Deutche Bank Crashgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Last week the Deutche Bank has a crash because they installed a new system in time for the Y2K. While they claimed it was not a Y2K crash, two news sources said the new system was being installed to replace a "non-compliant" system. My question is, did they bring the old system back on-line or did they fix the bugs in the new system???
If the DeutcheBank crashes in January, that could bring the whole European banking system to its knees and put the world banking system in jeopardy.
So, does anyone know if the system is now "compliant"???
-- IMREADYRU (firstname.lastname@example.org), December 16, 1999
I don't have the answer to your Question about DB. However, the Dirty Little Secret of this whole "remediation" charade is that almost NONE are using remediated code for Production in 1999.>p?In just two (2) weeks, that does a 180 degree change.
-- K. Stevens (kstevens@ It's ALL going away in January.com), December 16, 1999.
From Hyatt discussion in news forum under Greenspan scared to death.
Move over, Mary Higgins Clark and Dorothy Gillman, it's time for some sleuthing on y2k.
Under this scenario, the Federal Reserve System officials who govern the banking system of the United States of America were REALLY shook up by the one-day Deutsch Bank failure on December 1.
Now, follow this time-line closely. . .
December 1: Deutsch Bank computer system in its International Payments department goes down. In desperation they quickly revert back to the old system to restore order.
December 2: A passerby tells a WASHINGTON TIMES reporter that he sees the lights burning late at night in Alan Greenspan's office at the Federal Reserve.
December 3: An "emergency meeting" panic sets in at the Fed, who hurriedly get the word out to banks across the country that "the house is on fire, the house is on fire." We must have an official time-out. . .we must have a hiatus so we can buy time. . .to figure out what to do.
December 4: Banks across the country, in turn, have their emergency meetings, draft a letter to be sent to all their customers doing foreign exchange business with them, and rush it to their printers.
December 5: Printer sets up, prints letters.
December 6: Letters are mailed to customers telling them that the Fed has "recommended" to them that their foreign exchange business be closed down (made to sound like, ho-hum, routine maintenence, much like a chemical plant temporarily shutting down for inventory and annual clean-up) for a THREE WEEK period--beginning on December 21, and ending on January 10. During this time no deposits will be accepted. . .AND NO WITHDRAWALS WILL BE ALLOWED.
December 13: The Yourdan site member receives the letter and publishes it on the Yourdan site two days later.
This "case" is, of course, composed exclusively of circumstantial evidence. But, the more I think of it. . .well, IT MAKES SENSE TO ME.
Inexplixably, the media--AGAIN--do NOT consider this news. Why? I guess, even though it does HINT at a possible, future bank closure in general, it was NOT an order, but only a "recommendation" from the Fed (but, can you see any bank thumbing its nose at the Fed and saying, "Go fly a kite; I don't feel like following your 'recommendation'; I'm going to keep right on doing foreign exchange business anyway?). Also, ADVANCE NOTICE is given, so that funds can be withdrawn BEFORE the December 21 deadlline.
When you consider that, in the old days of analog equipment and long distance phone lines, foreign exchange trading has NEVER been suspended, this has got to be a ringing shock to ANYONE AND EVERYONE who follows y2k manipulations and events closely. Three days (coinciding with the 3-day storm?) is one thing. But, THREE WEEKS? Folks, there are a lot of VERY WORRIED people. . .in VERY HIGH places, running RIVERS of sweat over what might happen to the international banking system.
How do you like my little novella of a mystery? Sounds more like non-fiction to me.
-- narda (email@example.com), December 16, 1999.
Eek, eek and EEK.
Sweat and other stuff, I'm sure.
-- stop (firstname.lastname@example.org), December 16, 1999.
K.Stevens: Would you please explain what you're saying? What do you mean by "production in 1999"?
-- cody (email@example.com), December 16, 1999.
K. Stevens: Are you saying that almost no companies or organizations or banks (which of these are you referring to?) are using their Y2K remediated code to conduct business at this time, but they will all have to do so in three weeks?
-- cody (firstname.lastname@example.org), December 16, 1999.
I missed the forex letter. Where's the URL?
-- nothere nothere (email@example.com), December 16, 1999.
I somehow missed the letter from the fed recommending a shutdown of international payments for a THREE WEEK period--beginning on December 21, and ending on January 10. Can someone provide links and/or info.
-- Rick (firstname.lastname@example.org), December 16, 1999.
Yesterday, I spoke with my banker here in N Texas. We set up a closing date for some land I am buying for the 28th. He did express a desire to close before the year end. Obviosly this bank will be open.
-- MegaMe (CWHale67@aol.com), December 16, 1999.
It's not a question of a single or even group of banks being 100% remediated. An exchange is just that EXCHANGE of the data from one bank to another. If one bank starts transfering garbage that garage becomes part of the second banks data. That bank might send bits of that corrupt data to another bank, and like the shampoo another, and another.
Oops now the sytem is corrupted with bad little ones and zero's. That is what could give Alan the shakes.
-- Squid (ItsDark@doen.here), December 16, 1999.
Mega: the text refers to "foreign exchange business", the international clearing & settlement process between extremely large 'money center' banks.
-- who knows? not me (@ .), December 16, 1999.
A couple things bother me about the whole Deutschbank issue. First, (and I stated this in the original thread)the timing of thier "upgrade" is suspect. What IT manager in his right mind would make an OS change with 3-4 weeks left before the rollover, violating their own system freeze policy? The only conclusion I can reach is that their current system is non-compliant. I think what Kstevens was saying is that they aren't preocessing with the remediated code yet this year. In three weeks, they will have no choice.
The second thing that bothers me is the Yardeni connection. If I were an economist looking at Y2K from early last year and attempting to make an educated guess about the effects of Y2K, my first step would be my own IT department to find out their impressions. It is no secret that Yardeni has been the most pessimistic economist out there. Makes you wonder what he may have found out from his own people.
-- ariZONEa (email@example.com), December 16, 1999.
Ok, folks I think we can safely say we just went to DefCon 3.5-4.
Firstly for IMREADYRU:
WHERE IS YOUR LETTER???
Your letter will be the proof of what we already know unofficially: That those in the know, know for sure things are serious. If this is a fictional story, then get off this board and grow-up. Fiction is over at amazon.com under Peter and the Wolf.
I looked for the Deutsche Bank story. It is no where to be found. Deutsche Bank don't even have a news release on it on their site. I noticed a headline on a news service referring to a Financial Times story, but the article has gone from the site. Gary North's site also referenced the same URL so we can't the orginial story but Gary as usual has a copy on his site (Dec 8 1999).
I have checked most other major news wires and news sites with no reference to this crash.
Let this be a lesson to those who think that such coverups do not happen. If you ever find anything of interest, take a copy of the page for yourself so that if the info is removed we can get the source info back again. My guess is that some FT reporter had a contact at Deutsche Bank who gave him the story. After it was published it was pulled off the FT site.
Bless you Gary North.
I've put the article below. The last para tells the whole story.
WRT to Code Testing:
I posted a piece a while back that seemed to have gone unnoticed. In 1998 Gartner put out a report and one of the top 5 conlusions of this 20-30 page report was:
"Fifty percent of all enterprises are not planning to perform any year 2000 testing - they intend to fix code and install to production."
This means BIG Serious trouble to anybody who has been within 10 miles of any software development project. Having been there I know that this is type of action is a guarnateed pink slip firing with cause under normal conditions.
Here is the FT story from Gary's site.
When bank A cannot settle accounts with bank B, and bank B cannot settle accounts with bank C, we have the beginning of Greenspan's cascading cross defaults. He warned the House Banking Committee about this on October 1, 1998.
Big banks can get into trouble when their computers fail. Here is a recent example.
This is from the FINANCIAL TIMES (Dec. 7).
* * * * * * * * * *
Deutsche Bank has been forced to apologise to many of the world's leading financial institutions after its worst-ever computer problem.
Last Wednesday a systems problem at the German bank's central site outside Frankfurt meant it was unable to participate in the international clearing of interbank payments.
Deutsche yesterday declined to give further details, but an executive said the unprecedented one-day halt to payments to major international counterparties was the most severe technology problem it had experienced.
The system normally deals with about 100,000 transactions an hour, but the bank was unable to use its back-up system because it contained the same software problem.
During the 10-hour shutdown on December 1 Deutsche tried to clear the largest payments manually, but the huge volume of transactions meant many could not be handled until the next day, when the system was functioning again.
The bank has been forced to offer interest payments to banks to which it owed money. Executives say it cleared - or settled - all outstanding trades with counterparties by close of business on December 2.
Deutsche Bank has been telling European and US banks that the problem was un-related to the Year 2000 computer issue.
It has said the problem occurred after the installation of new software in an IBM operating system.
Nevertheless, the system failure has heightened concerns at US and European banks about the possible impact of the millennium computer problem.
Competitors were yesterday questioning why Deutsche would choose to install crucial new Y2K compliant software just a few weeks ahead of January 1. . . .
FT LINK THAT NO LONGER WORKS:
GARY NORTH LINK TO COPY OF FT ARTICLE:
-- Interested Spectator (is@the_ring.side), December 16, 1999.
Interestingly enough, this came out a few days after the FT story, but does not mention the incident:
FOR IMMEDIATE RELEASE
Global Financial System at Risk
Dec 6, 1999--
The global financial system will face its largest challenge to date from Y2K. The last real threat to global markets was the Russian debt crisis in the fall of 1998. In 1998, Russia only represented roughly 1.5% of Gross World Product (GWP) and yet the U.S. stock market declined over 20%. Y2K risks in emerging markets significantly dwarf the Russian threat.
International Monitoring believes that most institutional large value exchanges and clearing systems are now Y2K compliant. Unfortunately these efforts alone will most likely not be enough.
International Monitoring has published a technical white paper highlighting the risks to the global financial system which has been submitted to the U.S. senate sub-committee on Y2K and is available free online at
The Y2K financial threat comes in the form of market liquidity disappearing with extreme volatility filling the void.
A recent article published by Reuters on Dec. 2nd indicates that many sophisticated derivatives funds similar to LTCM (Long Term Capital Management) have, or are currently liquidating their positions.
The article went on to state that these funds are anticipating volatility, which falls outside of their historical models.
Highly leveraged derivatives are highly sensitive to extremes in volatility. This volatility could easily be transmitted to traditional bond and stock markets.
The U.S. Fed has done an excellent job of planning a Y2K strategy for the U.S. economy, between the extremes of excess liquidity leading to inflation and limited liquidity leading to institutional runs and flights to quality. Unfortunately the U.S. Fed isn't big enough to be a lender or liquidity provider of last resort to the world.
Liquidity and Y2K counter measures have been created by the fed and many central banks. The creation of a US$426 billion market in repo options by the fed is one of the more creative ways of offering liquidity on tap over the Y2K period. The fed and other G-8 central banks have expanded their definitions of acceptable collateral in an effort to bolster banks positions and available liquidity. These are significant defences. Whether they will hold up in the face of volatility extremes in the multi-trillion dollar derivatives market is another issue.
Many central banks in important markets are not as sophisticated or as well prepared as the Fed to respond to this crisis. The Asian and Latin American economies, which have just posted improving GDP figures in the last quarter, are at risk.
Lesser economies are at severe risk as they will be some of the first to lose liquidity in flight to quality or liquidation situations. Individuals in these economies are at risk of events far worse than the Asian crisis of 1997.
The de-monetisation of economies or extreme currency swings are possible for many economies globally. One investor option is holding what may be more stable currencies or gold as a store of value.
The debate of putting gold forth as a store of value would seem laughable given its performance over the last 18 years. That being said, yesterday's dog may well be tomorrow's dynamo, as gold's traditional role as a store of value is upheld. Prices have tested new lows around $250/oz. in the fall and shown extreme sensitivity to upside interest as seen in the recent price pop to over $330/oz. a few weeks ago after a positive IMF announcement.
Recent prices of $270 could be seen as reasonable in the face of the risks ahead.
We recommend fund managers consult the central banks in the countries in which they do business to ascertain their Y2K countermeasures and response plans.
International Monitoring is a specialist consultancy based in London. They assess countries technology infrastructure, efficiency of Y2K fixes, and estimates of the lateness of certain fixes. These analyses are used to calculate economic damages and probable Y2K scenarios.
The results are used by global 1000 firms conducting business internationally. For more information visit International Monitoring's web site at www.intl-monitoring.com and download a product brochure
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-- G Anderson (email@example.com), December 16, 1999.