David Eddy crticises Gary North's assessment of the effect of Y2k on banking

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David Eddy attempts to knock down Gary North's take on the banking system's suseptibility to Y2k disruption. I found his arguments simplistic at best. Here's a copy of the email I sent to him.


Re: http://www.wbn.com/y2ktimebomb/Techcorner/DE/de9939.htm

I must say that I was very disappointed in your arguments attacking Gary North's "banks will collapse" assertions. You put up one straw man after another and proceed to dismiss them out of hand as if you had cornered the 'logic market" implying that poor Gary can't think straight. In an effort to get you to reenter the real world, please answer the following questions:

*Please give me evidence that within (just for starters) the banking system itself, significant and substantial end to end testing has been successfully completed. Have these tests been audited -- or better yet, DESIGNED AND AUDITED -- by competent third parties? Have the details of such tests been released to the public?

*If test result have been SELF-REPORTED, why should we believe them? Do you not agree that officials lie when it's in their self-interest to do so (or their perceived assessment that it's OK to lie in "best interest for the country")?

*Please provide public access to the details of contingency plans for bank record reconstruction induced by SIMULTANEOUS AND MULTIPLE BANK FAILURES caused by electrical grid and back-up generator failures (what evidence do you have that the banks have solved their embedded chip problem likely to impact the reliability of their back-up electricity), software errors, data base corruption, wire transfer errors, extensive telecom outages, civil unrest, terrorist attacks, etc.

If you can't provide the above details, please try once again to convince me that Gary North is not correct, and you, David Eddy, are not simply whistling past the graveyard.

Dr. Roger Altman

-- Dr. Roger Altman (rogaltman@aol.com), September 29, 1999


Dr. Altman,

1. Since the banking system is currently operational, please provide solid evidence that Y2K errors will result in significant problems. Specifically, what banking hardware or software platforms are not Y2K ready and will not be ready on or before December 31st.

2. Please provide credible evidence that the regulatory bodies charged with oversight of financial institutions (i.e., FDIC) have falsified the results of Y2K readiness reports. These are the reports that claim nearly 100% of banks are Y2K ready.

3. Since the power grid is currently operational, please provide evidence the grid will fail and that the reports of utilities, the NERC AND independent entities are incorrect. To wit, nearly everyone with the exception of North feels the grid will stay up through rollover.

4. Provide evidence that current filtering mechanisms (the ones that detect errors in millions of transactions daily) will fail on Y2K.

5. Will the Federal Reserve will allow banks to remain open if there are difficulties rather than creating a "bank holiday" to allow financial institutions to resolve financial problems?

Dr. Altman, I cannot "prove" your next drive will not end in a fatal accident. "Proving the negative" is a rather tired rhetorical trick... and most thoughtful people simply will not fall for it. Since Gary North is making the assertion banks will fail, he is responsible for supporting this assertion with FACTS... not just idle speculation. If you are not happy with the explanation provided by your bank, exercise your right as a customer. Close your accounts, cut up your charge cards and do business on a cash-only basis.

By the way, is North still taking checks for TWO-YEAR subscriptions to Remnant Review?

Just curious.

-- Ken Decker (kcdecker@worldnet.att.net), September 29, 1999.

LOVE IT !!!! Your essay is soooooooooo timely for me as I have to go to the bank and fight with them again tomorrow. I have cashed in some small amounts of stock that I still had. Checks from $1700 to $10,000 coming in. They are drawn on Edward Jones but bank will not cash. Says I must deposit and then write a check against them. However, I have to wait for those checks to clear. I took one in for $1760 today and they said no they couldn't cash it. So I whipped out my check book and wrote a check for $2000 (had 4k in the acct) and the woman just stood there and stuttered when I told her I wanted 20s, 10s and 5s. She then proceeded to tell me that I was going to get knocked over the head and lose all my money and that I should put it into an interest bearing CD. With that I yanked the $2000 check out of her hand and wrote one for $3900. And in a very low voice said if I did not get "MY money now, everyone in the bank was going to hear about it...all the details." I got my money! Now the problem is what to do with the rest of the checks, especially the one for $10,000. I am getting really paranoid about going to the bank. The funny thing is, we have ALWAYS DELT IN CASH and keep only enuff in the acct to pay for insurance and property taxes and the credit card which I use on the net. I tried to go to another branch of the same bank and they all but threw me out the door. The bank is AMSouth. Tomorrow I am going back in with another check and I will play their game and deposit it. Then the on Monday will go in and cash a check against the account. When they give me the crap again, I am going to have all of your questions ready for that teller and the branch manager. All I can say, is if you need to get some cash, you better start working on it now. They in no way, consider it YOUR MONEY. I am sure open to any suggestions about how to convert these checks to cash.

Taz...who is getting down right pissed on one hand and intimidated on the other.

-- Taz (Taz@aol.com), September 29, 1999.


Your arguments are ridiculous. It has been shown again and again that unremediated code will produce enormous problems where ever they exist, and the banking industry is a prime example.

When your car, computer, or VCR fails, all you have to do is show the repair man in what way it doesn't work properly, and you leave it to him to fix it. Similarly, Y2k has introduced errors that, if not remediated, will cause significant failures during the new millennium. (Hopefully even you are prepared to accept this premise).

When it's time to pick up your repaired equipment, most reputable technicians provide a demonstration that it works properly before you leave their shop. Similarly, I'd like a credible demonstration that the banking system has been repaired properly, Failing that, I think it's only prudent to assume that it hasn't, and prepare for whatever potential problems unrepaired code can cause.

Forgive me, this isn't a debating contest. Am I must be missing something? Isn't this approach just plain common sense?

-- Dr. Roger Altman (rogaltman@aol.com), September 29, 1999.

They are not arguments, they are requests for information. You have offered no proof that the code used by banking has NOT been remediated. Your assertion contradicts reports from every source related to the financial services sector.

The banking IT infrastructure is not a VCR. Personally, my VCR does not have a large staff devoted entirely to its maintenance. In addition, my personal income does not depend on my VCR working. If it breaks, I simply go without watching movies for a few days.

Again, if your bank does not satisfy you... go someplace else. As a private business, a bank does not "owe" you a personal explanation of their Y2K readiness. If your business is important enough to the bank, they'll try to satisfy your curiousity. If not, find a bank that will.

You may ASSUME whatever you choice. Your personal assumption, however, should not be intepreted as a finding of fact. You are simply using what I could call Cook's Theorom: In the absence of fact, always assume the worst.

The banks depend on their IT infrastructure... and they have been aware of Y2K problems for quite some time. I personally know senior managers in regional banks... and they all tell me the same thing. We keep testing the damn stuff and it keeps working.

While this is not a debating contest, I prefer not to allow your spurious arguments to pass uncontested. If you use the logic of self interest to suggest banks will lie... how can you dismiss the self interest involved in successful remediation. Financial institutions have a distinct self interest in remaining operational.

Common sense tells us there is probably at least some degree of truth to the mountains of reports coming from not only institutions... but from regulatory agencies. Common sense tells us not to confuse personal opinions (like yours) with actual factual arguments. You are simply saying the banks have not proven, to your satisfaction, that they will survive Y2K. So... bury your money in a mason jar.

-- Ken Decker (kcdecker@worldnet.att.net), September 29, 1999.


You're implying the banks have done NOTHING to date. If the code is unremediated, it hasn't been touched - isn't this what you're saying?? Do you honestly believe as a grown up person that the banks have done NOTHING with their code???

I've seen the test results from many, MANY banks testing so I am really interested in your answer and your source.

Thanks in advance.


-- Deano (deano@luvthebeach.com), September 29, 1999.

If some,any,large banks would announce that they are CURRENTLY using the code that they will be in 2000 then we could be a little confident in these blanket A-OK PR releases. I say a little because what if JUST the post office is less than functional in 2000? How will joe public get bank statements or get checks to their "suppliers". I know drive-n-drop-off. Then there's gas and that darn systemic loop again that Eddy forgets. Think utilities, the post office, payment of employees, and employees on the job. I know the utilities are ready.... Ready for this scenario?

-- Complete IT (systemic@loop.com), September 29, 1999.


If you want to cash a check, you need to take it to the bank it is drawn on, not your bank. Your bank is perfectly within their rights-- and it has always been that way to the best of my knowledge--to require the checks to clear before giving you cash for them. By asking them to cash it, you are asking them to honor a piece of paper that did not originate from their bank nor one of their customer's accounts. They would be foolish to cash it, and no bank ever would.

Just trying to be helpful.

-- Buddy (buddydc@go.com), September 29, 1999.

Complete I(dio)T

Pardon?? You think they're not running on the same software now as they will be using in 2000?? You're kidding me, right??? When, oh when pray tell, did you think they were going to install the software??

If the code has been remediated and successfully tested (and it has) it's what's in production now. There won't be a whole lotta installs going on on 12/31........


-- Deano (deano@luvthebeach.com), September 29, 1999.

Buddy...I understand what you are saying. However, a year ago I was CASHING dividend checks larger than this, without a problem. They gave me flack last week over a gov't money order for $600 and a $1200 cashier's check ISSUED AT THIS BANK, THIS BRANCH!!!!!!!!!!! They flat ass don't want to give out any cash! I fully expect the teller to scream in my face that I am causing a bank run.


-- Taz (Taz@aol.com), September 29, 1999.

Taz - deposit all your checks. As soon as you know it is posted, go in and close your account - tell them you are tired of the battle and are taking your business elsewhere. If they try to give you your funds in a cashiers check - insist on cash.

-- April (Alwzapril@home.com), September 29, 1999.

Last Friday, I went to my credit union to withdraw $2500....wanted $2000 in ones and $500 in quarters. They had to order it from the central bank, the Fed I presume. It was ready for me on Monday. No hassle from them, no undue questions, a few raised eyebrows and chuckles but that's it. They aren't getting many requests for currency yet.

Last week I sold one of my cars. I was given a "bank check" for $7000. I asked to cash it (at the bank it being drawn from) and receive currency in $5, $10 and $20 denominations. They had to order it from the central bank, the Fed I presume. It was ready for me on Monday, 48 hours later. Again no questions. I was shocked that they didn't even ask me for a picture ID.

The Fed says there's enough currency in circulation for $2000 per household, if needed. The reality is that most of this is in large denominations. Also, most of the currency will be in locations that are remote from the banks and only available on a 48 hour basis. When/if the SHTF in December, people will lose patience when told they must wait 48 hours. This is when panic will set it.

Get your cash NOW.

-- Big Steve (Steve@Boulder.CO), September 29, 1999.

Mr. Decker's arguments illustrate the classic pollyanna belief that "the burden of proof" is on the doomer to prove that there are going to be problems. If this burden of proof cannot be met, then pollyannas believe that there is no need to worry.

My favorite analogy here is that of a bomb threat. If someone phones in a bomb threat, claiming that in a public building (maybe a bank) a bomb will explode at a particular time, we certainly do not insist that the caller "prove" this. Even if the caller hangs up without supplying any evidence whatsoever, just his "assertion" that there is a bomb that will go off at a particular time, we still do not dismiss the call. Rather, we take the position that until we can prove otherwise, the building must be cleared and either the bomb found or a hoax declared.

We take this position because of one simple reason: human lives are at stake. Funny how Y2K is the same way, isn't it?

93 days.


-- Jack (jsprat@eld.~net), September 29, 1999.

Deano- Your statement tells me that you are assuming that, because the code HAS ALREADY BEEN remediated and successfuly tested, that the same code MUST be in production now.

I agree that sounds like it SHOULD make sense. In a perfect world.

'course you know what they say about making an assumption. LOL

-- Brent James Bushardt (brentj@webt.com), September 29, 1999.

I think Jack's analogy hits the nail on the head. When lives are at stake, the threshhold to take protective action is very low. In the case of Y2k, the chances of a serious mishap are well beyond this modest trigger point.

Can anyone seriously believe that the banks have been proven Y2k compliant, and therefore, no protective action is necessary? Such a premise is incredible to me.

BTW, here is David Eddy's response to my email, and my response to his email.

Dr. Altman:

Neither I, nor Dr North, nor anyone is able to lay their hands on such concise facts. Those facts do not exist now & the banking system is humming/stumbling along.

We're going to have to take this one on faith.

If I were a gamling man, I'd be betting against OTHER industries.

The only thing we really know is that we'll know fairly soon... but who's counting.

- David


You put your finger on my point exactly. There is a BIG difference between the ODDS of something happening and the STAKES IF it happens. Your analysis does not consider this ditinction.


-- Dr. Roger Altman (rogaltman@aol.com), September 29, 1999.

Gawd, nothing like having both BANKING and GARY NORTH mentioned to really bring out the trolls -- even the long lost "Buddy". LOL!

I urge everybody to REALLY READ THOROUGHLY David Eddy's defense of the banking industry, replete with such grand arguments that I don't think I have seen expressed since at least early 1998 -- like, well, we had banks long before we had computers. Like, duh, yeah, and they were huge and had everything on paper files and a zillion clerks to rummage through it -- gone. IF DAVID EDDY'S PATHETIC ARTICLE AS TO WHY YOU SHOULD TRUST BANKS TO BE READY DOES NOT PERSUADE YOU TO CASH OUT N-O-W BEFORE IT ALL GOES DOWN THE TUBES, NOTHING WILL!!!!!

(I can hear Beano now, "Duhhh no, NO! No, yuh gotta keep yer money IN the bank, yeah, thats what yuh gotta do. Yo, Adrian, thats what yuh gotta do, right? DuhhhYeahhh!!!")

-- King of Spain (madrid@aol.cum), September 29, 1999.

Banking is a global industry. Even if the US manages to squeak by, many foreign countries will seize, slow, and otherwise pollute the system. Its gonna be a coin toss as to how bad it gets.

If even a small amount of people take their money out the risk of bank failure will increase dramatically, but in the current situation, I can't say I would fault anyone for wanting to have their cash. Even Flint agrees that its too risky to leave it in the bank.

"99% is not good enough. It must be 100%" - Alan Greenspan

-- a (a@a.a), September 29, 1999.

I just came across these. Well worth a read:



-- Linkmeister (link@librarian.edu), September 30, 1999.

Also see:


-- Linkmeister (link@librarian.edu), September 30, 1999.

Is it just me or are 'Mister Deckers' contributions becoming more desperate as time passes. *Most* individuals of the stature and intelligence he claims to represent understand that answering a question with a question is NO answer at all.

-- (cujo@baddog.byte), September 30, 1999.


Are you trying to be obstinate, or just simply not bothering to read Mr Decker's post? Or perhaps you simply dont understand the point.

An analogy. .

I tell you to radically change your lifestyle and move into a cave in the wilderness, because next week, the earth will be devastated by a catastrophic asteroid impact.

You, rightly shocked, but suspicious (bearing in mind the great upheaval I am suggesting to your day to day life), ask me to prove that what I say is true.

My proof consists entirely of telling you . . "YOU prove to ME that it WONT happen".

You, clearly, are not able to do so.

Still concerned, you check with NASA, the Government, and most other official space-related agencies, to see whether anyone can disprove my argument. They respond by telling you that whilst it is impossible to PROVE that I'm wrong, they have no information to suggest that I am right, and in fact, the information they DO have suggests the opposite.

Do you therefore take my advice and move to the cave ?

In case you still fail to understand the analogy . . let me spell it out.

1) The "expert" advocates of the pessimistic Y2K scenario, claim, (in the face of all the information eminating from the banks and utilities regarding their success in meeting the challenge of preparing for Y2K), that in reality, (and contrary to the official line claiming the reverse), the system is still bound to fail on a massive scale.

2) Those of us of an optimistic nature, pointing to the information coming from the banks and utilities themselves (as well as referring to the simple logical assumption that no bank or utility would suicidally ignore an issue of this kind, especially bearing in mind the resources and expertise at their disposal); ask these pessimistic "experts" to explain the basis of their opinion, and to back up the explanation with some kind of evidence.

3) Their reply is . . "Prove that it WONT all go wrong".

Mr Decker simply points out the folly of the "prove the negative" device as a means by which to back up an opinion.

I hope this goes some way to answering your question.

Kind Regards.


-- W0lv3r1n3 (W0lv3r1n3@yahoo.com), September 30, 1999.

Thanks (again), Linkmeister, for the unusually good catch (international banking risks). I can't believe I read the whole thing! (Also passed it on to at-risk relatives who like neat reports more than messy forums.)

-- jor-el (jor-el@krypton.uni), September 30, 1999.

QOS - Is that Queen or Queer - you be the judge........

The bank's the best place for your money. Always has been, always will be. Are you honestly telling everyone to pull their thousands of dollars out and stash it around the house?? Do you even listen to yourself?? Do you have any idea how ignorant that is??? Obviously not.

QOS - you prove day in and day out that most 2X4's and some big rocks possess more intelligence than you will ever dream of having.

Asked any more MEN to mudwrestle lately Queen???? What a dolt!!!


-- Deano (deano@luvthebeach.com), September 30, 1999.


If a bank has remediated their code and successfully tested that remediated code, you can rest assured that THAT code is what's in production now. They would want to get any bugs (that didn't show up in testing and it happens all the time) out of production as soon as possible. The sooner they install, the sooner they can do just that.

That's the way it works.


-- Deano (deano@luvthebeach.com), September 30, 1999.

More give and take from David Eddy.

Roger email:

You put your finger on my point exactly. There is a BIG difference between the ODDS of something happening and the STAKES IF it happens. Your analysis does not consider this difference.

David Eddy email:

I think I'd tend to agree here... unfortunately attempts by a wide variety of folks to raise the alarm at the tremendous stakes (of things getting massively screwed up) at risk have been uniformly put down... "tut, tut, tut... don't worry your pretty little head. We've got it under control."

I still maintain that the odds that banks continuing to work reasonably well are good. However the stakes of the same banking industry working against their own good fixing efforts, are likely to be undermined by their continued refusal to provide any substantive, public evidence of said progress.

What I'd like to see is banks making public how often/much they already screw up & cope with it... unfortunately such a disclosure is clearly not going to happen. Too bad.

- David

Roger email:


You know Garry North is a historian. So even though he is as sharp as they come, I presume his mathematical background is not on a par with that of a typical "quant". BUT I have a deep respect for his INSTINCT to sniff out the possibility of collosal Y2k mishaps even though he may not be able to express these problems is ways that are acceptable to a quantitative mind. So here's my quantitative take on what he's saying:

*Let's take the bank's word that the vast majority of them really will be ready by the end of the year and give them only a 1% chance of systemic failure.

*On the other hand, foreign banks are in a lot worse shape so let's assume that chances of them failing are 10%

*Because banking is CRITICAL to world commerce, on a scale of 1-10 in importance, banks would rate a 10.

Assuming that foreign banks are critical to maintaining the integrity of the world banking system, the following equation provides a quantitative assessment of the relative risk:

Relative Risk from Y2k = (1 - 0.99 x 0.9) x 10 = 1.09 (the highest number possible is 10)

Even by itself, "1.09" is NOT insignificant. Now let's put ourselves back in the 1960's when banks relied on computers in a much more limited way, and INTERNATIONAL foreign banking was concentrated in a much smaller number of countries which probabily had banking operations as reliable as ours. Therefore, the risk of system failure was about the same here as it was abroard, and THAT risk was vanishingly small because very few computers were interconnected electronically the way they are today. It's also possible that the BANKING SYSTEM played a much smaller role in commerce then they do now (meaning individual banks played a much larger role back then). Therefore, the relative risk of SYSTEMIC FAILURE during this time period might have been on the order of:

Relative Risk (1960's) = (1 - 0.9999) x 4 = 0.0004

So when you compare the relative risk for these two time periods you can estimate that we are possibly over 2500 times more at risk from systemic failure today than we were several decades ago.


David Eddy email:

Mr Altman -


>*Please give me evidence that within (just for starters) the banking system itself, significant and substantial end to end testing has been successfully completed. Have these tests been audited -- or better yet, DESIGNED AND AUDITED -- by competent third parties? Have the details of such tests been released to the public?

The banking system has NEVER been tested end-to-end even now... simply too many moving pieces.

And does the lack of said current test therefore mean that the banking system is currently in a state of collapse? I don't think so.

The banking system (or any of these systems) have been constructed over many decades, little bitty pieces at a time. No failure of a single piece will bring everything to an immediate, permanent halt.

>If you can't provide the above details, please try once again to convince me >that Gary North is not correct, and you, David Eddy, are not whistling past the graveyard.

Dr North has made a very nice living, thank you, over the past several decades selling the impending end of the world for whatever reason was at hand. The best of my knowledge he wouldn't know JCL from a poke-in-the-eye with a sharp stick.

>*Please provide public access to the details of contingency plans for bank record reconstruction induced by SIMULTANEOUS AND MULTIPLE BANK FAILURES caused by electrical grid and back-up generator failures (what evidence do you have that the banks have solved their embedded chip problem likely to impact the reliability of their back-up electricity), software errors, data base corruption, wire transfer errors, extensive telecom outages, civil unrest, terrorist attacks, etc.

Chill out. You can conjure up whatever impending total disasters you wish if that makes you happy. Personally -- and from my direct experience in large, complex software systems -- I believe life will go on. And neither one of us can actually prove that belief until after the fact.

- David

Roger email:


If you had asked me not to make public the emails you sent me I would have abided by that request. Y2k is vitally important, and sharing whatever additional supporting evidence you can muster is essential to help forum participants plan accordingly.

I saw nothing in your emails that indicated anything of a proprietary nature. I should think you would be glad to have your views extended to as wide an audience as possible.

So if I offended you.


-- Roger Altman (RogAltman@AOL.com), September 30, 1999.

LOL! Why is it that it is ALWAYS the pollies that get so stirred up about PUBLIC disclosures?? This David Eddy dude writes a frigging article on a web site COMPLETELY OPEN TO THE PUBLIC, yet objects when someone asks questions about it and PUBLICIZES the answers that he gets back from Eddy??? Gawd!

Beano, PLEASE, leave YOUR money in the bank. I hope that ALL pollies leave their money in the bank. (If you can persuade Flint to PUT his money IN the bank, please do so!) And I hope that you morons are invested up to your frigging eyeballs in the stock market, especially the Internet stocks!! (I can hear Beano now, "Duhhh, hey, that KOS is A-OK, yeah, he's comin' around now, sayin' the right stuff about yuh gotta keep yuh money in the bank. DuhhhYeah!!")

-- King of Spain (madrid@aol.cum), September 30, 1999.


Boy! Two threads in one afternoon. You're making this too easy birdbrain. My money IS staying in the bank. No doubt about it. You take yours out and bury it in the backyard (or whatever expert advise you're handing out these days).

Wrong again pervert. Only my 401(k) is still in the market and it's doing just fine thankyouverymuch. I made the big bucks years ago with Home Depot........turned a few thousand into SEVERAL thousand real quick. Family Steakhouse was another big one for me.

What are your success stories?? Oh, and pervert, ya can't refer to any mudwrestling conquests over either sex..........


-- Deano (deano@luvthebeach.comq), September 30, 1999.

David Eddy, a polly. That's an interesting observation, KOS. Evidently you haven't been keeping up with his his commentary over past two years. I suggest you review his writings prior to making any more knee-jerk conclusions concerning his positioning on Y2k.

-- Buster Collins (BustrCollins@aol.com), September 30, 1999.

Then there is this nasty little thread just posted today referencing an article in CNN/FN about multi-trillion dollar exposures to banking that are still real with three months to go -- and the industry isn't even aware of it, by and large:


Fortunately, Hoff has already assured us that cascading banking problems have a vanishingly small probability, you know, like getting hit with a meteor.

-- BigDog (BigDog@duffer.com), September 30, 1999.

Buster Collins: I will admit that I have not followed David Eddy's previous articles, so maybe I am shooting from the hip. But THIS article is absolutely polly tripe. And very weak tripe at that. GARY NORTH HAS A COMMENTARY ON EDDY'S ARTICLE TODAY (www.garynorth.com, in "Banking").

Deano, your never ending fascination with homosexuality is disturbing, as are your previous posts where you talk about how you like to work with kids. Get help, dude!!

-- King of Spain (madrid@aol.cum), October 01, 1999.

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