We may be overlooking something in economic termsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
It seems to me we are overlooking a couple of important item in re the economy after the crisis. Assuming for the sake of arguement that Y2K will have a large impact, there is no reason to assume the effects will be limited to the US. (I would assume the world wide part, but I have seen a number of posts indicating the US would be attacked by someone who presumably has no Y2K problems as soon as Y2K brings us to our knees.) Since the US is further along towards Y2K compliance than any other major industrialized country, it currently looks like the effects of Y2K will be less here than anywhere else. This would imply an increase in exports as US industry recovered more quickly than elsewhere, with an increase in jobs but would also seem to imply deflation of some sort as the dollar would certainly rise with regards to everyone elses money. US programmers would be in high demand all over the world, wages would go up, and we would be in for a repeat of the growth of the 50's and early 60's until the rest of the world got its act together.
Just a thought - total disaster is not the only scenario I can see resulting from Y2K.
I really don't see the enormous power outages some predict - sure the problems would be tremendous IF NO ONE BOTHERED THEMSELVES ABOUT THEM. There are people working on these things, and while they probably won't do a perfect job - they will get a lot of things right. Shucks, thats what Americans do - get things right more often than not.
-- Paul Davis (email@example.com), October 10, 1998
Just a couple of examples on how problems overseas can really hurt us here at home.
Auto industry relies on parts manufactured and shipped from Japan for use in both domestic and foreign models here at home.
High Tech Industries like computer makers rely heavily on components ONLY made overseas.
There are hundreds and hundreds of examples of interdependencies like this. If business and manufacturing overseas is hurt, we will be too.
Also, many of the U.S. corps to business overseas as well. Just Coke alone does the MAJORITY of it's business overseas.
Also, if the dollar rises against other currency that would mean that only holders of dollars would be able to afford the products and services. And, if there is a recession/depression most people would be holding those dollars to use for vital, everyday necessities.
In today's modern world I can't see how we can get by if the rest of the world is in
-- Michael Taylor (firstname.lastname@example.org), October 10, 1998.
Your scenario seems possible under the right leadership which of course excludes the Bill Clintons and Bob Doles of this world.
I would like to point to another problem with respect to solving the Y2K bug which does not exclude your scenario down the road. We may be in the early stages of a world wide depression which is not fully evident here but may be very much so in early 1999. Just this week the long bond rate moved from 4.71 % to over 5.1 %. Both wednesday and thursday the dollar lost 10 % against the yen. This shows that there is a lot of panic out there and a lot of paper wealth being lost. Should the stock market continue to tank from current levels which I think it will it will have a tremendous impact upon peoples preceptions of their own well being.
People no longer confident about their retirement seeing their net worth drop daily will reduce spending on non essentials. Many will convert their 401's and IRA's to cash equivalents.
What I am getting to is that businesses will have cash flow concerns which will put Y2K fixes on the back burner if they weren't already there. We may be trying to put out the fire in front of us while another fire is creeping up behind us.
It seems to me that between the economic and Y2K problems there may be many families facing foreclosure on their homes while at the same time real estate values are dropping. With Y2K just 14 months from now or sooner and the massive loss of income that could result I see a catch 22 situation that I would very much like to get input on.
Factories close due to power grid problems thus no payroll. Banks are mostly shutdown for the same reason. Hypothetically in 6 months some workers are able to return to work and banks are up and running. Can the banks foreclose? Will they? Will local politicians and the community allow the banks to do mass foreclosures? Also if I can't meet the bank's demands, I owe let say 50K on my house and houses like mine already on the market can be had for 5 or 10K why would I want to meet the bank's demands. Especially if I had tucked away 10K in cash, silver or savings bonds. Who has the strong hand and how will it play out?
Respectfully, Ed Stevens
-- Ed Stevens (email@example.com), October 10, 1998.
Exports of some things may increase if the USA is in relatively better shape than foreign countries after Y2K. Essential services, and those essential goods which cannot be stockpiled would be in demand early on. But with many businesses crippled, the demand for non-essential goods wouldn't be there, simply because they'd have little cash to spend.
I heard an interview with Peter de Jager today about this very thing. He said that the countries with money could get their post-Y2K problems fixed quickly by hiring foreign (North American) talent. But countries like Russia and some in South America won't be able to pay for the work, and will be slow to recover.
I think you are correct, overall. Whether we're talking about entire countries, governments, companies, or individuals - those who are the best prepared will have the advantage.
-- Mike (firstname.lastname@example.org), October 10, 1998.
Im feeling a little grumpy tonight so Im gonna pick on a few things, I know that you will not mind if I attempt to poke a few holes in your argument.
=Since the US is further along towards Y2K compliance than any other major industrialized country, it currently looks like the effects of Y2K will be less here than anywhere else.=
Since the US has a far higher reliance on technology than anyone else, being farther ahead means staying equal, or maybe even falling behind.
=This would imply an increase in exports as US industry recovered more quickly than elsewhere=
Since the rest of the world is in meltdown well before us, they will probably devalue first, leading to an increase in cheap imports, not exports.
=US programmers would be in high demand all over the world, wages would go up, and we would be in for a repeat of the growth of the 50's and early 60's until the rest of the world got its act together.=
India is supplying a great deal of very astute programmers to US companies now, they work cheap. As long as telecom is OK, American programmers have no inherent advantage over anyone else. In fact, the high wages the you allude to would put them at a disadvantage in the world market.(due to the above mentioned deflation)
If you think I am out of line, slay me, of course.
-- Uncle Deedah (email@example.com), October 10, 1998.
Forget about Y2K for one moment. Japan (and the rest of Asia) is in a world of hurt. Hedge funds "the S&Ls of the 90's" are trying to liquidate HUGE positions in currencies, bonds and index futures. The Big Boys are running scared (the fed can't save them all) this liquidation feeds itself. The banks aren't even talking about the even bigger problem, derivitives. No one truely knows the exposure the banks have.
Y2K is the left hook no one saw coming (except us)that will cripple the world economy for many years after it hits. Right now we are just one more fighter in the battlecage.
-- Bill (firstname.lastname@example.org), October 10, 1998.
Where do people get the idea that being "further along" in Y2K compliance is going to mean diddly squat when time is called on Jan 1, 2000 (or sooner ... those pesky FISCAL year 2000 deadlines, you know)? If you ain't there, you ain't there -- thats life in computer land. As far as third world countries: because people there are LESS dependent on computer technology, it seems to me that there will be LESS of an impact.
-- Jack (email@example.com), October 11, 1998.
What about countries that depend on desalinization plants as their main source of water? If the desalinization plants have embedded systems that are date-dependant and are not compliant, one would think that this would have a dramatic impact on these countries, even though they might not appear to be as developed as the United States.
Correct me if I'm wrong, but this could be another potential vulnerability for some OPEC nations, which in turn will affect oil production.
Comments are appreciated.
-- Tim (firstname.lastname@example.org), October 11, 1998.
Just a thought....... If Y2K is an 8-10, maybe even a 7, The US economy will not only abrubtly grind to a halt but fall so fast it will make your head spin. As someone else said, Japan and SEA are in a WORLD of hurt, I would even suggest that they are in or on the verge of a depression and there ain't no stopping it Y2K or not.
-- CP (Spoonman@prodigy.net), October 11, 1998.
In my humble opinion if we completely take Y2K out of the picture we are still looking at a very grim situation. Japans BIG solution is to give everyone Monday off to go shopping and help boost the economy. No kidding.!Latin America has already squandered over half of the Bailout money they recieved . Brazil is going to need major IMF help, Russa is demanding money, but has no practical solution.But they have nuclear weapons so I'm sure they will continue to recieve money that will end up in the hands of the wealthy. We have terrorists out there that are claiming to have nuclear weapons, and probably do! I believe that sooner or later they will impregnate the U.S. And lets not forget all the other little countries that would like nothing better than to knock us off our high horse. Add Y2k into the picture, which I believe will be on the scale of 7 or better and look out !!!!!! I am forever grateful I found this bulletin board. The information I have gotten from here these past few months will probably save my familys life. I thank you all : )
-- Cecilia (BigDog001@aol.com), October 11, 1998.
In response to Tim's question--
Y2K and Water Desalinization
-- Max Dixon (Ogden, Utah USA) (Max.Dixon@gte.net), October 11, 1998.
Paul, Wish I could believe your pollyanna scenario, but there is zero evidence to support it. As regards electric power, make yourself read the entire NERC report. Remember, they are "cautiously optimistic" just like you. Rick Cowles' very well written commentary on this at:www.y2ktoday.com/modules/home/default.asp?id=326&feature=&type= is invaluable. Will the power go off and stay off? Depends where you live. Consider Commonwealth Edison of Chicago. They fired all their IT people in 1996 and replaced the with Anderson consulting. That didn't go well so they fired them and brought in IBM. Thats not going so well so now they want to hire a few hundred programmers. They are only 23% complete with basic testing and they haven't actually assessed embedded systems yet! Chicagoans, "do you feel lucky?". There are other places (Washington State) that are doing better. Stability of entire grids can be brought down by relatively small instabilities. According to one report, the Northeastern grid requires 96% of its plants operational capacity at any one time. So if 5% of generating capacity is lost...... Well, in the past, one grid could import power from another, but in this situation that may well be impossible.
As to the rest of the world, you can't export products if they can't purchase them. The financial third world is melting and its only going to get worse. I have to laugh at your idea that programmers will be an export. We import talent now because there aren't enough codeheads for domestic projects. Post Y2K the shortage will be even worse!
No, total disaster isn't the only scenario. I place that around a 15% probability. Much more likely is a Depression scenario. However, my preparations will be for TEOTWAWKI. Why? Because the "unlikely" total disaster is sufficiently likely for me to buy insurance in the form of preparations. Now do your family a favor, get off your butt and start an extended pantry good for six months. Figure out how to heat and light your house without elecricity. Its not a wasted effort.
-- R. D..Herring (email@example.com), October 11, 1998.
Just a few points here - India is not supplying programmers now, they lost all that when they started testing nukes a couple months ago. First response by most govt's was to cancel visas and immigration. The US most certainly did. In re exports - Europe was in pretty bad shape after WWII and we exported an awful lot of stuff to them for the next 15 or 20 years while they rebuilt their infrastructure. Aside from plants built recently, much of the US is LESS dependant on computers than German and Japanese facilities - many of our steel mills and so on were built in the 40's and 50's pre integrated circuit. The reason Germans and Japanese get longer vacations than US citizens is because they went in for automation in a big way when they began their big expansion in the 70's and 80's. I feel sorry for the folks who are dependant on the major overall US power grids (I think there are three) for imports of power - they will likely have some problems. BUT, not all the country (nor even most of it) is so reliant on imported power. A great deal of power is generated locally, and I think the local grids will stay up, even if the national grids fail. As I said before, we are coming out of this further ahead on Y2K work than any other country. That means we will have more working infrastructure, more working financial centers and more reliable communications than anywhere else in the world. The rest of the world has things they must have to correct their problems, and they will come to us to get them. The Arabs have bought tremendous amounts of gold, European countries have gold stored, and where they don't they will offer other things. This will result in growth in the US economy IMHO. Remember, there were enormous fortunes made in every financial or economic disaster in history - BY THE PEOPLE WHO WERE READY FOR THE DISASTER. Get ready to grab a bucket, it just may rain soup.
Remember all the folks who got rich during the depression by buying land at fire sale prices. Mineral rights went for a nickel or dime an acre - some of that land is now producing coal worth twenty or thirty dollars per square yard!! There are over a million square yards in a square mile - about 650 acres - at a dime an acre thats $65. Watch for opportunity - it is bound to come in any crisis - and this will be a crisis of greater or lessor proportions.
BTW, I am not aware of any chips that cannot be fabbed in the US, the only ones I can think of off hand we import in a major way are memory chips. That market was ceded to the Orient some years back which results in bad publicity every now and then, but I know of no reason the US fab plants can't set up to make it, its just not the high profit kind of item they want to produce. And there is a lot of pressure on lower down the chain suppliers, here and abroad, to prove compliance or lose contracts. The real problems will come in where some large corp. say a German outfit, that does not supply anything to the US, lets the whole thing go because "its just more US panic BS". That will be what sinks Japan and Germany. The US is very Y2K aware compared to Europe - how many from Europe have ever posted anything here? How about Japanese? It will make a difference.
-- Paul Davis (firstname.lastname@example.org), October 11, 1998.
Thanks Max for the link. I've been particularly interested in the technology called "Solar Thermal Trough". It is not new. First big installation was in about 1920 somewhere in the middle east. There are whole systems in place in developing countries in villages...I will not do it justice to describe, except to say that it is doable technology that provides power for desalinization, refrigeration, lighting, heating, cooking....do a websearch on Solar Thermal Trough....or go to/search for Home Power Magazine...
I think the missing ingrediant here is only passing mention of the Iron Triangle, of which power is the rosetta stone, linch pin...Power, Banking, Telecommunications...all of which fall when power falls...and of 7,800 power companies in N. America...none is compliant or ready.
I stand with those that say, doesn't matter if they are "almost there"...
Uncle, I'm sorry you're feeling punky today...hang in there!...More breathing.
Thought provoking discussion.
-- Donna Barthuley (email@example.com), October 11, 1998.
Paul said, "Just a few points here - India is not supplying programmers now, they lost all that when they started testing nukes a couple months ago. First response by most govt's was to cancel visas and immigration. The US most certainly did."
Paul, maybe you should mention that to ABC news who just did a piece on this very thing about a week ago. (See previous threads) The work is being outsourced to programmers IN India. No Visas required. They work for much less than US programmers, and are doing plenty of our work, plus that of other countries. Ask the large businesses (whose work is being done VERY cheaply there) if they care about the recent nuclear testing.
-- Gayla Dunbar (firstname.lastname@example.org), October 11, 1998.
Gayla: You're right about a lot of y2k remediation being outsourced to India -- Russia too, for that matter. Some companies have learned to be a little careful about what they wish for, though -- New York Times back in March carried an article on computer security that mentioned several cases of y2k work coming back from overseas with secret back doors added to the programs to allow unauthorized browsing. Think about it. The new version of the KGB must be drooling over the possibilities, and at the moment we aren't exactly high on India's list of favorite places since they started popping nukes again.
-- J.D. Clark (email@example.com), October 12, 1998.
India: FI Group (UK) has a business partnership with a major Indian Software house, they will do major development work for any current or future clients. The work will be done on the Indian subcontinent with liaison to UK clients provided by FI.
My last employer contracted out much of the y2k work to another Indian software house.Citibank are doing the same. You obviously don't need visas.
Y2k is the springboard for the Indian software industry.
-- Richard Dale (firstname.lastname@example.org), October 12, 1998.
Well - I was referring to the large number of programmer/immigrants that we saw flooding into the country over the last few years. Numbers over 5 years was close to 300,000. That put a dent in hiring practices, let me tell you. Here is a site that discusses that -
In re jobbing stuff out directly to Indian houses - I have heard some mighty bad things about the stuff coming back - and generally management is mad about it anyway because they can't make changes at the last minute. The jury is out on just how much business India and others can get - we will see as time goes on.
-- Paul Davis (email@example.com), October 12, 1998.
The economic bubble bursting early may be what saves the power grid. An earlier message talked about grids going down if the supply is 4% short. But when factories are shut down, offices closed, and retail/service running short hours (to reduce overhead), suddenly there's not a heavy a demand on the grid.
The same thing goes for oil. Depression leads to factories shutting down & people getting layed off, which leads to less oil consumption.
The point is, if we slide into Y2K rather than falling off a cliff, we might have a better chance to get through it. But for personal reasons, I'm crossing my fingers & chanting "May 1999... May 1999... May 1999...."
-- Larry Kollar (firstname.lastname@example.org), October 12, 1998.
Larry, I don't know just what the guy with the 4% figure was talking about - so I have kept quiet about it. But from my actual experience in the coal/power industry I KNOW that all coal fired generators are down for maintainence at least 20% of the time - often more. Nuclear is down about the same or a bit less - hydro less for maintainence but often is down to allow water levels to rise above the dam. Now whether he meant a shortfall of 4% of the total drawdown would drop certain areas off the grid, or whether he meant 4% of generating capacity going down would knock off some areas - I don't know. I do know the whole thing is meant to go down gracefully rather that crash and burn - but certain parts no one ever discusses (fear of terrorists) are more critical than others - in fact there are about 67 or 68 (going by memory here) really critical points on the overall grid that would be pure h**l to replace - fortunately they are rather large - uhh - power convertors that can't be replaced at all quickly. But they don't use much in the way of chips - they are just the really sticky spots in terms of transmission.
-- Paul Davis (email@example.com), October 13, 1998.