ADVANCE WARNING SIGNALS RECESSIONgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I am convinced there will be triggered by Y2k concerns.What will be a signalwe are getting close
-- PAUL E THOMAS (firstname.lastname@example.org), December 28, 1997
Good question ... and I have a feeling that the answer might be "a new kind of signal, unlike the ones that economists have used in the past to anticipate recessions." There was an article in the NY Times business section, either Sunday or Monday (I don't remember now), suggesting that economists were somewhat concerned that they might not be able to read the signals associated with the current Asian financial crisis accurately enough to know what its impact will be on the US economy. The Y2K phenomenon is sufficiently unlike any previous event that I suspect that it will involve an entirely different set of signals.
Here's a suggestion, though: watch for a wave of resignations of CIOs and outside-Board members in mid-1998 or thereafter. That will be a clue that the rats (metaphorically speaking) are deserting a sinking ship
-- Ed Yourdon (email@example.com), December 29, 1997.
While I am not a programmer, it's my understanding that the 1999 date field was sometimes used for functions other then just the date. So, on January 1, 1999 some applications could fail. Also, many of the states and cities rollover to the next fiscal year on dates other then the first of the year. It's my understanding, for example, that New York City, rolls over on February and many of the state governments on July 1st. So, if any y2k failures start on a city, state, or business level prior to January 1, 2000 it's an excellent signpost of what's to come.
-- Dennis Sherwood (firstname.lastname@example.org), December 30, 1997.
In the Business Section of the 31 Dec 1997 Chicago Tribune, Blue Cross and Blue Shield unexpectingly annouced it was dropping its Medicare processing contract, which it had held for almost 31 years. The "Blues" processed over $300 million in claims each month for Medicare. The Blues are the fifth Medicare fiscal intermediary to give up the claims business. Robert Kieckhefer, a spokesman for the Illinois Blues, said it decided drop its Medicare contract because its's a "low margin, high risk" enterprise. While y2k concerns were not mentioned, one has to wonder what is the high risk element involved in dealing with Medicare?
-- Dennis Sherwood (email@example.com), December 31, 1997.
Dennis, I think I read some place that Medicare processing was to be done on one computer run by the Feds in 2000! I also read that there are no contracts that would require the fifty companies who process Medicare data to upgrade their systems to process Y2K claims. In essence the companies who are now processing claims will be out of (Medicare processing)business come 2000. So why would you want to spend millions for a business that will end in two years??? Hmmm - upgrade your equipment before you turn the lights out - just my thoughts - Dennis
-- Dennis DeLaurier (firstname.lastname@example.org), December 31, 1997.
Dennis & Dennis,
These are good points about Medicare. I think I'll combine them into a separate question that I'll create at the top-level index of questions on the Q&A forum, so we can start to talk about fallback planning in the field of medicine and health
-- Ed Yourdon (email@example.com), December 31, 1997.
Medicare cancelled its plans to bring its Medicare-processing systems in-house, after having notified its contractors well in advance that their services would not be needed after 1998. So the contractors can continue onward, after all, but how many of them invested in upgrading their systems to be Y2K-compliant knowing that (at least until a few months ago) their contracts were going to be terminated? I surmise, few or none. How many are upgrading to Y2K now in the expectation they can continue to process Medicare claims beyond 1999? I surmise, few or none, because it's already too late. I expect most of them will take the BC/BS approach, and bow out. Come 2000, Medicare may find that it has neither contractors nor computers of its own to process claims.
-- Nick Chase (firstname.lastname@example.org), January 21, 1998.
Watch the precious metals . If they start to make a big run then the "gig-is-up"! Watch the DOW-30 when they stop their big runs to the upside then watch for big corrections. Watch foreign currencies vs the U.S. dollar and look for massive devaluations in those foreign currencies. Watch the other foreign markets for signs fo big sell-offs.
-- david elliott (CWAVES@worldnet.att.net), March 21, 1998.
David Elliott suggested, in a recent posting on this thread, that we should watch for price movements in precious metals. From that perspective, one of Gary North's recent newsletters made an interesting point: while the price of gold bullion remains below $300/oz, the supply of one-ounce gold coins has dried up, presumably because more and more people are beginning to buy them and stash them away. I don't know if there is any way of tracking this in a quantifiable fashion, but it seems to me that it would be a good indicator.
-- Ed Yourdon (email@example.com), March 21, 1998.
I run an investment advisory firm. We have supplemented our routine advisory work with efforts aimed at insulating client portfolios from potential y2k destruction. This involves the ongoing purchase of precious metals in bullion form. In general, we haven't run into any problems acquiring inventories of 1 oz gold bullion coins from dealers, which in my mind refutes the scarcity theory as a current indicator of looming recession. Perhaps the scarcity reference was directed at the U.S. Gold Eagle 1 oz. coins, which we typically avoid because this coin carries a fineness of only .9167 (22k) vs. a .9999 fineness (24k) for the modern Austrian, Australian and Canadian 1 oz. bullion coins. We have had no problem finding competitively-priced supplies of these higher grade bullion coins. In our opinion, if people want to own gold for the sake of preserving their wealth, then they are better off buying the pure gold bullion coins rather than the U.S. Gold Eagle coins which contain 8.333% of non-precious metal alloys.
-- R L Flink (CFA100@msn.com), March 25, 1998.
This answer takes a different approach to the question. Remember that recessions, depressions, and market gyrations are largely a factor of public perception. A worried public can start a run on banks even if no Y2K problems occur whatsoever.
Therefore, I'm keeping half an eye on the daytime and late-night talkshows--at least the commercials I see for them. When Oprah, Donahue, Jerry Springer, Nightline, Prime Time, etc decide that it's time to squeeze Y2K for it's disaster-related ratings potential, then the word will finally start to "get out" to the clueless public.
The next morning, you'll start to see an increasing series of small cash withdrawls and mutual fund sells that can cumulatively cripple our financial institutions. Again--even if no Y2K problems emerge whatsoever.
-- Mark Zieg (firstname.lastname@example.org), May 26, 1998.
Oprah had Tony Keys on her show a few months back. She laughed it off, then started talking about partying on New Years Eve 2000. I'll panic when I see the panic starting.
-- Annie (email@example.com), May 26, 1998.