you work for. This is America.

-- Declan McCullagh (, February 14, 1999.

And you don't have a political axe Declan? Huh!

But facts are facts. Sounds like the Brookings Institute stated one.

Your secular humanist buddies are to blame for this y2k mess and coming global depression. History will record it as such although Time won't.


-- b (b@b.b), February 14, 1999.

Note to religious wackos:

There's more similiarities between "secular humanists" and yourselves than you think.

You both have 'gods' to which you are supposed to stick your rear ends up to: The state and/or "Big Brother in the Sky." (Don't question the "authority" of Stalin, Clinton, the Pope, or the "bible".)

You both preach charity and tolerance, but in practice that extends to your own, if then.

You both, in your own way, encourage breeding to drastic overpopulation levels. Humanistist because of worries about race and genocide, and religious wackos because of opposition to birth control and abortion. Both support subsidizing families, encourage families where parentes are unable and unwilling to keep track of and provide for their "litters." (Humanistists, if not for themselves, at least for the underclasses.)

etc. etc. You both make me puke.

-- A (, February 14, 1999.

Scarlet - good post!

A@A - if you barf on your keyboard does that mean you'll cut out the adolescent pseudointellectualism?

Arlin Adams

-- Arlin H. Adams (, February 14, 1999.

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