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AFRIK-IT  January 1999

AFRIK-IT January 1999


(Fwd) [GKD] Y2K and the Domino Effect


"Watermeyer, Henry" <[log in to unmask]>


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Mon, 25 Jan 1999 17:55:13 +200





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Hi all

Some people think that the y2k problem is being overstated. Read the
attached "Circle of Dominoes", if you havent already seen it, and think
some more!


"Optimism is a state of mind, not a fact of life!"

------- Forwarded Message Follows -------
Date:          Mon, 07 Dec 1998 14:43:30
To:            [log in to unmask]
From:          John Walker <[log in to unmask]>
Subject:       [GKD] Y2K and the Domino Effect
Reply-to:      [log in to unmask]

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CSS Internet News Special Report, Y2K and the Domino Effect

Y2K, A Circle Of Dominoes

A critical look at the coming Year 2000 crisis using the mathematics
of interrelated probabilities

By the Webmaster at
Copyright _ 1998 by Arial Marketing, Inc.

- A Circle of Dominoes *
- The three core infrastructure sectors *
- The critical question *
- Probabilities review *
- Bring in the secondary factors *
- The big picture *
- The 1% challenge *
- The impact items *
- Is this right? *
- Is it reasonable to talk about chances for a single event? *
- Conclusion *
- Disclaimer *

A Circle of Dominoes

The fact that each infrastructure element of modern society is
threatened by the Year 2000 computer problem is well established.
What has not been thoroughly investigated or publicized, however, is
the effect of the interdependencies of these infrastructure sectors
and the overall probabilities of society staying up or going down.

It is in the interdependencies, in fact, where the soul of the Y2K
problem lives. That these interdependencies have been largely
ignored by the press and the public is perhaps the most alarming Y2K
realization of all. Almost nobody has a realistic understanding of
the bottom line odds we really face.

This free report from attempts to calculate the
overall odds of our civilization staying up or going down, using
well-established laws of probability and well-known
interdependencies among infrastructure sectors. The only unknowns in
this study -- and admittedly, they are very large unknowns -- are the
actual probabilities for each individual sector suffering a critical
Y2K failure. However, in order to get past the criticism that will
certainly accompany such assumptions, Y2KNEWSWIRE.COM has developed
and posted a "Y2K Domino Engine" where users can enter their own
assumed values and receive their own resulting odds calculations,
based on the interdependencies of various infrastructure sectors.

This engine is accessible at:

The three core infrastructure sectors

Three sectors must remain in operation in order for the rest of
society to function. These are banking, power, and
telecommunications. The failure of any of these three sectors will
cause the failure of the other two within a matter of days or weeks
(at most), which will then result in the failure of civilization as
we know it.

For example, the loss of power would render banks and phone companies

The loss of telecommunications would render power companies and banks

And the loss of banking would eventually render power companies and
telecomm companies useless (although this would take longer).

If banking, power, and telecommunications fail, the affected nation
(or planet) suffers mass famine, unprecedented internal turmoil, and
eventually returns to a pre-1900's civilization. This result is
largely undisputed by all but the most absurd Y2K skeptics, most of
whom simply have no grasp of history or understanding of civilization.

While there is no 100%-accurate data available regarding the
probabilities of each of these going down (and there wonÆt be
because thereÆs no way to prove anything until Y2K actually hits), we
can start with some conservative numbers based on the data we have

Note that the "chance of failure" figures used below represent the
odds of an internal, critical, sustained failure that cripples the
sector in question to the point where it can no longer
constructively participate in society. This definition is
wishy-washy, at best, and it is for this reason that we use
conservative numbers.

We will propose that the chance of the power grid going off-line on
its own is 25%. ThatÆs a conservative estimate given that many power
companies havenÆt even completed the assessment stage, and the fact
that power failures can cascade through the system, causing a
"domino effect" collapse.

The chance that banking will fail on its own will be placed at 10%.

This may actually be too low considering that the failure of even 5%
of the banks would set off a cascading wave of bank runs that would
soon collapse the other banks. That's because there is only enough
cash in the banks to cover 1.32% of total deposits, and the FDIC
only holds enough funds to bail out approximately 1.25% of the
deposits. The total is a little over 2.5% of all deposits that can
actually be covered during any widespread bank collapse. For details,

The chance that telecommunications will fail on its own will be
placed at 20%. While some telecommunications companies are on top of
the issue, many arenÆt, and at least one (U.S. West) is still in the
assessment stage according to the information on their Year 2000 web
site, meaning there is almost no hope of U.S. West being fully
compliant by January 1, 2000.

The critical question

Now, if we accept these numbers (and you don't have to, you can go
to the Domino Engine and enter your own numbers if you want), the big
question is: what is the overall chance that none of these three
will go down?

Or, put another way, if the chance of power failing is 25%, the
chance of banking failing is 10%, and the chance of
telecommunications failing is 20%, what is the chance that none of
them will fail?

Probabilities review

To find the answer, it may be helpful to quickly review some laws of
probability. Suppose you have three dice, each one representing one
pillar of the "core" diagrammed above. And suppose the number "1"
represents a failure of the sector in question. If you roll the
three dice simultaneously, what are the odds that at least one of the
dice will come up as a "1"?

At first glance, it might seem that you add the percentages: 25% +
20% + 10%, making 55%. However, this is incorrect. This becomes
obvious if you are considering the flipping of, say, six coins. If
you're asking, "What are the odds that none of the coins will come up
heads?" then you realize you can't simply add 50% six times. That
would be a 350% chance, which is meaningless. Probabilities only
exist between 0% and 100%.

So there must be a different way to approach it.

It turns out that calculating the probability of the events not
happening is easier than calculating the probability of them

And the not side is relatively easy. What are the odds that any
single coin will not come up heads? It's 50%. Multiple that times
the six coins (.5 x .5 x .5 x .5 x .5 x .5) = .0156. That means
there is a 1.56% chance that none of the coins will come up heads.
Simply subtract that from 100% (100% - 1.56% = 98.44%) to get a
98.44% chance that at least one of the coins will land on heads.

Back to the dice examples, if you are rolling three dice and asking
what the odds are that at least one of them will roll a 1, the
answer is 100% minus the chance that none of them will roll a 1, and
that chance is 5/6 x 5/6 x 5/6, which is 58%. You take 100 - 58 to
get a 42% chance that none of them will roll a 1.

Now, back to the CORE odds. Let's ask the question again for review:

If the chance of power failing is 25%, the chance of banking failing
is 10%, and the chance of telecommunications failing is 20%, what is
the chance that none of them will fail?

The answer to this question is .75 x .9 x .8 which is .54 or a 54%
chance that none of them will fail. Accordingly, there is a 46%
chance that at least one of them will fail.

So there's our answer: taking the individual odds given for the CORE
sectors, and acknowledging the interdependent nature of these three
sectors, we must conclude there is a 46% chance that at least one
will fail. And that one failure will cause the other two to fail, so
there is actually a 46% chance that all three will eventually fail.

Again, you may disagree with the initial numbers, and you can enter
your own values at the web site address given above. However, the
interdependencies will always tend to multiply the effect of
isolated failures, resulting in far worse odds than most people
initially suspect.

Bring in the secondary factors

Here's where the analysis starts to get tense. Assuming that "power"
has a 25% chance of failing on its own, consider the things on which
power depends. We have listed three key things on which the power
industry depends (other than banking and telecommunications, which
was already covered): coal, trains and the Nuclear Regulatory
Commission (NRC):

As you can see from the diagram above, the coal depends on coal
mining machinery, and trains depend on a number of items (we'll get
into the explanations below). But let's take coal, trains and the NRC

Coal: Power plants depend largely on coal. If coal supplies were
halted, most plants would shut down within 30 days. Throughout the
United States, at least 40% of the nation's power depends on coal,
so if coal were unavailable, 40% of the power would simply disappear.
Many power experts have stated that losing 40% of the power
nationwide could result in the entire power grid shutting down. The
answer is still unknown, but without question, there is some chance
that the absence of coal could take out the power to the entire
country. We will put the odds of coal not being available and causing
the power grid to go down at 10%.

Trains: The trains carry the coal to the power plants. Without
trains, coal simply cannot be delivered in adequate quantities.
Because of the enormous problems the railroad companies are having
repairing their mainframes, we will put the odds of the railroad
company computers not being compliant at 15%.

NRC: By law, the NRC must shut down nuclear power plants that cannot
prove they can safely operate. While the NRC is currently conducting
spot inspections of 12 nuclear power plants, the nuclear power
industry as a whole is far behind where we'd like them to be. We'll
put the chance of a NRC-induced nuclear plant shutdown -- on the
scale that could shut down the national power grid -- at 10%.

To summarize, we have a 25% chance that the power industry will shut
down from internal compliance problems (embedded systems being the
most likely culprit), a 10% chance that coal won't be available, a
15% chance that trains won't run and a 10% chance that the NRC will
shut down nuclear power plants, causing a failure of the power
industry as a whole. What, then is the overall chance of the power
industry staying up?

Take .9 x .85 x .9 x .75 to get .52, or a 52% chance that none of
these will go down. That means there is a 48% chance that at least
one of these elements will fail with sufficient force to bring down
the power industry.

So now the CORE calculation is changed. Instead of power having an
isolated 25% chance of going down, it now has a 48% chance of going
down when you consider all the dependencies.

But it goes much further than that. You also have dependencies on
the railroad track switching computers (which is different from the
internal operations computers already handled in the "trains"
category), the dependence on the correct operations of all the
railroad machinery (the locomotives themselves, the repair
facilities, and so on), and the dependence on oil (fuel). Without
oil, obviously, the trains simply can't run.

We'll put the odds on these three as: switches: 5%, machinery 5%,
oil: since oil can't fail "on its own," it can only be calculated by
the chance represented in the "tankers" and "turmoil" nodes.

"Tankers" means the compliance of international oil tankers -- the
ships that move the oil from the Middle East to the United States.
Are these ships compliant? Are the loading docks complaint? The
navigation equipment? We'll put the odds of a critical failure in the
tanker industry at 5%.

"Turmoil" means the odds of Middle-East turmoil shutting down the
oil supply. No supply makes the tankers irrelevant. Why would there
be Middle-East turmoil? Many experts predict that with the United
States military crippled by the Year 2000 bug, some countries in the
Middle East would take the opportunity to militarily invade their
neighbors. While this is a possibility, we think this is a relatively
small chance, so we'll put this at 3%.

The odds, then of the oil being unavailable to the trains would be
about 8% (that's 100% - (.95 x .98), which comes out to 8%).

When you take switches, oil and machinery all together, then, you
get a 14% chance that something will stop the trains from working.
Considering the 15% chance of trains not working on their own, you
have a combined chance of 27% that the trains will fail. This
affects the odds of the "power" core sector, as we'll see below.

There's one more element here: the chance that the coal mining
machinery won't be compliant. We'll put this at 5% as well.

Now that we have the odds on each element that could cause a
critical failure in the power industry, we can calculate the combined
odds of a power failure. When you do the math, you find the resulting
odds of at least one element failing to be 59%. That means overall,
assuming the numbers are correct here, the chance that the power
industry will stay up is only 41%. The chance it will go down is 59%.

Now we turn to the banking sector:

Fed: this means the Federal Reserve. We'll put the chance that the
Fed won't be compliant at 25%. This is because the Dept. of Treasury
has made almost no progress on Y2K repairs and continues to earn low
ratings. And the Fed itself reveals very little about its own

Panic: we'll put this number at 20%, although it should probably be
much higher. This represents the chance that a bank run panic could
collapse the banks. Given that it only takes less than 6% of the
banking customers withdrawing their cash to completely deplete the
national banking system of cash, it doesn't take much of a panic to
bring down the banks.

International collapse: this represents the odds that the
Y2K-related collapse of banks around the world will subsequently
collapse the banks in the United States. Because many U.S. banks have
highly-leveraged exposure in overseas banks and overseas market, and
given the fact that other countries are even further behind than the
United States, we'll put this number at 15%.

When you take the Fed, the panic, the international collapse and
combine it with the odds of banks failing on their own, you get a
combined chance of 54% that the banking system won't make it.

Moving on to telecommunications:

Solar flares: the largest solar flares in recorded history are due
to his planet earth right around January 2, 2000. These could wreak
havoc with telecommunications (and power, for that matter, which
hasn't even been added into the equation here). We're putting the
chance at 5% for solar flares to cause a total collapse of

Satellites: are satellites Y2K-compliant? They'd better be, because
there certainly isn't time (or the means) to swap out the in-orbit
hardware. Modern telecommunications depends heavily on satellites as
demonstrated recently by the failure of the Galaxy IV satellite that
took out 90% of the pagers in the United States when it spun out of
control. We put the chance that satellite failures will cause the
failure of telecommunications at 5%.

The big picture

Now that we've identified all the elements, we can do the math. The
banking group ends up having a 54% chance of failing, the telecomm
group has a 28% chance of failing and the power group has a 59%
chance. Taken together, the overall chance of Y2K bringing this
civilization to its knees is 86%.

This deserves repeating: there is an 86% chance that the Y2K problem
will result in the complete collapse of modern civilization.

Naturally, this is assuming the numbers we used were correct. Since
there's no way to know if the numbers are right, there is no way to
verify the accuracy here.

The 1% challenge

So let's take the 1% challenge. Suppose you think all the numbers
used here are way too high. Let's take the smallest whole number we
can use here: 1%. Suppose every element here had a 1% chance of
failure. What would the overall chance be in that case?

The answer: a 15.7% chance of a complete collapse of modern

Thus, even if you take the most ridiculously-low numbers and plug
them into the dependencies here, it still tells you there is better
than a 15% chance that civilization won't make it.

The impact items

But it doesn't end here. Notice the items at the bottom of the chart
- the "impact" items. These are items that could affect the ability
of all sectors to function correctly. These are not even included in
the calculations because they don't have a direct impact on any
single element. But taken as a whole, they could dramatically
increase the chance of a failure of any item on the chart. Let's
examine these one at a time:

Terrorism: Experts on terrorism agree: January 1, 2000 is a "window
of opportunity" for both domestic and international terrorists to
strike. Why? Because the country will likely be in chaos already, and
responding to terrorist acts may be impossible.

IRS: The IRS is widely expected to fail by most people who don't
work there. If the IRS goes down, how does the federal government
operate? And if the federal government can't operate, it will affect
regulated industries like power, banking and telecommunications.

Nukes: The possibility of accidental nuclear missile launches due to
Year 2000 problems has been widely acknowledged and reported. If a
nuke is actually launched and detonates over a major American city,
it will dramatically interfere with the ability of this country to
operate smoothly.

GPS: The Global Positioning Systems was programmed to lose 1024 on
August 22, 1999. This is the day the 12-bit week register rolls over
to "000000000000." When that happens, it could have a serious impact
on banking, telecommunications and transportation, further impairing
the ability of these sectors to operate smoothly.

Meteors: A well-documented meteor shower is expected to hit planet
Earth in mid-November of both 1998 and 1999. This meteor shower,
experts say, could take out satellites. According to NASA, there is
a 1 in 500 chance, for each satellite, that it could be destroyed by
meteor dust.

Europe: According to the Gartner Group, Cap Gemini, and dozens of
Y2K experts, Europe is far behind on Y2K repairs. If Europe's "core"
collapses, that will have an impact on the United States and other

Asia: Just as with Europe, the collapse of any major Asian trading
partner (Japan, China) could have disastrous effects on the United
States. For one, if Japan finds itself in serious trouble, it might
sell of U.S. stocks, bonds and T-bills, resulting in an
unprecedented collapse of the stock market. And China has been widely
regarded as the second-worst country as far as Y2K preparations go,
beating only Russia: a country that has promised to do absolutely

Unrest: The possibility of social unrest is a realistic one. And
where there's social unrest, people can't get to work and do their
jobs. Rioting could have a huge impact on the ability of the United
States to get back into gear.

Water: This item alone could render all other "impact" items
irrelevant. If water treatment facilities fail, the affected cities
are wiped out. People either leave or they die. And dead people
can't work at the banks, the telecomm companies and the power
companies. Without water, no city survives.

Panic: This is different from "social unrest." This represents the
tendency of the population to cause huge problems in their eagerness
to stock up on emergency items like food. If the grocery stores are
cleaned out, it interferes with the normal operation of "life." The
possibility of having no food is a major distraction that could
dramatically affect the population's ability to do anything
productive (like running the banks, the power companies, etc.).

We assign a number to the entire impact group: 10%. This means we're
assuming there's a 10% chance that these elements will result in a
failure of at least one CORE component. Combine that with the 86%
chance of failure of the CORE that we've already established and you
come up with the final number:

87% chance of failure.

Is this right?

The interdependencies are correct. The math is correct. The only
item up for debate is the numbers we're plugging into this equation.
Granted, these numbers may be way off. The may be way too low, or
way too high.

But if you are a skeptic, realize how many elements have actually
been left out of this equation: retail operations, the trucking
industry, lawsuits, and so on. In fact, if you were to try to model
the entire economy and all the interdependencies, it would take you
much longer than the time we have remaining until January 1, 2000.

This report is not trying to model our entire economy, it is trying
to explain the significance of the interdependencies of a few key

Are we saying that broken coal-mining machinery could bring down the
entire civilization? Yes, that's what we're saying. If coal cannot
be mined, the lights go out eventually. If the lights go out, society
ceases to exist as we know it. We realize this may be a great leap
for many readers, but our modern civilization does indeed depend
largely on the availability of coal.

Is it reasonable to talk about chances for a single event?

>From a mathematical point of view, it really doesn't make sense to
talk about the "odds" for a single event. This was pointed out quite
well by Dr. Gary North ( who knows the
details of the Y2K downside better than anyone. There really isn't
any roll of the dice involved here: the Year 2000 path has already
been chosen. It was chosen back in 1990 when everybody decided to
ignore the problem. The results of those decisions are now largely

The only "chance" here relates to the fact that we can't see the
future. So the chance relates more to us: what is our chance of
being right, what is our chance of being wrong? Y2K has no chance,
technically. It will happen in pure cause-and-effect fashion. And
while the effects may seem random, they only appear that way because
we fail to understand the complexities of our high-tech


The interdependencies of the various sectors of modern civilization
have been largely ignored. Y2K, because it strikes all sectors
simultaneously, presents a unique, unprecedented threat to our
civilization. The level of that threat can only be properly assessed
through a mathematical, probability-based assessment, and the answer
produced by such an assessment surprises almost everyone. In fact,
most people have such a poor understanding of the laws of
interdependent probabilities that they initially think our engine is
simply wrong.

Our numbers predict an 87% chance of a collapse of modern
civilization. But the numbers plugged into the equation are easily
debatable. Using the lowest whole numbers possible, just a 1% chance
at each "node", the chance of a collapse of modern civilization
still comes out to 15.7%.

This study reveals the vulnerability of any highly-specialized, high
division-of-labor civilization. One weak link in the chain can
disconnect the other sectors from critical resources, causing a
cascading disruption in services that takes out subsequent sectors,
one by one, resulting in a complete collapse.

Perhaps most interesting is that this situation has only existed for
a few decades, and the very technology that gave us the ability to
run a high division-of-labor civilization -- the computer -- is
precisely the same technology that now threatens to take it away.

Humanity has engaged a massive experiment. The experiment, largely
unstated, was to see how much wealth we could create by turning
everyone into highly-efficient specialists. By historical standards,
the experiment is so far a huge success. But on an historical scale,
this 40-year experiment has just barely begun. It's not yet past the
incubation stage, and it may yet fail before it really gets off the

This document is considered "freeware" and may be republished,
redistributed, and copied without prior permission provided credit is
given to and the document is left intact.


This information is copyright _ 1998 by Arial Marketing, Inc.. All
rights reserved. This information may be distributed, copied,
posted, or reproduced in any form as long as it remains intact and
credit is given to

information contained in this document represents the current view
of Arial Marketing, Inc. on the issues discussed as of the date of
publication. Because Arial Marketing, Inc. must respond to change in
global conditions, it should not be interpreted to be a commitment
on the part of Arial Marketing, Inc. and Arial Marketing, Inc. cannot
guarantee the accuracy of any information presented herein. The user
assumes the entire risk as to the accuracy and the use of this


All statements made herein are Year 2000 Statements and are
protected as Year 2000 readiness disclosures under the Good Samaritan
Act of 1998.


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