This article from the Gold Eagle site:

How y2k Could Sink the Stock Market

Ray

-- Ray (ray@totacc.com), July 07, 1999

Answers

Gold Bugs = HumBaugh!

Gold was at $800/oz in about 1980 and the market was under 1000. The gold bugs are just GREEN WITH ENVEY.

We are in a new era. The computer has changed everything. Moore's Law rules the land, and things are good.

We are at peace, interest rates are..LOWish. The market is on an upward trend. Summer is here, relax, enjoy.

It is OK to feel GOOD! Get use to it, Y2K=AoK.

-- No (Problem@All.com), July 07, 1999.

Ray, the piece you post is pretty good in many ways, but it falls into the WRONG conclusions.

"Canadian and major US banks should be fine, and the average person should only need to withdraw a few thousand dollars in cash for the century roll-over, not every penny in the bank" (last paragraph)

(1) A withdrawal of a FEW THOUSAND dollars in cash per person (average) means an unequivocal, unbearable BANK RUN, both in Canada and the US (see point 4 below)

(2) Why on Earth would major Canadian and American banks be fine. None of them are currently y2k compliant, not even the Fed itself.

(3) What's this silly idea of talking about these banks or those banks?? Whenever anybody decides to leave money in any bank they are trusting and betting that the INTERNATIONAL banking system will make it. It's all interconnected by SWIFT (still non-compliant!!) There are 200.000 banks in the world, and "99% compliance is not enough. 100% is the minimum" ( Allan Greenspan, Federal Reserve President and ex-mainframe programmer)

(4) Don't believe me. Just read the scary conclusions of the International Settlements Bank (Basle) Y2K Report and the honest plea made by BankBoston on "serious threats and uncertainties" for their worldwide banking operations despite the fact that they are the leaders in the field.

(5) Please go to the following link

" www.y2knewswire.com/cashcomputer.asp"

All your doubts will be clarified in a matter of seconds.

Fair enough?

By the way, where is Mr.Decker, yada yada woodpecker ?

-- George (jvilches@sminter.com.ar), July 08, 1999.

Hey, No Brain @ all -- what exactly are you trying to do...compete with Y2K Pro for flimsiest argument? If so, I think you may be winning!

-- (@ .), July 08, 1999.

 George
 

Very interesting site!  Real Facts and Figures.

Now that is the way to set up an arguement.

>>>>
Y2KNEWSWIRE.COM cash computer

You've been wondering whether the banks will really run out of
   money or if the Y2K cash scare is just hype. Well now's your chance
   to find out what will really happen, based on your own
   assumptions. We've researched bank deposit obligations and
   cash reserve numbers from the Federal Reserve. We've nailed
   down workforce statistics, average hours worked, and average
   hourly wages. We've checked and double-checked all the numbers
   here, and we're giving you the web link to every source we quote.
>>>>

-- Brian (imager@home.com), July 08, 1999.

Brian,

Thanks for the direct link to "www.y2knewswire.com/cashcomputer.asp"

Actually, I must confess I didn't know how to do it myself!

Thanks again and I encourage all the lurkers to try it out, simply because this is the MOTHER of all y2k debates.

Take care

P.S.: By the way, just WHERE are Flint, Decker, Anita and the other pollys?? This is a no-brainer so they shouldn't have problems, would they?

-- George (jvilches@sminter.com.ar), July 08, 1999.

I found the program to be interesting. This is what I got from it:

I assumed that working people would set aside $200 for day-to-day cash needs. That's a total of $27.8 billion in cash withdrawals.

I also assumed that households would cash out 20% of their savings (both savings accounts and mutual fund holdings). That comes to a total withdrawal of $66.6 billion.

I guessed that 10% of companies would reserve a two-week supply of cash to meet the January payroll. That comes to $12.5 billion.

I also guessed that businesses would withdraw 5% of their deposits. That's a total of $155 billion in cash withdrawals.

According to my inputs, this will be a total withdrawal of $261.9 billion. I assume that the Fed would bring an additional $200 billion to the banks. This is on top of the existing bank reserves of $49.4 billion. This provides a total cash availability of $249.4 billion.

Summary: according to my assumptions, the banks will have a total of $249.4 billion in cash available. Cash withdrawals will be $261.9 billion.

Should my scenario come true, the banks will run out of cash. In fact, the banks will be $12.6 billion short of cash.

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), July 08, 1999.

Well one of the big things the FRB has to consider is what the international response will be. The demand for US greenbacks is going to be in high demand. This could put the dollar under some pressure if folks aren't getting cash and they get a bit worried. Just think about all the countries that have less than stable IT banking. Or communications. Just another what if?

I expect that the Canadian $$$ will improve, we have a compliant tax system, and an agressive banking effort. Interesting thought eh? We used to be "higher" in value than the US greenback, but then they called it a "Loonie" and you can't have a country backed by loonies,,,,,,,,

-- Brian (imager@home.com), July 08, 1999.

Hi, George.

I'm here. Y2knewswire has had these little quizzes before on other Y2k topics. You input your ASSUMPTIONS, and they calculate what your assumptions would represent. One could do the same with a calculator at home. Garbage in...garbage out. You're correct. It's a no- brainer.

-- Anita (spoonera@msn.com), July 08, 1999.

Once more into the breach....

Currency and money are not the same. "Cash" is the common term for currency... legal U.S. tender like Stan Faryna's thick roll of $100 bills. Money has several different definitions, but it goes well beyond currency into demand deposits (checking accounts), money orders, cashier's checks, etc. Only a small percentage of commerce uses currency (one notable example is the drug trade.) For the vast majority of U.S. commerce, money flows in forms other than currency.

Currency is clumsy and inconvenient. How many readers pay cash for everything? Very few. We'd rather write a check... like I do for my modest monthly bills. Banks can easily issue money orders or cashier's checks... quasi-currency, if you will. This ability expands the amount of liquidity in the system exponentially beyond the supply of currency. Oh, and the government can define legal tender to include these quasi-currency instruments.

Furthermore, people cannot hold liquidity for long. We, as a country, are far too deeply in debt. Debt must be serviced so money (M1) will immediately flow back into the system.

Finally, the Federal Reserve can impose restrictions to maintain the viability of the system. It can only fail if they allow it to fail. Of course, the price of staving off a general panic might be very high in terms of economic consequences.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), July 08, 1999.

Anita dear, I was missing you, glad you showed up!!

Garbage?

Anita, I'm sure that even you would agree that Stan Faryna's assumptions were quite conservative. It's not a matter of garbage, it's a matter of what people think. And people are not garbage, right Anita? If you don't like Stan's conservative input, pick your own. And I'm sure they won't be garbage Anita. You are not garbage, and what you think is not garbage either.

Power to the People!

Please also take into account that the US cash supply also faces FOREIGN bank runs. 'Cause you see Anita, it's people again, O.Kay? The rest of the world DOES exist Anita, they ALSO have "money" and can do whatever they please with it (and money is very very coward you know). Like take Japan, or Brazil (without phones for the past week!), or whichever country you decide to pick: as soon as people there perceive that something rotten is cookin'up in their own countries and central banks for example (it's always people Anita, don't forget) they will cash in their own currencies at the whatever rate of exchange and you will have an instant cash run on the US dollar (store of value everywhere), which you either satisfy or are forced to devaluate the local currency, the UGLIEST, UNTHINKABLE decision that won't happen. Or if it does happen it only lasts until hyperinflation catches up. Like in Germany in the 1930's or Argentina in 1990 (5000% inflation). Massive devaluations are forbidden, period. (Mexico, Russia, Indonesia, etc.)

So the Fed has the same problem that you may have, i.e., they forget that it is a GLOBALIZED economy, that 70% of world transactions are denominated in dollars, and that there are b-b-b-billions of people in other countries that ALSO play (and we can't just bomb them away, right Anita?). So the FRB has to print US dollars for them too, which they haven't because they forgot, just like the two digits in the y2k bug. And I think you are cute Anita.

Warm regards

-- George (jvilches@sminter.com.ar), July 08, 1999.

For Mr. Decker

"Once more into the breach.... "

Looks like you will have to again return to the breach Mr. Decker. BTW, isn't that what they call that little space where you load the ammunition into a gun? I think that's what it said in the manual. I guess I'll have to reread it the next time I go for target practice.

"Currency and money are not the same. "Cash" is the common term for currency... legal U.S. tender like Stan Faryna's thick roll of $100 bills. Money has several different definitions, but it goes well beyond currency into demand deposits (checking accounts), money orders, cashier's checks, etc. Only a small percentage of commerce uses currency (one notable example is the drug trade.) For the vast majority of U.S. commerce, money flows in forms other than currency."

This is all well and good, as long as all portions of the system function as they do now. Checks, money orders, and cashiers' checks, etc. will lose their value if the computers and phones are not fully operational. A sales clerk who wants to sell you a Polartec sweater but cannot call MasterCard will probably accept cash. Will they accept a personal check without Telecheck? How about a cashiers' check if the line at the bank is two hours long?

"Currency is clumsy and inconvenient. How many readers pay cash for everything? Very few. We'd rather write a check... like I do for my modest monthly bills. Banks can easily issue money orders or cashier's checks... quasi-currency, if you will. This ability expands the amount of liquidity in the system exponentially beyond the supply of currency. Oh, and the government can define legal tender to include these quasi-currency instruments."

People use other forms of payment as currency or money because it is more convenient and people will still accept it. Liquidity is the key. It is guaranteed by the size of the market which is guaranteed by the ease of communications which we have today. Remember that before the telegraph, communicating meant just what the latin roots imply, PHYSICALLY GETTING TOGETHER. When this becomes more expensive, liquidity of all markets will be reduced. How expensive will it be?

"Furthermore, people cannot hold liquidity for long. We, as a country, are far too deeply in debt. Debt must be serviced so money (M1) will immediately flow back into the system."

I'm sorry, but this sounds like the bank executive in the early 80's who said that governments (even those in 3rd world countries) can't declare bankruptcy. Again, it depends on the integrity of the system. If people default, what happens to the currency?

"Finally, the Federal Reserve can impose restrictions to maintain the viability of the system. It can only fail if they allow it to fail. Of course, the price of staving off a general panic might be very high in terms of economic consequences."

There you are. How would you like to see 20% interest rates? It might take an even higher rate for people to leave their money in the banks. How do you think the stock market would handle that one?

-- nothere nothere (notherethere@hotmail.com), July 08, 1999.

Hi again, George.

You said: "Anita dear, I was missing you, glad you showed up!! "

How nice of you to miss me.

You then said: "Garbage?"

It's an IT term, George...meaning that the output will only be as good as the input. It certainly wasn't meant to infer that the data entry clerk was her/himself garbage.

You continued with: "Anita, I'm sure that even you would agree that Stan Faryna's assumptions were quite conservative."

I would? If I recall correctly, Stan estimated folks taking about $200 out in cash. That sounded about right to me. Stan then went on to state that folks would take 20% of their money out of savings, money markets, etc. For what purpose? I can honestly say, George, that I know absolutely NO ONE who intends to withdraw their money from a bank. I have a network of between 50-150 IT-types with whom I communicate regularly, family in Norway, neighbors, and other friends outside of IT, and *I*'m the doomlit of them all for even taking prudent measures such as having food, water, a means of cooking food, etc. The OTHER working adults I know spend every dime they make and incur credit- card debt to boot. To assume that others have savings is more conjecture. To assume that they'll take out ANY percentage of their savings is ALSO conjecture.

Even the Gallup poll that Nabi was so kind in posting to another thread stated that only 2% of folks intended to take out enough money for a year or more, with 6% taking out enough money for several weeks or more. Even these intentions could be bogus....as in "Do you really even have enough money in your savings account to sustain yourself for an entire year?"

You went on to say: "Please also take into account that the US cash supply also faces FOREIGN bank runs." (Forgive me, but I snipped the rest, George.)

Much of this is based on conjecture, George. Mr. Milne projected bank runs as early as 1998 based on Asian problems. Howard Ruff predicted bank runs in the late 1970's based on the world situation. None of these predictions came true, and I have absolutely no firm evidence upon which to conclude that these predictions will come true with Y2k. You may feel that YOU do, but *I* don't.

I'll conclude here with two thoughts, George. The first one goes like this: I've heard repeated over and over again on this forum that nobody "gets it". Yet I've also heard that bank runs will prevail. Who will start these bank runs? The folks who don't "get it?"

The second thought is more my feeling on WorldNetDaily in general. I know many of you love that internet rag, but for most of America it's simply the internet equivalent of a Conspiracy tabloid.... the type that shows its face at the supermarket checkout counter. Mr. Farrah (sp?) and Mr. Bresnahan(sp?) are WAY out there on this one. They have been for some time.

Just my opinion on this, George, and you know what they say..."Opinions are like assholes...everyone has one." Please forgive me, moderators, if I've stepped out of line on that lost thought.

Nice to "talk" with you again, George.

-- Anita (spoonera@msn.com), July 08, 1999.

Anita wrote: "I can honestly say, George, that I know absolutely NO ONE who intends to withdraw their money from a bank. I have a network of between 50-150 IT-types with whom I communicate regularly, family in Norway, neighbors, and other friends outside of IT, and *I*'m the doomlit of them all for even taking prudent measures such as having food, water, a means of cooking food, etc."

I agree with this statement because it says "intends to withdraw". Most who are taking cash have already done it. LOTS of it. Maybe they aren't telling you (why would they?). The amount needed for your 150 friends is sitting pretty in a safe deposit box somewhere RIGHT NOW.

Got cash?

-- mv0 (mv0@cash.is.king), July 08, 1999.

For the record, I have seen 20%+ interest rates during the early 80s. It was not pretty.

Despite our roaring economy, wealth is heavily concentrated among the top 5% of Americans. When people do the "math" of bank runs, they neglect to consider how many Americans live essentially from "paycheck to paycheck." The vast majority of American families do not have 6 months of expenses sitting in the bank. I'll wager many do not have even a single month in a savings or checking account.

The market falls when the demand for equities falls. When there are more sellers than buyers, prices fall until they reach a new equilibrium. Right now, money continues to pour into the market... call it "auto" buying. This auto-buying will not continue forever. The baby boomers and foreign investors will eventually start selling.

It will be a long fall.

As for the financial services sector, the "iron triangle" looks pretty sound. With power and basic telecommunications, the banking system will function. Without power, where are you going to spend your money anyway? (laughter)

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), July 08, 1999.

Anita, I have worked and continue to work in finance for a number of years and to say that there has not been bankruns recently shows either avoidence of or ignorance of the facts. Russia most recently (as in every other week) has new bank runs as bank after bank fails. Brazil also has bank failures monthly. Japan last year suffered bank runs, (most notable that the shame the Japanese felt forced them to hide from the news camera or to even attack the cameraman, missallocated rage I guess). Thailand, Korea, Indonesia, even Hong Kong had bankruns but currency "allotments" bought time for the goverment until international loans saved the day. I also remember walking up from my broad street job as a new trader in New York to Canal street in the Chinatown section to see with wonder my first real live bankrun on an Asian bank that had gone out of buissnes, that was in the early 80's, somethings you never forget. The point is that it has been the policy of the IMF and the Federal Reserve to try and contain these bank failures as fast as they can. When they could not contain it, as in the case with Russia, the Fed floods the system with liquidity, attempting to shore up the world financial system at least while under their watch.

-- PJ (iop@hotmail.com), July 08, 1999.

Dear Anita, I just *knew* that with time and effort our virtual souls would match and merge as two sweet, tender marshmellows in a mid- summer night's dream.

(1) Anita, you say that you don't agree with Stan's conservative assumptions because you "know absolutely NO ONE who intends to withdraw their money from a bank". This is strange. One possibility is that your 150 acquaintances may not have told you about it so as not to expose themselves later with pennyless DGI's, or because they do not want to admit that they are (unsocially) covering up their butts being part of the bank run already, etc., etc., whatever.

At any rate Anita, the most recent Gallup poll on bank runs showed that "(a) "46% of Americans believe that people will panic and withdraw ALL their money from the bank and, (b) 20% of Americans believe that the banking system will shut down on or before Jan.1, 2000". Accordingly Anita, your perception of what people think (garbage or no garbage) is a bit skewed here.

(2) Then you go on to say that "all the other working adults you know" don't have a dime saved. That's also strange because (a) People normally don't have as many acquaintances/friends/people they "know" as you do (150, plus, plus) but it could very well be true in your case considering how cute and outright beautiful you are. Still, Anita, do you really "know" hundreds of people that would tell you what they do with their money? Just what do you do for a living anyway? Are you in sales? Because only a sales person would know that many people, but not well enough to know what they do with their investments particularly under such special circumstances, right?

(b) It is no "conjecture" (I love your fancy footwork Anita) to state that (*) A one-week supply of cash for the average American family is $450 (*) The average American household has $2133 in savings (liquid) and $ 1118 in money market funds (also liquid). Total = $ 3251.

Please link to

"www.y2knewswire.com/cashcomputer.asp"

and verify PROVEN official US Census Bureau and US Federal Reserve Board data mentioned above.

(3) Foreign bank runs have already taken place in Argentina 1990/ Brazil 1991/Mexico 1994/Indonesia 1997/Russia 1998 with massive devaluations as a result. What's your point Anita, you want that all over again everywhere? (You are sweet aren't you?)

In closing, Anita please be advised that I know GIGA at least as much as you do of course, but as far as the asshole analysis you are definetly the Queen here.

Take care honey

Warm regards

-- George (jvilches@sminter.com.ar), July 08, 1999.

Mr. Decker, I can tell you first hand while working the desk at Broad st. that market declines of significance begin with not just more sellers than buyers, but with a lack of buyers at all. Trading is normal and then BOOM! no bids to be found. The sellers are there like always but now there is no bids, the spread flies open and now you have the cascading panic as price stopps are hit and still no bids. The market only stabalizes when there is a solid base under the bids and that only happens when Goldman ML, Leh Bros come in to make a stand. This has happened now four times in my career and I think I will get to see it again in the next month!

-- PJ (iop@hotmail.com), July 08, 1999.