Here's another tidbit from the guy pollyannas call the Raving Lunatic of y2k. I notice that several requests on recent threads, where I asked pollyannas to point out the lies and distortions in Milne's posts, have gone unanswered.

Subject:	Re: Wall Street's Y2K Plan: Cut Assets, Close Early and Check Overseas
Date:	1999/05/26
Author:	fedinfo <fedinfo@halifax.com>
	Posting History

In article <ntR23.1551$4G5.117@news2.atl>,   "Robert F" <robertf@bellsouth.net> wrote: > From today's WSJ. > > Robert Folsom > ==================== > May 26, 1999 > Wall Street's Y2K Plan: Cut Assets, > Close Early and Check Overseas > By RANDALL SMITH and LYNN COWAN > Staff Reporters of THE WALL STREET JOURNAL > > NEW YORK -- Wall Street securities firms are likely to slash their assets at > year end in a bid to head off potential year-2000 computer problems. > > That's one of the predictions of a Y2K task force, led by former Federal > Reserve Bank of New York President Gerald Corrigan, which Tuesday issued a > blueprint for how top securities executives should shape their contingency > plans for possible market disruptions. > > Mr. Corrigan, now co-chairman of the risk committee at Goldman Sachs Group > Inc., said at a media briefing that the likelihood of problems requiring a > marketwide shutdown "is very very small, bordering the minuscule."   ================   The cognitive dissonance is EAR shattering.   Listen very carefully to what was written.   They plan to what??? ***SLASH*** their assets.   They plan to ****SLASH**** their assets for what?     They plan to ****SLASH**** their assets for a risk that they say   "is very very small, bordering the minuscule."     This is laughable in the extreme.   I have prepared for Y2K because i believe it to be a HIGH probability. I see a BIG risk. A BIG risk, not a miniscule risk. By their own admission the risk is negligible yet they plan to ***SLASH*** their assets.   BWAHAHAHAAHAHAHAHAHAHAHA!     When does anyone go to this extent to protect themselves from what they claim is a MINISCULE risk?     BWAHAHAHAHAAHAHAHAHAHAHAHAH!   Stop it!! Yer killin' me. Stop it, I tell ya!     -- Paul Milne If you live within five miles of a 7-11, you're toast. --== Sent via Deja.com http://www.deja.com/ ==-- ---Share what you know. Learn what you don't.---

-- a (a@a.a), May 26, 1999

Answers

(1) Raving Lunatic? No...though he is a bit conservative.

(2) If we cannot afford to do our own exhaustive research into Y2K, we can always follow the example of the large companies and governments. They are stockpiling and making contingency plans. Why shouldn't we also be prudent?

-- Mad Monk (madmonk@hawaiian.net), May 26, 1999.

Mad - Don't forget, they are also firing vendors and other business partners that can't show RIGHT NOW that they will be fully functional next year. How about next spring I tell Town Hall to put a sock in it!

-- Brooks (brooksbie@hotmail.com), May 26, 1999.

--a...thanks for the share. I agree with Paul.

BWAHAHAHAHAAHAHAHAHAHAHAHAH! karen - already ready and then some

-- karen (karen@karen.karen), May 26, 1999.

This cognitive dissonance happens to people who are utterly unable to see any difference between "potential year-2000 computer problems" and "a marketwide shutdown."

Interesting to see how Milne segues from one to the other. He calls these potential computer problems a risk. Then he calls a marketwide shutdown a risk. Since they are both risks, they are the same thing! Presto! At no time do the fingers leave the hand!

Distortion? Nawwww. Risks is risks, right?

-- Flint (flintc@mindspring.com), May 26, 1999.

Flint what the hell are you talking about? Are you on the right thread?

-- a (a@a.a), May 26, 1999.

'a':

I quoted the article. I quoted Milne. I showed how he went from "possible problems" to "marketwide shutdown" in quick easy steps. I know the obvious has a hard time penetrating sometimes, but if you carefully read what you yourself posted, and notice the actual words, you'll understand eventually.

-- Flint (flintc@mindspring.com), May 26, 1999.

No Flint, go back and read the title of my "Question Asked":

Why are Wall Street securities firms preparing to SLASH their assets due to a "minuscule risk"?

Can you answer the question? Are you having trouble with the big words? Don't know what SLASH means? Think OJ Simpson.

If you cannot answer, why are you babbling about irrelevant side issues?

This is what you sound like, Flint, a broken record: "Y2k won't be so bad, unless its bad, in which case it'll probably be pretty bad"

Ray has you pegged: "Yada yada yada." Your tactics are fooling almost no one.

-- a (a@a.a), May 26, 1999.

'a':

One more try, and I'll address your question directly.

This article claims they are slashing assets to "head off potential year-2000 computer problems."

The miniscule risk, (PLEASE read the article, just once, pretty please) is of "marketwide shutdown". There is a HUGE difference between y2k computer problems and marketwide shutdown. They are very different. They are not the same thing at all. One does not resemble the other. Is this becoming clearer yet? Damn!

Let me put this another way: They are countering risk A because they see it as a real risk. They consider risk B to be miniscule. They are NOT countering risk B. A is not B!

Just because Milne can't tell A from B doesn't mean you must mimic his blindness. Just try it. Just once. You can do it.

-- Flint (flintc@mindspring.com), May 26, 1999.

Here's the full text. Stop splitting hairs.

From today's WSJ.

May 26, 1999 Wall Street's Y2K Plan: Cut Assets, Close Early and Check Overseas By RANDALL SMITH and LYNN COWAN Staff Reporters of THE WALL STREET JOURNAL NEW YORK -- Wall Street securities firms are likely to slash their assets at year end in a bid to head off potential year-2000 computer problems.

That's one of the predictions of a Y2K task force, led by former Federal Reserve Bank of New York President Gerald Corrigan, which Tuesday issued a blueprint for how top securities executives should shape their contingency plans for possible market disruptions.

Mr. Corrigan, now co-chairman of the risk committee at Goldman Sachs Group Inc., said at a media briefing that the likelihood of problems requiring a marketwide shutdown "is very very small, bordering the minuscule."

But he also said firms should plan a variety of measures to reduce such risks. These range from reducing the number of certain types of trades to be settled in the 10 days before and after Jan. 1, 2000, closing most markets early on Friday, Dec. 31, 1999, and even moving up mutual-fund distributions to the week before Christmas from the last week of the year.

There appears to be a slightly greater threat of problems originating abroad, such as an electric-utility shutdown, Mr. Corrigan said. "As you look at this subject in a global context, there are elements of uncertainty that are somewhat greater outside the U.S. than inside the U.S."

Some securities executives have said privately they planned to reduce the size of their balance sheets before year end as a precaution against Y2K problems, particularly in less-developed countries where computer systems may be less advanced. In this setting, the report said, "most firms will be striving to maintain higher than normal liquidity and smaller than normal balance sheets."

Mr. Corrigan added that securities executives should be prepared to step in and settle problem trades disrupted by computer problems "manually," by communicating among themselves and with regulators as necessary. Such problems had arisen in 1985, during a 31-hour computer failure at the Bank of New York, Mr. Corrigan said, and in some mortgage-backed securities markets in the aftermath of the 1990 collapse of Drexel Burnham Lambert Inc. In the latter episode, he recalled, the Fed set up "a totally manual payment system" in an auditorium.

The Goldman executive, whose report was prepared for the Securities Industry Association trade group, also warned that financial regulators should be prepared to relax capital-adequacy rules if one trading party doesn't get the cash for a trade on time as a result of "large-scale disruptions of processing activities." Legislation offering "safe harbor" from legal liability may also be needed.

The solutions for any potential problems range from preparing back-up plans -- such as ensuring there are standby arrangements for manually assisted transfers of cash and securities -- to preparing for any decisions to suspend specific business activities on Jan. 3, the first day the market will be open in 2000. The one subject the SIA committee speaks most forcefully about is the time the markets should close on Friday, Dec. 31, the last day of trading in 1999.

Often, Dec. 31 is a late closing day, especially in the short-term money markets, and the SIA said that tendency should be avoided this year so firms can get an early start on processing transactions, freeing up the weekend for Y2K issues. The panel is "strongly of the view" that all U.S. financial markets should close at the same time that day -- early in the afternoon.

-- a (a@a.a), May 26, 1999.

Is everybody TRYING to miss the point here, or just arguing to make sure their keyboard still works?

"potential year-2000 computer problems" = less than 100% operational

"possible market disruptions" = somewhere between 1 and 99% operational

"marketwide shutdown" = 0% operational

Now the response to the expected operationality should be proportional, right? Small problem percieved, small response. Big problem percieved, big response. Slash = small?

Ie., if they expect just a little BITR, their response should be little. If they say they expect just a BITR, but act as if they are 70% of the way to TEOTWAWKI, you should assume that their actions speak louser than words. Ie., follow the money.

I'ld like to point out of course that this is merely a piece of journalistic palm reading. Saying that somebody is "likely to slash their assets" and actually having them sell off assets are two different things. However, these palm readers are with the WSJ, not Nickel Trader.

-- Ken Seger (kenseger@earthlink.net), May 26, 1999.

Flint,

Let me give it a try.

Wall Street securities firms are likely to slash their assets at > year end in a bid to head off potential year-2000 computer problems.

Now, by slash, I think we can all agree doesn't mean cut up the stock certificates, it means sell, and when they say slash, we would have to asume they aren't talking about 2% of their positions.

Now, when you buy or sell stocks, they charge a brokerage fee, comeing and going. Big securitiy firms dont deal in 5000 share lots for just $5.95 fees. They deal in 1,000,000 share lots. I can't give you figures because they don't release that kinda stuff to the plebes, but if they are SLASHING their positions, it will in all likelyhood cost them millions to get out and then get back in, all over a minuscule problem.

That is the disconect

-- CT (ct@no.yr), May 26, 1999.

OK, Flint, your interpretation of the exact wording could be correct, in which case Milne may have (inadvertantly) made an assumption that was technically invalid. BUT THE FACT REMAINS: Wall Street is expected to slash assets due to Y2K problems. That is a BIG reaction, and it seems reasonable to conclude that Y2K is therefore a BIG problem. And I'm sure, all in all, this was what Milne was attempting to convey.

-- King of Spain (madrid@aol.com), May 26, 1999.

???

The article says they see potential problems (no kidding) and are making contingency plans. Sounds reasonable to me. The article goes on to say that the worst possible problems (marketwide shutdown) are considered a miniscule risk. Again, that sounds reasonable. They are trying to identify their exposure to the most likely risks and reduce that exposure where they can. Good idea.

All in all, prudent planning in the face of risks that, while unknown, are almost certain to be inversely related to the magnitude of the impacts. Very small impacts, highest probability (though still considered fairly low) so reduce those holdings. Extreme impacts, vanishingly unlikely. Standard risk management.

Now, where's the dissonance? The dissonance comes when you conflate the lowest and highest probabilities, and assume (as the subject of your thread assumes) that they are exactly the same risk!

This is NOT splitting hairs. They are taking steps against one end of a risk spectrum, and you have stated that they are taking steps against the opposite end. The article doesn't say that at all. So where did this error come from? Well, Milne made the error, and you swallowed it whole.

Your Milne-worship is crippling your critical faculties.

-- Flint (flintc@mindspring.com), May 26, 1999.

Apparently a lot of this argument revolves around what the journalist actually meant by the world 'slash.' Often, this word simply means reduce. Like the sports headline that says Yankees Clobber Tigers 9- 7. A 2-run difference is 'clobbering.?' Well, journalists like to write like that.

If sales are less than 1% of assets (which is what I actually expect) is this 'slashing'? If you really think they're going to unload 70% of their positions (or even 5%) I've got this bridge for sale...

-- Flint (flintc@mindspring.com), May 26, 1999.

1%???? What would be the point????? 10%= lighten their posision? 20% = cut???? 30%=???? SLASH??? who knows? You'er really reaching.

-- CT (ct@no.yr), May 26, 1999.

I probably shouldn't say this, but I seriously love the repartee between a and Flint on the forum. Do you remember Saturday Night Live ("Jane, you ignorant slut ..."). I wish I was good enough to carry it off myself. Sigh. I mean, it doesn't get in the way of my making up my own mind and it is majorly witty on both sides.

Is that okay?

-- BigDog (BigDog@duffer.com), May 26, 1999.

BD,

If ya think 'a' vs Flint is top-quality entertainment, you shoulda been here for Milne vs Flint. Months of toe-to-toe action. Probably the two most tenacious debaters I've come across.

Ding Ding!

-- Bingo1 (howe9@pop.shentel.net), May 26, 1999.

I "slashed" my equity holdings in March and April. Until then, I was fully in equities plus a few holding on margin. I decided to take profits and reallocate assets anticipating a correction late this year and possible recession next.

Right now, the bull market is looking pretty tired. The players who have lived through a bear market don't want to wait until the streets are bloody. You'll see movement from the tech high flyers into more blue chips throughout the rest of the year. (Not a bad play....) Some will may even go to my extreme and roll profits into "cash" like T Bills waiting for better buying opportunities. The problem is the bull market has run for so long, everyone is nervous about jumping ship too early...

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), May 26, 1999.

OK Flint. OJ "reduced" Nicole Brown Simpson. Guess you're right.

-- a (a@a.a), May 26, 1999.

What I saw there is the WSJ reporters asserting that they are quoting a report made by a Y2K task force, led by "former Federal Reserve Bank of New York President Gerald Corrigan." Unless these two guys are anxious to find new jobs in another line of work, this is very likely exactly what they did.

Paul seems to be wondering at what seems to be a clear and extreme disparity between recommending substantive asset-reduction in response to Y2K concerns, and Mr. Corrigan's simultaneous claim that 'the likelihood of problems requiring a marketwide shutdown "is very very small, bordering the minuscule."' In other words, if it's so very, very unlikely to break, why take such serious measures?

Paul's question seems on point.

-- Tom Carey (tomcarey@mindspring.com), May 27, 1999.

uummmm,, he "reduced" her, unless he really reduced her, then it was quite a reduction??

-- R. Wright (blaklodg@hotmail.com), May 27, 1999.