Louis Proyect: Once More on IT and a Return to the Drachma

Even though the matter of Greece leaving the Eurozone appears to be resolved for at least a few years by virtue of Greece having agreed to wear a new, improved version of the austerity hairshirt, the debate over the viability of a Grexit continues.

Our Richard Smith, who worked on a project for a mid-sized fund manager to deal with one component of the conversion to the Euro, noted:

This is the kind of bank IT that’s relevant to Grexit:

…in the final analysis, it is the problem of nailing down user requirements that will always bite you in the ass.

This is the kind that isn’t:

…innovative card payment services to banks and corporations throughout the Eurozone.

By Louis Proyect, who has written for Sozialismus (Germany), Science and Society, New Politics, Journal of the History of Economic Thought, Organization and Environment, Cultural Logic, Dark Night Field Notes, Revolutionary History (Great Britain), New Interventions (Great Britain), Canadian Dimension, Revolution Magazine (New Zealand), Swans and Green Left Weekly (Australia). Jointly published with Louis Proyect: The Unrepentant Marxist


Recently I learned that an EBook on Amazon.com titled “Austerity, Greece’s Debt Crisis and the Theft of Democracy” included a chapter titled “The Information Technology Problem” that discussed my articles on Naked Capitalism and those of Australian economist Billy Mitchell who has an unrealistic take on the amount of work required to modify Greek computer systems to handle a return to the drachma.

Joseph Firestone, the author of the EBook, has a PhD in Political Science from Michigan State, over 150 articles to his name, and an extensive background in IT but mostly at the management level. Right now he is the Chief Knowledge Officer of a company called Executive Information Systems, a title that most likely has something to do with Knowledge Management, his area of expertise. This is apparently a field that has emerged since 1991 but one that somehow managed to elude Columbia University where I worked from that year until my retirement in 2012. There will be something about it later in this article by another expert in the field.

Firestone tries to reconcile Mitchell’s views and my own, probably something that irritated the economist emeritus much more than it does me given his irascible reaction to my first article on Naked Capitalism. His tone reminded me of the one I take on issues such as when the Russian Revolution went off the rails but let’s leave that aside and move on to the substantive IT issues.

From Firestone I learned that Mitchell had a short follow-up article that somehow escaped my attention. Using the authority of a friend who appears to be as high-powered as Firestone, a man who “owns a significant private firm in Europe which is at the forefront of delivering innovative card payment services to banks and corporations throughout the Eurozone”, Mitchell sought once again to buttress his “its not rocket science” understanding of the IT issues.

The friend confided to him that since “the Euro was integrated ‘on-top’ of the existing legacy IT payment systems”, ‘switching’ the Drachma back on would not be such a major task.” He added:

the Grexit should be accomplished by stealth. He would leave everything in place as it is for now. Then establish, in secret, a public bank (like the German KfW), procure the banking software out-of-the-box, sign a contract with a major card-scheme to use its network for transactions and hook the bank up with the official Bank of Greece, the nation’s central bank.

I wonder if this plagiarized or at least conveyed the madcap spirit of Varoufakis’s “Plan B”. If they ever made a movie about such a scheme, I’d cast Steve Carell in the leading role (only because Peter Sellers is dead.)

In terms of the Euro being integrated on top of the legacy systems, I have no way of assessing this. As someone who has taken part in at least a dozen feasibility studies over the years, I have learned that it is best to be cautious. Apparently the higher up you are in the IT food chain, the easier it is to throw caution to the wind.

In the late 90s I advised IT management at Columbia to avoid purchasing a Facilities Management System from American Management Systems (AMS). This was an outfit that Robert McNamara’s aides in the Pentagon founded in 1970. That should have been a warning from the outset to steer clear. Within six months after the system was implemented at the cost of millions of dollars, the users decided it did not meet their needs and dumped it. Just a few years later AMS went under, no doubt partly a result of Mississippi terminating an $11.2 million contract to modernize the state’s tax system. It would go on to sue the company for $985 million. Wikipedia states: “a jury awarded the state $474.5 million in actual and punitive damages in August 2000, causing a drop in stock price from 44 3/8 to 14. The company subsequently settled the suit for $185 million.” You can bet that if Greece ever needed consulting help to get them back into the drachma, there would be latter-day versions of AMS knocking at its doors.

Furthermore, with all due respect to Mitchell and his friend who “delivers innovative card payment services to banks and corporations throughout the Eurozone”, there is more to IT in Greece than banking and credit card processing. Greece has hospitals, universities, wholesale and retail companies selling furniture, yogurt, olive oil, tourist accommodations, and Zeus knows what else. Many of these companies do not have in-house staffs. Getting them up and running on a drachma will not be a piece of cake—trust me on that.

For Firestone to bridge the gap between Mitchell and myself, he invokes his own particular areas of expertise that supposedly get us closer to “it’s not rocket science”. Naturally this require some critical commentary.

In a section titled “Web-oriented Architecture Approach to a Drachma-based Transaction System”, he advises “web-enabling a legacy system”, something that might take a “few days, if that long”. Well, gosh, why hadn’t he brought that to Varoufakis’s attention? That would have saved him from the trouble of lining up his pal at Columbia University to program a stealth-based “Plan B”. Firestone even offers up the names of some products that could be off-the-shelf solutions such as the one marketed by the slyly named Kapow Software. While this software no doubt works as advertised in terms of integrating different systems under a web-based front end, it has little to do with the complexities of batch processing—the meat and potatoes of all banking applications for which there is no user interface. Kapow might be of some use to a bank officer evaluating a loan application from a nervous customer sitting opposite him or her, but it is totally irrelevant to a stream of programs run at 3am in the morning that pump out customer statements. A customer statement like the kind that you receive from your friendly banker at the end of the month with a listing of your debits and credits followed by an account total. It is exactly programs such as these that will require onerous and time-consuming attention—nothing that Kapow can address.

Finally, returning to Firestone’s Knowledge Management, he starts off by wisely acknowledging that “people avoided mainframe applications wherever they could, because the chances of failure were so high”. He includes himself in that group. That being said, he regards the Kapow approach as an interim solution and concludes that a “better solution” would be to develop a new system written for the mainframe from scratch “using modern programming tools and techniques”—no doubt drawn from the Knowledge Management toolbox.

All I can say is that ever since the mid 1970s, I have heard about one new technique or another that would finally make developing large-scale systems more averse to failure. They were put forward either as management, systems analysis, database or programming technologies in trade journals such as Datamation or Computerworld:

programmerless programming: Languages such as MarkIV would allow an end user to build a system by using to specify parameters that satisfied business requirements. In fact I automated Salomon Brothers in London (SBIL) when I reported to Michael Bloomberg in 1977. Trust me, Michael couldn’t have done anything in MarkIV if his life depended on it.

goto less programming: The less said the better. I stopped using the “go to” in 1978 or so but deadlines were still missed because the user kept changing his or her mind—the real explanation for most software delays.

structured design methodologies: I worked for a consulting company that employed SDM for a phone company project that would evaluate whether a customer would be charged for a phone call that they claimed that they didn’t make. When the consulting company demanded new funding because the project was delayed, negotiations broke down and we were escorted out of the building by security guards. SDM did not address user indecision, the cause of cost overruns.

relational databases: This was a huge breakthrough supposedly because it organized data into rows and columns just like a spreadsheet that could be accessed through SQL and best when it was based on normalized data structures, which meant avoiding redundancies through a data analysis of the firm. I can only say that I have worked with VSAM flat files, IBM’s IMS hierarchical database, Cullinet’s IDMS network database before finally becoming a Sybase support person on my project team at Columbia University. All of them work just fine even though Sybase (and Oracle) are best suited for client-server or web-based applications. But in the final analysis, it is the problem of nailing down user requirements that will always bite you in the ass. Given the economic chaos in Greece, this will be a thousand times worse than the normal chaotic situation.

–Object orientation: I spent about five years developing Java programs in the STRUTS framework for Columbia University’s financial system. Anybody who sells OO as some kind of silver bullet should get one in the head.

Since I have never gone near Knowledge Management, I won’t say a word about it although I would be remiss if I did not refer you to this:

Wall Street Journal, Jun 24, 2015

Whatever Happened to Knowledge Management?

By Thomas H. Davenport

I would never claim to have invented knowledge management, but I confess to an intimate involvement with it. I co-authored (with my friend Larry Prusak) one of the best selling books on the topic (in case you are into the classics, it was Working Knowledge: How Organizations Manage What They Know) and am supposedly the second-most cited researcher in the field (after the Japanese scholar Ikujiro Nonaka).

So I should know whereof I speak when I say that knowledge management isn’t dead, but it’s gasping for breath. First, the ongoing evidence of a pulse: academics still write about it, and some organizations (most notably APQC—a nonprofit research organization of which I am a board member and respect a lot) sells out its knowledge management conference every year. Professional services firms are still quite active and successful with the idea.

But there is plenty of evidence that it’s gasping as well. Google Trends suggests that “knowledge management” is a term rarely searched for anymore. Bain’s Management Tools and Trends survey doesn’t list it in the top 25 tools for the 2015 or 2013 surveys; it was included before that. More subjectively, although I am supposedly an expert on the topic, hardly anybody ever asks me to speak or consult about it.

What happened to this idea for improving organizations? I’m pretty sure that knowledge itself hasn’t become less important to companies and societies, so why did many organizations give up on managing it? Is there any chance it will return? And what does its near-demise tell us about the attributes of successful business ideas?

Although it’s impossible to know for sure why something rises or declines in popularity, here are some of my ideas for why knowledge management (KM) has faded:

  • It was too hard to change behavior. Some employees weren’t that interested in acquiring knowledge, others weren’t interested in sharing what they knew. Knowledge is tied up in politics and ego and culture. There were methods to improve its flow within organizations, but most didn’t bother to adopt them. Perhaps for this reason, the Bain survey (for example, the one from 2005) suggests that corporate satisfaction with KM was relatively low compared to some other management concepts.
  • Everything devolved to technology. KM is a complex idea, but most organizations just wanted to put in a system to manage knowledge, and that wasn’t enough to make knowledge flow and be applied.
  • The technology that organizations wanted to employ was Microsoft’s SharePoint. There were several generations of KM technology—remember Lotus Notes, for example?—but over time the dominant system became SharePoint. It’s not a bad technology by any means, but Microsoft didn’t market it very effectively and didn’t market KM at all.
  • It was too time-consuming to search for and digest stored knowledge. Even in organizations where a lot of knowledge was contributed to KM systems—consulting firms like Deloitte and Accenture come to mind—there was often too much knowledge to sort through. Many people didn’t have the patience or time to find everything they needed. Ironically, the greater the amount of knowledge, the more difficult it was to find and use.
  • Google also helped kill KM. When people saw how easy it was to search external knowledge, they were no longer interested in the more difficult process for searching out internal knowledge.
  • KM never incorporated knowledge derived from data and analytics. I tried to get my knowledge management friends to incorporate analytical insights into their worlds, but most had an antipathy to that topic. It seems that in this world you either like text or you like numbers, and few people like both. I shifted into focusing on analytics and Big Data, but few of the KM crowd joined me.

Any chance that this idea will come back? I don’t think so. The focus of knowledge-oriented projects has shifted to incorporating it into automated decision systems. The hot technology for managing knowledge is now IBM Corp.IBM -0.28%’s Watson—very different from the traditional KM model. Big Data and analytics are also much more a focus than KM within organizations. These concepts may be declining a bit in popularity too, but companies are still very focused on making them work.

If you believe in knowledge management—and you should—perhaps in your organization you can avoid the pitfalls I have listed and allow the idea to thrive. And if you favor a different idea and want it to survive over the long term, don’t hitch a complicated set of behaviors to technology alone. Don’t embrace a vendor for your concept that doesn’t care much about your idea. And if another notion that’s related to yours comes along and gains popularity, don’t shun it, embrace it.

Thomas H. Davenport is a Distinguished Professor at Babson College, a Research Fellow at the Center for Digital Business, Director of Research at the International Institute for Analytics, and a Senior Advisor to Deloitte Analytics.

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  1. Alexandre Hanin

    It’s a pity that Mitchell, who has in my opinion so many interesting things to say, literally cannot take any criticism.

    That being said, I’m a complete ignorant on the subject.

  2. JTMcPhee

    …maybe the same people, or at least the same mind-set, are responsible for those persistent notions that the World Class US Military can Defeat The Enemy Du Jour… Easy-Peezie, right? Just takes the right algorithms.

  3. Synoia

    Changing the Greek banking system to the drachma is not rocket science.

    It is millions of unidentified (unidentified now) little tedious details, all of which have to be identified, be correctly modified, tested individually (unit testing) and tested together (systems testing), all in the environment of “when you are in there changing this could could you just make this minor change.”

    In code where the source may or may no exist, and the comments (which are required to understand the code) are cryptic, inaccurate, misleading, misspelled and probably largely written in Greek.

    Given the country’s financial woes, who would pay for this work? The Germans?

    1. Ceina

      The only sensible way to estimate the effort is to compare to a previous experience.
      How long did it take Greece to switch from the Drachma to the Euro? This is your benchmark.
      This time it will be easier. They have the past experience. They don’t have to make the changes they made in the past to support decimals/cents. They will changeover one to one and most operational parameters will be the same.

      Btw, in my experience greek code is usually written and commented in english.

  4. Vatch

    People in management are sometimes seduced by buzzwords. But the reality is typically far more complex than the trendy jargon implies.

  5. Lambert Strether

    “I wonder if this plagiarized or at least conveyed the madcap spirit of Varoufakis’s ‘Plan B’. If they ever made a movie about such a scheme, I’d cast Steve Carell in the leading role (only because Peter Sellers is dead.)”

    * * *

    Sellers would, of course, play multiple roles; I would suggest Yanis Varoufakis, Angela Merkel, and “Raoul,” the Eurogroup’s all-round pool boy, bag man, fixer, and provider of concierge-enabled services, previously employed by DSK.

      1. Disturbed Voter

        That is just what Syriza was trying to do, but the Germans didn’t take the bait. But then they haven’t paid for the last time either (Greece in WW II). Only the Americans are stupid enough to enable a Marshall Plan.

        1. Synoia

          Well, actually, I believe the Germans took the bait. It contains a lingering but deadly poison.

          What’s been imposed cannot but fail again. In the process the Greeks exposed the German Imperious Imperial attitude.

          A very real part of the poison is the $50 Billion asset fund. I view the asset fund as a bribe to seduce the Greek elite, and it will spawn an amazing amount of corruption, bribery and Greek resentment.

          Eventually the Greeks will rebel, and some Greek political party will introduce a parallel currency, a government script as a cash only currency, complete with a non-central bank central bank to manage the script, which will eventually live alongside the Euro, probably in a permanently depreciating exchange rate to the Euro.

          The Greeks cannot replace the Euro in one step, but they can manage introducing a a parallel currency incrementally.

          Do Greek banks manage accounts both in Euro and, lets day US dollars? If so that could provide the start of managing a accounts in multiple currencies within the Banking system.

          The key to starting is to define a limited set of interfaces between the Greek Script and the Euro, and plan the evolution.

          If Greece has a Giro system, that could be a place to start.

          1. Praedor

            I think you are giving the Greek government way too much credit. All this mess isn’t by design, it is simply by common human stupidity, greed, and giving in to their lessor angels. It’s like hardcore pro-Obama types who always claim that when something goes Obama’s way (or fails for that matter) then it is only UberObama playing multi-dimensional chess and that’s why he won (or failed but only temporarily and will ultimately succeed because…genius!).

            It’s stupidity all the way down.

        2. David

          IMO, the Marshall Plan was one of the (very) few American successes in the 20th Century.

          The political effects of the Marshall Plan may have been just as important as the economic ones. Marshall Plan aid allowed the nations of Western Europe to relax austerity measures and rationing, reducing discontent and bringing political stability.

          Unfortunately, the Northern Europeans lack the vision or the buy-in to the EMU.

          1. Disturbed Voter

            In a sad way, the USA is a hard act to follow. We are perhaps unique, and so other lands that would get an advantage by avoiding our mistakes and copying our successes, cannot do so. But I will give the E Asians an A for effort. But Europe is more like a bad Disneyland ;-(

    1. alex morfesis

      joe flaherty (sctv) in Trick 17

      because europe must do things the german way…

      love that arrival lounge berlin intl…

  6. Disturbed Voter

    As others have pointed out … computer systems don’t escape entropy. The longer a system is in place, and the more systems you have, and the more interconnected these systems are … the harder it is to change or to pay for the change. This is why mature computer departments spend 90% of their budget on maintaining legacy systems. And often the remaining 10% is wasted spectacularly on hair brained schemes. Japan after WW II was able to recover spectacularly, precisely because so much of the legacy system had been flattened beyond repair. Again … Grexit is probably the best way to reform the Greek banking IT … because they can just chuck the systems to the curb and start over.

    1. Lambert Strether

      On chucking software to the curb: No. Joel on Software, “Things You Should Never Do”:

      [T]he single worst strategic mistake that any software company can make:

      They decided to rewrite the code from scratch. ….

      We’re programmers. Programmers are, in their hearts, architects, and the first thing they want to do when they get to a site is to bulldoze the place flat and build something grand. We’re not excited by incremental renovation: tinkering, improving, planting flower beds.

      There’s a subtle reason that programmers always want to throw away the code and start over. The reason is that they think the old code is a mess. And here is the interesting observation: they are probably wrong. The reason that they think the old code is a mess is because of a cardinal, fundamental law of programming:

      It’s harder to read code than to write it.

      This is why code reuse is so hard. This is why everybody on your team has a different function they like to use for splitting strings into arrays of strings. They write their own function because it’s easier and more fun than figuring out how the old function works.

      As a corollary of this axiom, you can ask almost any programmer today about the code they are working on. “It’s a big hairy mess,” they will tell you. “I’d like nothing better than to throw it out and start over.”

      Why is it a mess?

      “Well,” they say, “look at this function. It is two pages long! None of this stuff belongs in there! I don’t know what half of these API calls are for.” …

      Back to that two page function. Yes, I know, it’s just a simple function to display a window, but it has grown little hairs and stuff on it and nobody knows why. Well, I’ll tell you why: those are bug fixes. One of them fixes that bug that Nancy had when she tried to install the thing on a computer that didn’t have Internet Explorer. Another one fixes that bug that occurs in low memory conditions. Another one fixes that bug that occurred when the file is on a floppy disk and the user yanks out the disk in the middle. That LoadLibrary call is ugly but it makes the code work on old versions of Windows 95.

      Each of these bugs took weeks of real-world usage before they were found. The programmer might have spent a couple of days reproducing the bug in the lab and fixing it. If it’s like a lot of bugs, the fix might be one line of code, or it might even be a couple of characters, but a lot of work and time went into those two characters.

      The idea that new code is better than old is patently absurd. Old code has been used. It has been tested. Lots of bugs have been found, and they’ve been fixed. There’s nothing wrong with it. It doesn’t acquire bugs just by sitting around on your hard drive. Au contraire, baby! Is software supposed to be like an old Dodge Dart, that rusts just sitting in the garage? Is software like a teddy bear that’s kind of gross if it’s not made out of all new material?

      1. TheCatSaid

        Amazing article–thanks for the quotes from it. The description of bug fixes is class–and makes the problems very clear. BTW the first couple paragraphs of the original article are also worth a read. They describe how several Big and Famous companies were delayed by years in releasing new delayed because they made the mistake of deciding to build new code from scratch.

      2. H.Alexander Ivey

        Wow, as a former software tester, I must say that is one of the best summaries of why “old code” is so little respected yet so much needed. Excellent comment and link.

      3. Disturbed Voter

        I agree, if we were talking about General Motors. But in the case of Greece … they need a full psycho revolution to clear things up. Calling Robes Pierre … calling Robes Pierre … you are wanted on the discourtesy phone!

      4. Praedor

        Huh. I wonder how ever we managed a complex society with big businesses, banks, government, universities, etc, without computers before the 1980s. Obviously, the time before IT and computers didn’t exist and it all just POOFED into existence in 1980 already setup with computers. There’s just NO WAY to do without programming and computers to program on. No way a currency can exist or work without a computer. No way a nation can exist without computers. Nothing exists without computers.

        Obviously I’m using hyperbole here but you place WAY too much import on computers and the “harm” of tossing out the old and broken/unworkable and starting over. It can be done. It has been done. It will be done. It is just that some portion of the infrastructure people, those entrenched and benefiting from the status quo are EXTREMELY resistant to any change that might eject them from their privileged positions. It is also because being of and IN the status quo, they literally cannot see beyond their personal horizons into how anything new might possibly work.

        1. flora

          The posts about computer infrastructure serve as a stand-in for the much larger question of what it will take – in terms of time and work, and detailed analysis of the scope of all the issues and how to address them – for a successful Grexit.

          Computing infrastructure is an example for that larger issue; it is not the sole sticking point.

          A badly analyzed, badly planned, badly prepared for Grexit would leave Greece and her people in a far, far worse state than even the recent awful bailout program.

          1. flora

            The question is: are the people named in the post who are advocating a Grexit offering good analysis and comprehensive planning for that event?

            The answer is: no.

            The question is not: Should Greece leave the Euro monetary union?
            Maybe they should, with very careful planning and preparation. No one has said otherwise. But that is not the question here.

            Please don’t conflate the 2 questions and assume people who are answering the first question are also answering the second.

  7. Dan Lynch

    I’m not feeling this debate about how tough it would be to switch to the drachma. Would there be problems? Sure. Are academics out of touch with real world problems? Sure. Is there a viable alternative to the drachma? No. So get on with it.

    How were payments made before we had electronic money? Checks. So write checks. That takes care of domestic payments.

    Foreign transactions are the problem. Yes, it would be a mess. But Greece is already a mess. At least with the drachma, there would be light at the end of the tunnel.

    1. micky9finger

      I agree with Dan Lynch.
      None of this is an argument not to dump the Euro.
      It’s more like- Greece is trapped forever in a bad system because it is too hard to change.
      How did they dump the Drachma and pick up the Euro?
      Did we say we couldn’t go to the moon because it was too hard? Did we say we couldn’t map the human genome because it was too big for our capabilities?
      No. So get on with how to do and do it.
      I’m not saying Louis Proyect is exergerating but it would be a similar tactic employed by a company or entrepreneurs to make an outrageous price seem reasonable. It’s impossible buuut for a billion dollars we can do it.
      Ok I went a step too far but- just saying.

      1. Yves Smith Post author

        We’ve posted a long series on the considerable real world difficulties in converting back to the drachma. and the serious real-world consequences that result from not doing it well. Greece got a very mild taste of it during the two week bank holiday. The damage to importers and domestic supplies was accelerating. For instance, food shortages were starting to occur, for instance, and would have become pronounced in the next couple of weeks.

        Going to the moon or sequencing the genome are in no way comparable. You were not putting the economic welfare and lives of millions of people at stake.

        And as we’ve pointed out, the conversion to the Euro took eight years of planning and three years of execution to go smoothly. Louis in his previous post guesstimated that it would take three years to handle the IT conversion to the drachma, and readers who are more current on the state of bank IT suggested that he double that.

        1. Praedor

          Every country the US decimates with bombs and troops gets the whole start-over treatment. Some are still trying (and will ultimately succeed one way or another). It isn’t impossible and just because it is ugly is irrelevant. How is being a literal slave and destitute better than being free and destitute? The international community WOULD step in because it would have to with food and meds. Doctors without Borders would step in. The Red Cross would step in.

          Japan made it up from total destruction quite well. So did Germany. At least Greece isn’t starting from a bombed-out shell. Their buildings and basic infrastructure is still there. Their streets aren’t rubbled. It can be done, it will be done, one way or another. It is NOT rocket science. Only rocket science is rocket science.

    2. Synoia

      Checks. Oh that’s a solution, but breathtakingly ignorant.

      Checks are incredibly complex to process. The MICR line needs completing with the amount, then they must be read with a very expensive machine, and depending on the truncation rules, imaged, sorted and made available to the payers bank to resolve disputes.

      Just “write checks”. If only life were simple, but check themselves require processing. Google “Item Processing” and do some research.

      1. Praedor

        Huh. How EVER did we manage to process money and checks before the 1970s and 80s when computers went big time? However did we manage all of US history up to around the 60s without all the computers and software to that are clearly evolutionarily required for life to be possible, let alone a society? How DID we do it?

        1. Synoia

          It used to be that one could only bank at one’s branch. The records, ledgers, were kept locally. This would be up to the mid ’70s.

          First Computers enabled central accounting. And cut costs. Early ’70s.
          Second, The bank went on line, and records were central and one could bank anywhere. Late ’70s.
          Third, the Banks installed ATMs, giving 24 hour service, Bank only used to ope 6 hours per day, and send the balance of the time bookkeeping.
          Fourth the banks interconnected with the merchants and one could withdraw money anywhere. The ’80s.

          Similarly with credit cards. ’80 and ’90s and Debit cards in the ’90s.

          This was of course, the 20th century.

          You could be young and unknowing, old and unobservant, senile and cannot remember, or argumentative, or some combination of these. For us, who are ancient, please be respectful, lest we become tetchy.

          1. Praedor

            Yes, I managed to grow up happy and healthy without a computer ANYWHERE to be had or used. So did my parents, their parents, THEIR parents, etc, back about 3.7 billion years to the first living cells on the earth. 99.999999999999% of all complex life has existed and flourished without a single computer to be had, without a single programmer. Huh. Clearly not possible!

            As for now, I know enough computer programming to do what I need sometimes. I love my computer games, I love CGI, etc. I almost NEVER use an ATM. I still write checks now and then and will continue to do so as I deem appropriate and required. I lived at least half my life without a credit card or debit card (they didn’t exist). Electricity could fail tomorrow and I’d still be OK, still have food, still have water, still have shelter, still have transportation (the reliable kind without any computers: a horse or even bicycle). Don’t need Wal-Mart, don’t need Target, don’t need Goldman-Sachs, don’t need any of that and nobody else does either. They WANT it, they LIKE it, but they don’t NEED it. The “hard” or “impossible” stuff being discussed here is actually most accurately called “highly inconvenient”.

            Haiti was a MUCH happier, healthier, richer place BEFORE the US jumped in and forced them to “internationalize”. We forced urbanization, we forced globalization, etc, and all THAT works best with computers and programmers (though it also works with sail boats and swords and canons, etc, as it did for most of human history). I see hard, I don’t see impossible here with Greece and Grexit. I see inconvenience, not decimation and extinction event. I can’t take city people very seriously when they are all on about how they cannot live without CONVENIENCES. Without TV, without the theater, without HBO, without cell phones, without cars. Boohoo. I have all of these too and I LIKE them, USE them, but I also know I can actually live without them. The Greeks can too for a while.

            1. Lambert Strether

              “The Greeks can too for a while.” Perhaps the Greeks would prefer not to be experimental test subjects for your views about “wanting” and “needing”?

              Incidentally, the best indication I can find is that the Greeks aren’t self-sufficient in food, either. So, an “It’s easy Grexit” with no payment system and no self-sufficiency in food strikes me as folly.

            2. Kurt Sperry

              The problem of course is that the lack of those modern “conveniences” back then were *normal*, which is to say the culture, the economy, (that about covers it right?) everything, were precisely tuned for that, the problems had all been dealt with before by people who more or less understood pieces of that collective puzzle right to their toes. Doing something *normal* is exponentially easier than doing the exact same thing when it isn’t and in any case if history is any guide technology is largely irreversible short of civilizational level collapses.

              Given the very clear and well argued–unrebutted, I’d go as far as–case made here that a Grexit would be a near certain and immediate and then ongoing humanitarian crisis, it would surely be irresponsible for the country’s leaders, who have as their highest purpose to act in the people’s best interest, to pursue one. The resources, the organizational capacities, the knowledge and the political will are all in short supply and can’t simply be willed into existence. Primum non nocere.

            3. flora

              Gosh, as of 2011 14.4% of Greeks were age 14 or younger. 19.0% were 65 or older. Do you suppose Greeks would willingly subject 35% of their population, the very young and the old, to your version of Mao’s Long March?

      2. Praedor

        Huh. How EVER did we manage to process money and checks before the 1970s and 80s when computers went big time? However did we manage all of US history up to around the 60s without all the computers and software that are clearly evolutionarily required for life to be possible, let alone a society? How DID we do it?

    3. Clive

      Synoia is exactly right (above).

      Paper clearings are actually — and most definitely — part of the problem not part of any solution. The are an added layer of complexity in that clearing the checks does nothing whatsoever to update the account balances of either the payee or the paying parties. The checks needs encoding with an OCR amount in order to have any hope of industrialising the clearing process. But who inputs the manually (handwritten) amounts, in to what device, where, in what quantity ? And which agency then transports the physical paper clearings to a clearing centre for onward distribution to from the payee’s bank to the payer’s bank ? Or, if you don’t want to be moving the physical paper vouchers (and believe me, you want to get away from doing that as fast as you can) then on what system is the accounting supposed to be done on?

      Yes, Greece has checking facilities. But they are scaled to accommodate today’s volumes. Any payments infrastructure / domestic banking system has been trying (very wisely) for the past 20 years to decommission checks. Expecting the residual lump of check processing capacity in Greece to suddenly grow to encompass the volumes needed to handle every single non-cash transaction has more than the whiff of magical thinking about it.

      1. Synoia

        I have always believed Artificial Intelligence is impossible until humans collectively demonstrate some Real Intelligence.

        Please note the word “Collectively” in the context of the Right, the Republican Part, or RAAs

        RAA = Rich Authoritarian Ass… (the A may be redundant, and a subset of R).

    4. Edward Qubain

      Several weeks ago Patrick Coburn wrote an article about Ireland’s experience with a bank strike in which they did as you suggest– they used checks and IOU’s as an alternative currency. This worked quite well, he wrote.

      What baffles me about this Grexit debate is I don’t see how Greece has a future under EU control. Once someone else controls your life, especially a hostile person, you have had it. At least with a Grexit, Greece has a chance because they will manage their own affairs. How difficult a Grexit is will depend on the talents of the Greek people and how creative they are in overcoming the difficulties.

      If this blog is having a debate on the feasibility of a Grexit does it include articles for both sides of the discussion?

        1. Edward Qubain

          That is kind of amusing. I am probably being unfair to this blog. I admire its high standards, give-and-take, and the hard work that clearly goes into it. Among the many blogs on the internet it definitely stands out. At the same time I can’t help but wonder if the Greeks are really as helpless as they sometimes sound.

      1. flora

        The subtext for a lot of the current arguments that “Grexit can’t be that difficult” is, it seems to me, this:

        If something is hard to do then it can’t be done.
        Something needs to be done.
        Therefore, it can’t be hard to do. (Cue simple and hare-brained Grexit plans.)

        If Greece votes for a Grexit it will be a difficult transition. Difficult doesn’t mean bad or impossible. Doing it well requires sound planning, not magic thinking or hare-brained schemes.

        1. Watt4Bob


          It seems to me that some people are mistaking a level-headed assessment of the size and nature of the job, for judgmental criticism.

          As Proyect comments below, he’s not saying the job can’t be done, he’s not saying the job shouldn’t be done, he’s simply explaining that it would be an expensive and time consuming project.

          It’s clearly not a value judgement, it’s just facing facts.

        2. Edward Qubain

          I think the subtext is that the Greek government has accepted a new, hideous bailout and I and others are wondering how Greece will get anywhere. If they won’t get anywhere then why didn’t they default? Is a Grexit supposed to be easier a year from now?

          1. Praedor

            It is inevitable so get it over with! It doesn’t get easier if you just drain away your country to creditors (and you wait for all the able-bodied Greeks to migrate to other countries, leaving Greece for the rich carpetbaggers of Europe to repopulate). I’m not saying it will be easy but it is NECESSARY and INEVITABLE and pretending otherwise is a waste of time and utter bullshit.

            It’s like Climate Change. It IS happening, it IS going to continue happening, pretending it isn’t wont make it easier to deal with when it is overwhelming. Bite the damn bullet already and deal NOW while you have some strength rather than later when you are prostrate and helpless.

        1. Synoia

          Ireland in the 1970s, 50 Years ago, when Banking was much less online and real time.

          As an analogy, I suggest you only travel on airlines which fly 1970’s planes. Or only drive 1970’s cars, or better yet only use a 1970 computer (good luck with the electricity expense of the 1970s computer, GUI, and a high quality printer).

          1. Praedor

            Again, you are merely talking CONVENIENCE, not necessity. Planes from the 70s are fine. I flew a plane from the 60s for a good part of my military career in the 90s (B-52s). They work VERY well, thank you. Still.

            The 70s cars don’t have remotely hackable (or disable-able) computers in them, are immune to EMP (natural or man-made). Downside is they pollute more, use more gas but they work perfectly fine. 99% of people lived through the 70s without ever seeing even a part of a computer (or even hearing about them). They aren’t NECESSARY, only a great convenience.

            1. Yves Smith Post author

              International commerce now presupposes those things you erroneously call “conveniences”. You want to kill Greece’ s tourism sector, which is 18% of GDP. or make it well nigh impossible to import food, on which Greece depends? Going back to the stone knives and bearskin era of banking is the way to guarantee that.

  8. flora

    Very good post. Thanks.
    When reading arguments from authority – “a man who ‘owns a significant private firm…at the forefront of delivering inovative card payment services to banks…throughout the Eurozone’ ” – I always have to ask what is the breadth and experience of that authority in relation to the entire problem. Is it a narrowly focused experience covering only a fragment of the whole problem, but presenting itself as comprehensive?

  9. dw

    how long will it take to go back to the drachma. depends more just how they got to the euro to begin with. and what has changed since then. and it doesnt matter what the technology base is. it depends more on how complex it is, and whether any one really knows what its doing. users dont always know what all of its doing, and IT might not either. some of its retirements, some of its been automated to the point that users dont know why it happens. or if it does. but it will take longer than any thinks it will. and replacing it with newer ‘technology’ doesnt mean it will wok either. as many can attest to many such projects end up as major failures. costing millions

    1. dw

      and one note for those who seem to think lets just throw out the ‘old’ stuff. that has been described as trying to change the engines of aircraft. while its in flight. from piston engines to jet engines. by people who know nothing about the piston engines. and dont know how the aircraft flies or how it works. and the ‘pilots’ dont really know the plane works either. nor do the ‘mechanics. and by the way failure isnt an option. businesses have done it. but spend a lot doing it. and the failure rate of these mid air engine replacements has extremely high

  10. Oregoncharles

    Frank Herbert’s “Butlerian Jihad” looks better all the time. One wonders how he knew.

    As far as I’ve gotten, I have some questions – or perhaps alarm bells:

    1) What on earth does AMS have to do with it?

    2) What have they done to us? The gist of this whole debate is that IT has turned into a monstrous trap, essentially for all humanity. It reminds me of when, a few years ago, the state of Oregon tried to replace its computer system. They failed, at the cost of millions of dollars (maybe that’s what AMS has to do with it). As far as I know, they’re still using the old one. That’s also the lesson of the Y2K fiasco – which I gather was a real problem plastered over with bailing wire fixes.

    Most importantly, this is a vitriolic debate among experts. Proyect, here, is telling us there’s literally no way out. And that really applies much more widely than just to resurrecting the drachma: he’s saying it’s fantastically difficult to change ANYTHING once it’s embedded in the electronics. Code is Law, carried to a remarkable extreme. Is dynamite really the only solution?

    Of course, part of the problem is that bureaucracies are themselves computers, with their own “code,” which is now interlocked with the “code” running on millions of stupid machines.

    3) This appears to mean that Tsipras and Varoufakis were absolutely right: the only real solution is to reform the Euro, because once it got established, there is no going back. (There is, of course, but we shudder to think.) Turns out that will take a much more important country than Greece, the designated victim. Like Italy, Spain, or France. And just possibly a war, since Germany will resist. Fortunately, Germany has skimped severely on the military – they probably couldn’t take Greece. But that’s how bad this could get.

    4) Mr. Proyect, do you realize how bad a picture you’re painting?

      1. craazyman

        didn’t Schauble offer Greece 50 billion euros if they left?

        You could spend 5 billion on a new IT system and have 45 billion left over to invest in GREK. When it doubles you’ll have 90 billion.

        Then if the IT project goes overbudget, even at 5 billion, you’ll have plenty of headroom. 90 billion euros is not chopped liver. You can do things that pessimists can’t even imagine!

        1. craazyboy

          You’d definitely want to invest in a high frequency trading computer in that case. You could pump up GREK and have a 10 bagger!

  11. Another Anon

    Yes, reading code is harder than writing it, but
    good documentation can go a long way in
    reducing the difference. I once wrote a program
    that I did not document well because I did not think
    I would use it again. Big mistake as I did have to use
    it a year later and nothing made sense so imagine
    how much worse it would be if that poorly
    documented code was written by someone else.
    Always document ones code, but programmers
    tend not to do that.

  12. Louis Proyect

    Proyect, here, is telling us there’s literally no way out.

    That is totally false. I have said it is possible but that it would probably take at least 3 years. In terms of AMS (and my experience with silver bullets), I was simply relating my experience in the industry. I am sorry you couldn’t make the connection to overly optimistic projections about the IT part of a Grexit.

    1. Oregoncharles

      In the present context, 3 years is never.

      And it will happen ONLY in an extreme crisis.

      Addendum: that would be the scenario in which the entire Eurozone devolves, in parallel with its formation. Not an emergency Greek devaluation in a totally hostile environment.

      People are objecting to your conclusions because they can’t face the implications – but that doesn’t mean you aren’t right.

  13. Ben Johannson

    I’m reading here that Mitchell and Firestone are wrong because Bain and Google don’t do knowledge management. The rest is defensive polemics.

    Apparently the higher up you are in the IT food chain, the easier it is to throw caution to the wind.

    Ad hominem accusing Firestone of recklessness. I’m assuming it’s ad hominem, of course, as the other logical explanation is professional jealousy and resentment.

    there is more to IT in Greece than banking and credit card processing.

    strawman fallacy, as I see no evidence either Firestone or Mitchell suggested otherwise.

    His tone reminded me of the one I take on issues such as when the Russian Revolution went off the rails but let’s leave that aside and move on to the substantive IT issues.

    Appeal to emotion. Given you lack the mental superpower to pull another’s tone from their writing your attempt to make Firestone look silly is dismissed.

    You can bet that if Greece ever needed consulting help to get them back into the drachma, there would be latter-day versions of AMS knocking at its doors.

    How do you know they aren’t?

    For Firestone to bridge the gap between Mitchell and myself, he invokes his own particular areas of expertise that supposedly get us closer to “it’s not rocket science”.

    Your unconcealed hostility to anyone disagreeing with you makes the overall argument less than convincing.

    In a section titled “Web-oriented Architecture Approach to a Drachma-based Transaction System”, he advises “web-enabling a legacy system”, something that might take a “few days, if that long”. Well, gosh, why hadn’t he brought that to Varoufakis’s attention?

    You mock the idea yet provide no refutation of it. Temper, sir.

    And then we get the attack on Firestone’s competence and his failure to be in the popular kid’s profession, so of course he’s stupid.

    1. Clive

      Ben, besides the well-known fallacies — which you rely on in your critique of Louis’s evaluation of Joe’s premise (that Greece’s euro exit contains significant IT work and that need for IT development will constrain what Greece is able to achieve in the short and medium term) — one trap which is also all-too-easy to fall in to (and I have to watch myself because I can end up doing it as easily as anyone) is to pick on specific wording or phrasing. Every writer outside of the narrowest academic authors has to trade readability and grammatical shorthand against long, dry, technical description of the point they are making.

      You chastise Louis for saying: “Apparently the higher up you are in the IT food chain, the easier it is to throw caution to the wind.” But this is merely expressing a well-known and generally accepted phenomena which leads to project failure. It’s referred more fancily as “optimism bias”. Many authoritative pieces of research have been done on this subject (e.g. http://www.nao.org.uk/wp-content/uploads/2013/12/10320-001-Over-optimism-in-government-projects.pdf). From the paper on p.g. 6:


      5 The tendency to be overly optimistic leads public bodies to underestimate the delivery challenges of what are often complex projects. They may have financial and timing constraints, have multiple stakeholders, be interlinked or relate to other major projects, and be dependent on organisational or citizen behavioural changes.

      6 (the Uk’s National Audit Office) back catalogue shows that, in planning projects, government does not always take time to understand the complexity and, as a result, over-estimates its ability to deal with the challenges. Too often, government commits to a ‘solution’ without fully understanding the context and exploring alternative options to determine which solution matches the real need.

      Being the civil service, the report is written in a guarded style and so the catch-all term “government” is used, the “government” being referred to lacks agency in that section. But if you read the whole report, the “government” is actually ministerial direction as shown later in the report where the blame for a failed project is laid fair and square with “The Department for Communities and Local Government” i.e. the minister, who “tried to centrally impose a national control system”. It is senior level decision makers who are the worst exhibitors of optimism bias.

      As for “there is more to IT in Greece than banking and credit card processing”, this is a true statement. Happy to be corrected if I’m wrong, but I don’t think that factually correct statements are straw manning ?

      You don’t like Louis’s writing style and allegory. That’s fine, but as I said at the top, it isn’t valid to criticise a writer’s style as a substitute for criticising the substance of their arguments. Louis pointed out that there was no evidence provided by Firestone to underpin some of the assertions which Firestone made. Louis was correct – Firestone came up with some valid wish-lists but did not evidence how they would be fulfilled. Condemning Louis for highlighting the evidential omissions in Firestone’s arguments isn’t a valid criticism which can be levelled at Louis. Put more simply, you can’t harangue Louis for pointing out the flaws in Firestone’s piece.

      There is a similar theme to your disliking Louis’s choice of words in making the case that converting legacy systems to web-enabled services is very difficult. This subject has already been covered extensively in the Naked Capitalism archives so you could look there for supportive evidence of Louis’s premise but really, it is not hard to a significant body of well-respected, independent confirmation of Louis’s point. One of the most comprehensive, again from the UK National Audit Office (who has had, erm, some experience of flushing vast sums of money and many decades of time down the drain doing post-mortems on IT train wrecks) who did a whole paper devoted to how big an ask it is to drag legacy systems into a web-enabled model http://www.nao.org.uk/wp-content/uploads/2013/09/10154-001-Managing-the-risk-of-legacy-ICT-Book-Copy2.pdf and highlights several problems which are easily understood when well explained, such as:

      Business transformation, including the drive for digital transformation is proving challenging for departments when it involves legacy ICT. Many legacy systems require data to be processed as a sequence of batches that is incompatible with a fully real-time digital service. In the pension system, for example, online applications have to be manually re-entered into the main system by a (Department of Work and Pensions) operator, as the website and the main legacy ICT system are not integrated. The approach of adding functionality through the addition of interfaces to the core legacy ICT is likely to be insufficient to achieve full digital transformation.

      And as soon as you get into trying to “slap” a web front end onto an unchanged legacy system (the likelihood of this being required increases if you are attempting to web-enable legacy systems in very short timescales) then you actually defeat the object of your attempts to transform the legacy system into something a bit more modern because it increases the risk manual workarounds have to be put in place to glue everything together. Manual workarounds are the death-knell of the sorts of real-time processing which web enablement needs (emphasis mine):

      We examine the impact of adopting a ‘no change’ approach to legacy ICT. Our findings are drawn from our case study of the Office of Fair Trading’s (OFT) consumer credit licensing service. A full report on this service is available at http://www.nao. org.uk/search/year/2013/monthnum/08/sector/ict-and-systems-analysis/type/report … business processes are typically adjusted to meet new requirements and may include additional manual processes. Introducing change in this way potentially offers the lowest capital cost and the lowest risk that service performance will deteriorate as a result of change. However, while it may allow an organisation to change its services to some degree, it is unlikely to reduce costs or improve performance. It is also unlikely that transformational change, such as introducing phone or web-based channels, could be delivered. This strategy therefore leaves the organisation exposed to the full risks of legacy ICT.

      So, with a modicum of industry knowledge and subject matter expertise, I’ve been fairly easily able to find good quality, neutral, documented evidence to support Louis’s points. If you, as you undoubtedly do, take issue with what Louis has been saying, then I invite you to back up your counterarguments. Otherwise, you’re merely falling into the sort of blaming the rhetoric lazy logic you’re accusing Louis of.

      1. Ben Johannson


        You argue that Louis’ statement to the effect IT is more than credit cards and hospitals is a true statement and therefore not a strawman. But a strawman is mischaracterizing someone else’s argument and Louis clearly implied that Joe and Mitchell ignore the complexity. It therefore is not material whether the statement is true.

        There is a similar theme to your disliking Louis’s choice of words in making the case that converting legacy systems to web-enabled services is very difficult.

        Doesn’t matter. Louis did not present such evidence, he simply indicated the idea is stupid and rapidly moved on. I applaud your tehcnical knowledge but that isn’t the issue at hand. The logic and style of this person’s post are my concern and in my opinion both are sorely lacking.

        I’ve refrained from commenting on this topic for months simply because I’ve watched people whose work I respect as well-argued go off the rails into exactly the sort of thing NC has stood as a bulwark against. Posting derogatory and inflamatory text like this is not only (in my opinion) beyond the pale but damned weird.

        1. Clive

          Sorry Ben, but in trying to make the case for Joe and Mitchell by refuting Louis’s piece you end up digging a deeper hole to fall into. When you suggest that Louis was straw manning because, as you correctly put it

          “Louis clearly implied that Joe and Mitchell ignore the complexity.”

          Yes, Louis did clearly imply that Joe and Mitchell ignored the complexity. In fact, he (Louis) wasn’t at all subtle about it — he came right on out and said it. He stated quite clearly that Joe and Mitchell were ignoring complexity. But I too have read the piece and my reading of it is exactly the same as Louis’s. I’ll say it here too: Joe and Mitchell, based on what was published, ignored the complexity.

          The whole thrust of Joe’s article was that suggestions that Greece would have difficulties in implementing the necessary changes to the IT systems in the financial infrastructure of the country was just naysaying and that there were solutions which could be implemented fairly easily and quickly if only people were willing to look for them. Now, you’d no doubt call what I’ve just done there “straw manning”. But I would call it what it is (certainly it is what I am attempting to do): “summarising”.

          If after reading Joe’s work you come to the conclusion that it is indeed a description of the complexities which are inherent in migrating the IT systems in the Greek financial system from the euro to a new currency then, well, we must be reading entirely different articles. Joe’s feature does not make that point. It makes completely the opposite point. Me saying that is not straw manning. It’s making an accurate précis.

          Joe is wrong. Louis is right. I was about to add in a run-on sentence “in my humble opinion”. But that’s just the point: it’s not either my opinion or Louis’s. We can both point to significant bodies of work which substantiate our positions. Louis didn’t apparently feel the need to go to town with endless footnotes and links like some college dissertation.

          But that doesn’t make what Louis wrote wrong just because his article wasn’t peppered with links to other pieces which are easy to locate in the Naked Capitalism archives. I’ve found plenty of supporting evidence myself elsewhere which I linked to in my above comment. So I’m happy to concur with Louis.

          If you think we’re wrong, then the onus is still on you to provide supporting evidence and facts.

      1. Ben Johannson

        Yoi’ve never objected when I’ve cautioned people against taking an unhelpful tone toward you or Yves so let’s not escalate this to some sort of weird personal attack.

  14. Michah

    As a payment and billing systems expert and designer for more than 3 decades I will state that a new national central payment system, run by the post office to manage physical cashin and cashout, can be implemented in much less than 3 years. But, the 80/20 rule will apply. In the short run, you get the core and infrastructure for high volume, accurate, fully redundant and secure transaction management frontend and backend. Just enough to get the economy going internally. Maybe some bridges to support intl. transactions riding on commercial solutions. In the longer term will come the more elaborate functionalities.
    This task is not for 1000 programmers, with 250 testers, 100 project managers, and 50 senior PMs, and a board which decides on everything because no one has any authority.
    This can be done from the Prime Minister’s office directly or senior cabinet minister who allows a dedicated team to make it happen for better or worse. Because that project would be a showcase to humanity, that anything that is willed is possible, with patience and human skill.
    I suffer, as others do I’m sure, when I read how the people of Greece are brought to their knees and being told what is impossible.
    I say try, because failure is not an option.

    1. TheCatSaid

      “to manage physical cashin and cashout” –Does that mean it wouldn’t handle any electronic payments at all? What good would that be?

      1. Michah

        No, internal electronic payments must be handled, as many other minor requirements are met, simply b/c you cannot print enough money for this to work the old way.
        That’s not the issue, though.

    2. Louis Proyect

      a new national central payment system run by the post office to manage physical cashin and cashout, can be implemented in much less than 3 years.

      Good grief.

      1. Michah

        Waited for that. The expected cynical naysayers final words. Except that on this site the halo effect does not work.

        1. Lambert Strether

          Weeks of patient explanation of the technical issues, from multiple sources with collectively decades of experience in the field gets reduced to “cynical naysaying.”

          Please, sir. Mount your tricycle and ride away. The Greek people deserve a level of care that you are clearly unable to provide.

      1. Oregoncharles

        They never intended to leave the Euro, remember? And I doubt they know about “Michah”.

        Might be a good idea to send them a proposal, though. they’re going to need it, sooner or later.

      2. Michah

        You Lambert, more than anyone know that even ‘they’ is not They, ie who have been following the déroulement of this fiasco, know that much higher interests prevail than such a naïve one as truth. Plus, BTW, I’m too busy ;)

        1. Lambert Strether

          Too busy to save the Greek people with the contract of a lifetime…. Oh, OK. I’ll generalize, then, to people of your skill level and worldview.

          If it were as easy as juvenile adventurists relentlessly claim, those same adventurists would have been hired by now, and they would be doing it.

          Fortunately, Tsipras decided that a genius for self-seeking publicity was not the same as sound technical judgment, and Varoufakis’s scheme was deep-sixed.

    3. Yves Smith Post author

      We’ve explained at great length why you can’t do 80/20 in payment systems. These are mission critical systems. Errors lead to bankruptcy.

      Moreover, domestic payment systems have to be built to international standards to be allowed to connect to international payment systems. No waivers if you are not up to snuff. So a domestic only 80/20 system means you can’t have tourists using ATMs or credit cards to rent cars and pay for hotels, and importers can pay for good only if they fly cash to the offices of their vendors (which really did happen during the bank holiday).

      In other words, you’ve done the computer equivalent of the economist “assume a can opener” solution to how to open a can. Nice try.

      1. Michah

        Thanks. There are work arounds for all these issues.
        in the 80 of the 80/20

        you get the core and infrastructure for high volume, accurate, fully redundant and secure transaction management frontend and backend

        That doesn’t sound like a can-opener to me for what I know about current existing financial platforms supporting hundreds of millions of transactions per day.
        You’d be surprised I think if you knew the mess and patchwork that goes on in the back office.
        I could write a book on that.

        1. Synoia

          You be hard pressed to procure and install the equipment from vendors in 3 years. The facilities planning ad construction alone would take two years.

  15. Edward Qubain

    I just had a crazy thought. Could Greece use Amazon or even Paypal to mediate some of its economic transactions if it left the Euro?

  16. TheCatSaid

    Maybe a Carrington Event type solar flare will take down all our power grids, internet, GPS, flight navigation, etc.

    Then we’ll all be forced into a “Necessity is the mother of invention” scenario.

    Something on a smaller scale happened in Quebec in 1989 and it impacted the grid beyond Canada. We’re more vulnerable today.

    Black Death wiped out nearly half the population in Europe in 1348. Again, we’re more vulnerable today.

    1. Edward Qubain

      The event in question may be the collapse of the U.S. dollar, when the U.S. economy collapses.

      Actually, California experienced a blackout as a result of privatizing its electricity grid. Its kind of amazing privatization is still taken seriously.

      1. Synoia

        Yes California received a blackout in February when peak consumption is in the summer.

        The reason was more extortion than a technical failure.

        1. Edward Qubain

          Was there a blackout this year? I was referring to an Enron led scandal from years ago.

    2. Oregoncharles

      the planet cooled detectably after the Black Death, because there was so much less agriculture going on. (Sorry, don’t remember where I saw this, but it was a scientific paper.)

      1. Antoni Jaume

        Some attribute it to the devastation by the Mongol invasions, that are more or less from the same period.

  17. MaroonBulldog

    Louis, Lambert, Yves, Clive:

    Stick to your guns.

    I know that you know what you’re talking about here. A lot of us do.

    And thank you.

  18. ChrisPacific

    I dabbled a bit in knowledge management many years ago, to the point where I was regarded as the company expert (in the “least ignorant person” sense).

    The underlying business problem is real, but I agree that it’s not one that particularly lends itself to a technology solution. Most of the hard work is in defining what kind of knowledge you need to store, what form to store it in, and how it can best be captured, shared and easily found when it’s needed (even if the person in question doesn’t necessarily know that they need it). Technology can help with this if you begin by getting your definitions right, but most Intranet type solutions have the drawback that they reflect your organization as it is, rather than as you’d like it to be. So if the knowledge landscape in your company is siloed, fragmented and incoherent, then your Intranet will be as well. Then the managers decide that the product wasn’t a fit, throw it out, and commission a project to create a new Intranet based on a new technology, which somehow ends up having all the same problems that the old one did. I’ve seen companies do this over and over, always convinced that they are going to get it right this time around.

    In the end it’s still hard to beat putting the people who need the knowledge on a team with the people who have it and letting them learn on the job. If companies devoted the kind of time and energy to getting this right that they do to their latest Sharepoint implementation, they would probably get a much better return on their investment. Meanwhile the idea that you can capture the essence of your organization in such a way that you could lose all of your key staff, hire new ones with no background, and still retain your capability and culture just isn’t true in practice, unless your business is really simple to begin with. McDonald’s can do it, but Microsoft? Not so much.

  19. ITisEasy

    Find drachma > Replace all with > TempMoney
    Find Euro > Replace all with > Drachma
    Find TempMoney > Replace all with > Euro

    There it is, three lines of code…

    1. Yves Smith Post author

      You’ve just revealed that you are not qualified to comment on this topic. Even your humble blogger, who has only a passing acquaintance with bank IT. can tell you that you can’t do that in Cobol, and that is charitably assuming the mainframe code is written in Cobol. You have to inspect every line manually. And you are also assuming that there is only one way that “euro” was coded. Monster assumption.

      Seriously, you should not be allowed anywhere near complex systems with a view like that.

      If it was all this easy, it would not have taken eight years of planning and three years of execution to have the transition to the Euro go smoothly.

      1. ITisEasy

        It took eight years, for many countries with many different currencies, does that mean that it will take as long to unwind one country with one currency ?.

        Yves, please don your wit and sarcasm hats when reading posts. or do I have to include smileys and emoticons to give ample warning of the above ?.

        Just because something is hard doesn’t mean it can’t be done, however there is the cliche’, “the impossible and ridiculous can be done, but should it ?”.

        1. TheCatSaid

          Weren’t the changeovers in various European countries done in parallel? It’s amusing to consider them being done sequentially. . . (Who would go first? Just a few months per country? LOL) . . .

          Seriously, though, a currency change in “just” one country wouldn’t shorten the time frame dramatically as you suggest. The interior code examinations, changes, testing, debugging, more testing, etc. would need a considerable amount of time no matter how many others are having to go through a similar process. (Fixing a bug in Germany’s code wouldn’t fix a bug in Belgium’s code; and everyone would have to find/fix/test separately–not to mention the differences in internal accounting, taxation, local conventions, preferences, etc.)

      2. Torsten

        No, Yves, it is YOU who are not qualified to comment on this issue. This is forty years of experience in IT speaking. Harvard, MIT, DoD (embarrassed to admit, but quit), lead research scientist for world’s biggest NL data aggregator before Google, fluent in COBOL.

        I made an earlier comment (the first on this thread, i believe, along the lines of @ItIsEasy, which comment has diasappdared.

        You dont have to like my style, but the political (and cyber warfare) impediments to reinstituting the drachma are Way more daunting than the computational impediments.

        1. Lambert Strether

          Your personal style aside, it now appears that ItIsEasy was being ironic, and in fact he realized Greece is facing a hard problem. So as it turns out, “forty years of experience in IT” has endorsed a jest or jape.

          It’s interesting that you worked in Natural Language processing. NL, too, has a hard time recognizing irony. Perhaps you have identified too closely with your technology? As the philosopher Henri Berson writes: “That diversion of life towards mechanism is the real cause of laughter.” How true, how true.

        2. Yves Smith Post author

          I find you comment to be astonishing, since Cobol does not have the capabilities that ItIsEasy’s joke implied it did. Are you seriously telling me you code in Cobol and are simultaneously telling me you can do the sort of mass search and replace in Cobol that ItIsEasy suggested? And are you further so poorly informed as to believe that that’s all it would take to find all the relevant code in a bank?

        3. Clive

          While I can’t dispute your claims to possessing a great depth and breadth of technical knowledge I notice that you don’t include “risk management” in your skill set.

          Maybe you do possess experience in managing risks on IT projects (this is, of course, a separate discipline than coding and technical design). But if you do, you may need to pick up your textbooks and take a refresher. No reputable professional who liked to demonstrate having knowledge of how to manage risks on an IT project, however trivial it is, could ever make the sorts of invalidated assumptions which you have just done.

          Unless you have conducted a thorough review of the source code, the documentation, the code management tools and methods used, the skills of the available technical team members, the presence or otherwise of test rigs, the maturity of the software release processes and much, much more besides you cannot possibly assert that any software development undertaking is “simple”, “complex”, “low risk”, “high risk” or anything in between.

          Until you have audited the technical, people, financial, infrastructure capacity and cultural factors which are in play, you simply don’t know what your going to have to work with. You have to assume the worst until proven otherwise.

          Instead, you’re assuming that everything is going to just work out fine. I hope you never get to design any safety critical systems. I wouldn’t want to live next door to any plant conducting volatile industrial processes which you’ve had a hand in designing.

    2. Louis Proyect

      ITisEasy, it sounds like you are under the impression that Greek banking is based on MS Word. I assure you that you are wrong.

    3. Lambert Strether

      Congratulations. In our “Stupid Comment of the Decade” contest, you may already have won.

      Yves has said this far more politely than I, but your “idea” — if I may so grace it — has been shot down many times by people who actually know what they’re talking about.

      Adding… Easy except in compiled code, or where the currency value is only implicit, or when it’s spelled in various forms, or replaced by a symbol…. And that’s before we get to any contractual relations. Just skimming the surface of weeks of patient teasing apart of the real, technical issues, as opposed to the cheerleading and handwaving. Personally, whenever I hear a programmer say “It’s easy,” I think they’re either lying, or they don’t know what they’re talking about. From the standpoint of delivering working code to the Greek people, I suppose the end result would be the same.

      1. craazyman

        that’s totally unfair. You can’t base a winner on just one single comment. What about those of us with a multi-year history of stupid comments?? Anybody can get lucky with one comment. You need to consider the whole body of work. I mean really. Also, the DELETE-IT algo makes us look smarter than we are Drivel Entirely Lacking Edifyingly Thoughtful Eclucidation — It’s Toast! The DELETE-IT algo works against us. Is there a way to give us credit for comments that don’t get posted because they got DELETE-IT’d?

      2. ITisEasy

        @ Lambert; like Yves you should don your sarcasm and wit hats when reading posts, are you totally bereft of a sense of humor ?. “like, really dude”……

        1. Lambert Strether

          That was ironic? Believe it or not, we have had not just one, but many comments substantively identical to yours (and no, I’m not going to put on my yellow waders and go find them). It’s been like Groundhog Day: Over and over and over and over.

          You are, I can only assume, late to this discussion, or you would have known this. At this point, as I am sure you will be the first to understand, nobody has much of a sense of humor about the stupid.

          1. ITisEasy

            “nobody has much of a sense of humor about the stupid.”
            Lambert up to now I’ve given you the benefit of the doubt, re-arrogance and conceit-, but I now realise that you’re full of it, including hubris. Shame really ’cause your technical posts are good.

            1. Lambert Strether

              Ah, the classic “benefit of the doubt” post, followed by throwing your drink in your host’s face. It’s a big internet. I hope you find the happiness you seek elsewhere.

  20. Newtownian

    Wonderful article. I’m certainly won over to Louis’s position as it matches my modest encounters with computer databases and knowledge management over the years: Sic.

    1. Nowhere is their mention of beta versions and testing which is elementary stuff before the final version gets rolled out. You could never do this in secret hence a few people working to solve all this for Greece in a darkenned room is just not plausible.

    2. A few years ago I worked with some specialist programmers on using pretty simple Bayesian software. We never got a decent working program because we were talking different conceptual languages. They didnt understand our needs or foci and we didnt understand where they were coming from and what they were offering. Since then I’ve learnt a lot about the subtleties of Bayes nets and their power in terms of knowledge management even and appreciate what they were trying to communicate – and am now in the reverse seat. Ergo I think Greece would need to abduct a pretty remarkable polymath programming + economics team to cross the concept communication barrier – so great it would be remarked on by Interpol or in the pubs and no longer be a secret.

    3. When I’ve seen computer specialists come together to integrate knowledge it takes a long time to achieve a great product – there was this proposal to create an “Integrated Catchment Management Support System”. It soon flopped and became the Ichymiss. There was nothing wrong with the idea, but rather the resources and time needed to adapt were insufficient and underestimated.

    4. From time to time I have been done various scientific database data mining. By rights to get the information from such rational people should have been easy. But in practice exploring the terribly designed databases, poor extraction formats, errors in knowledge systems etc. showed me that the refined products we use day to day like headline Microsoft products – are the exceptions not the rules – and even these have notorious problems even after 30 years to development.

    In conclusion it seems that a Grexit would be quite possible but only with the concurrence and cooperation of the EU as applied when the Euro was introduced in the first place. But the mind boggles on the program to convert New Drachmas to Euros to Old Drachmas – what a mess.

    This said the logic of the Greek situation indicates that the current solution isnt viable so it really looks like they are damned either way unless the EU itself has a transfusion of economic sanity which dumps austerity at a political level. What that will take who knows but at a guess Spain or Italy ending up like Greece could force the issue next.

  21. Synoia

    Any conversion in Greece has to involve running two currencies in parallel, with conversion between the two.

    A flash cut is not possible (bank holiday and everything starts up again a week or so later). The new system would just both not function correctly, and would not work at the required transaction volumes.

    The complexity of managing the conversion rate appears unmanageably hard, even without the high currency traders gaming the system.

    The only successful scenario I can imagine is a complete failure and start again from, In which case many people will die.

    The best recent examples are Iraq, Syria and Lybia. They are all working well now, correct?

  22. Carlos

    I’m totally fed up with Yves, Lamberts and the so called IT experts attitude. I have to say it and I really don’t care if this is moderated to oblivion.

    Few people think conversion to the Drachma is easy. Don’t insult peoples intelligence by ramming this “we know more about banking IT systems than you” crap down our throats, with appeals to your bogus intellectual and knowledge superiority.

    I really object to the consistent inference that the IT problems are so insurmountable, inevitable hardship woul be incurred on the Greek people. If you are all really so goddamn smart, tell us what exactly would be needed (in terms of IT implementation) to return to the Drachma. In high level easy to understand layman terms. No need to resort to this techno babble, endless whining “this is why it too difficult”.

    Tells us succinctly the time and resources needed to change the system, the major challenges, risks and continguency plans required. I’m sick of hearing it’s difficult, we got that message loud and clear. Give the real facts (in digestible form) and let readers decide if it’s an unsummountable problem. You haven’t convinced me or many others, just listed out a zillion road bumps some trivial, others less so.

    Unless you look at this from the perspective of “how a grexit could be implemented” (however difficult) instead of “why a grexit should not be implemented” you are going to lose a lot of readers support. I for one support about 95% of what you do here, but this persistent one eyed, monotonous, bullying, steam rollering of opinion you don’t like has finally got my goat up and pissed me off intensely.

    So it seems Yves and the inner gang rule out return to the Drachma as an option and it is not to be discussed unless a peer reviewed thesis on IT feasibility is provided.

    Just give us the damn key facts in a few paragraphs and let us decide. So far I have listened quietly and I am calling bullshit on your totally unfeasible IT system technobabble storyline. Difficult yes, impossible no, how difficult…. Very poorly articulated so far …… C for effort only.

    1. Toni M

      The point is that you cannot gamble the lives and livelihood of millions of people unless you have a real plan in place. This means that you must produce solutions that tackle all of the challenges using the resources at hand and within the very strict constraints that Greece has been backed into. You have to understand the position that you’re negotiating from – and that means understanding the consequences and limitations of the grexit threat. If you had years and money and breathing room you could try tackling these things– Greece doesn’t have that, and in the here and now people need food, water, shelter, medicine. The fact that we’re frustrated by and don’t like the reality doesn’t change the reality.

    2. Louis Proyect

      I was prompted to write my initial article on this by ultraleft commentary that ensued a day after Tsipras signed a punishing memorandum that supposedly he was elected to fight against. The self-appointed revolutionary vanguard was under the impression that Tsipras could have carried out a Grexit pretty much on the basis of lining up a print shop that could churn out drachmas within a month or two at the most. There was something about this that kept nagging at me until I finally realized that it was the IT implications. I have worked on IT banking applications for about 15 years in a 44 year career, including programming ATM machines for the United Missouri Bank back when they were a novelty. I felt it my responsibility to call attention to this. In the Iliad, they would kill the messenger bearing bad news. I beg for your mercy.

    3. Edward Qubain

      “… just listed out a zillion road bumps some trivial, others less so.”

      This is what has griped me about some of the articles. They have described some difficulties without proving there are no workarounds. That may be a tall order but it is needed to establish that resurrecting the Drachma is not feasible.

      I would add something else. The narrative we are given, sometimes implicitly, is that “Syriza was compelled to accept a third bailout because they lacked alternatives.” However, right after Syriza was elected, Yanis Varoufakis stated that they would not seek a Grexit because Greek voters wanted to remain in the EU. More recently, Varoufakis has described a scheme to use tax credits as currency which he says should have been implemented but wasn’t. This makes me question whether Syriza had really explored (possibly for good reasons, lack of manpower, ect.) the alternatives to the third bailout and if they really had no choice about accepting it. How high was the bar for rejecting the EU plan?

      1. Clive

        Isn’t it just as plausible though that the Greek government (Syriza) did look at “the alternatives” and decide that they were sufficiently hideous that it had to take the Troika deal on the table, however bad that was ?

        1. Edward Qubain

          Yes and no. It is a question of how thoroughly they explored a Grexit, how hard they pursued an alternative. If they were committed to staying in the EU, did they make half an effort? I don’t know the answer, but I am suspicious for the above mentioned reasons. No doubt in defending its decision to accept the bailout, Syriza will claim (possibly correctly) that it lacked an alternative.

          Also, do we actually know for sure the reasons Syriza accepted the bailout?

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