A prediction by PNG on the Gartner Group

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From http://www2.gol.com/users/png/

Feb 16, 1999 The Gartner Group

I'm going to go on record and predict that the next Gartner Group report on world y2k status will show Japan moving up from level III (50% failure) to level II - one step below the U.S. (and closing fast). I also believe the levels or categories will be redefined to smaller percentages of potential failure to produce or distribute.

For example, Level I may be reduced from 15% to 8-10%, Level II reduced from 33% to 20-25%, Level III reduced from 50% to 33% and so on. They will probably cite accelerated awareness, improved remediation methodologies, increased coordination and information sharing and better reporting.

The report will also include the always important caveat that continuing effort must be maintained and as we countdown to the end of the year, it will be vitally important for the U.S. government to praise the efforts of the Gartner Group and endorse their findings so more companies will BUY THEIR REPORTS!

I can hear Members of Congress now: "Thank you for providing this important information that all American families need to know and I think we need more of these reports as we get closer to the end of the millennium. It's important to keep the American families informed. Ahhhh did you TV folks in the back get that or do you want me to do another take?"

If my prediction comes true, will that be good news or bad news? I say it's bad news. It will show that the Gartner Group couldn't forecast rain in a thunderstorm. It will mean that things may be better than they have projected or worse than they have projected. It means they don't know anything more than you or I. It would mean that the are an outstanding organization...at selling reports and themselves.

-- a (a@a.a), February 17, 1999


And YOU know what you are talking about because.........??

-- James Gardner (gardner@aol.com), February 18, 1999.

How did we go from Japan doing hardly anything for remediation to closing in fast on the US? Someone is bullshitting someone.

-- nobsplease (nobsplease@nobs.com), February 18, 1999.

Mr G--:: PNG is up to his Fundamental Orifice in Japanese business and banking.


-- Chuck, night driver (rienzoo@en.com), February 18, 1999.

There is one thing we do know. The GartnerGroup and Peter de Jager have both changed their message. And they both changed their message at about the same time (fall of 1998).

-- Kevin (mixesmusic@worldnet.att.net), February 18, 1999.

I wonder why Kevin???????

-- Andy (2000EOD@prodigy.net), February 18, 1999.

Either there's an evil conspiracy, or there's good progress being made. And progress is only noticed in other forums.

-- Flint (flintc@mindspring.com), February 18, 1999.

So cite some Flint.

-- Andy (2000EOD@prodigy.net), February 18, 1999.

OK, I'll cite de Jager and the Gartner Group. After all, these were very credible sources until they started disagreeing with you.

-- Flint (flintc@mindspring.com), February 18, 1999.

Flint, that's pretty lame even by your standards.

-- Andy (2000EOD@prodigy.net), February 18, 1999.

a@a.a: (Ref original title.)

Were you quoting PNG above, or paraphrasing, or commenting about what he wrote? The context isn't clear.

Predictions should change over time from rough estimates to finer tuing to final outcome. However, the real progress to date has been overwhelmingly "missed deadlines" based on "too early" predicted dates. That is, like what the IRS did: claimed in October to be finished by January (impossible deadline! stupid, ridiculous schedule made for political purposes only. But if it slips, they have "lots of time" to recover.) Then in January, when nothing was completed, no fanfare, no notice, no re-scheduling.

So when will they finish? No one publicly knows, and the government administrators aren't saying.

Power companies are almost universally claiming "on schedule" to finish "mid July". Fine, if they finish then, great. If they don't, who won't finish - but will slip an "acceptable" amount. Who will finish too late to test adequately - and so fail in unexpected ways? Who won't finish at all?

The _progress_ of information (rate of completion) isn't sufficient to change predictions as radically as talked about in the original posting.

On the other hand, the number of utilities and government agencies completed remediation and testing (the only measure of success I track) is so small that complete failure cannot be ruled out - yet.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), February 18, 1999.

PNG ---- "If my prediction comes true, will that be good news or bad news? I say it's bad news. It will show that the Gartner Group couldn't forecast rain in a thunderstorm. It will mean that things may be better than they have projected or worse than they have projected. It means they don't know anything more than you or I. It would mean that the are an outstanding organization...at selling reports and themselves."

Exactly. But you already knew that. I worked for the Meta Group at one point (a Gartner work-alike). Truly creative thinking there was nil. Everything was geared to being one-half step ahead of the conventional wisdom of their clients.

People (Flint?) who think we are denying the possibility of Y2K progress are wrong (see PNG above). It's the credibility of the forecasts that has, all along, been suspect. Though some doomers do grab everything negative and reject everything positive, not me, bub.

The issue, as always, remains, "how much preparation should I do to protect my family?" In the absence of credible evidence (see Gartner, de Jager, et al), the answer, alas, remains, "everything possible, ASAP."

I have a somewhat conspiratorial and disgusted view of what happened last fall. I think Koskinen passed the word quietly that, since no one can really predict Y2K effects YET (do you think these guys didn't know they were pulling estimates our of their rears?), "let's all be responsible global citizens and calm the herd."

"Things may be better than they have projected," Flint and Gardner, et al. But they may also be worse.

-- BigDog (BigDog@duffer.com), February 18, 1999.

Reason #1 for the "improvement" of Japan is the fixation on financial and banking transactions as being the paramount y2k indicator of infrastructure disruption.

Conveniently, the banking crisis in Japan has led major banks to announce complete withdrawl from overseas operations. They are packing up and going home to Japan. This retreat will limit the number of Japanese banks that will actually participate in international transactions.

The only ones remaining will be the ones far enough along in remediation to pass SWIFT network testing andmeet the reserve ratios required by SWIFT participants. Account management for overseas corporate clients requiring transactions will be shifted to banks still participating. The internal Japanese networks will be available to reconcile accounts domestically between Japanese banks.

So, because the number of participating banks will be reduced by perhaps 50%, and the remaining banks are the furthest ahead in remediation, the Japanese banks will be reported as making "substantial" progress. That's Reason #1. Ahhh, but there's one small problem...

All those Japanese banks that will be retreating this year? They will be taking their money back to Japan with them and laying off the local workers. They may begin to call in loans (good loans) as they are doing in Japan from business customers. I don't think I need to spell out in detail the economic impact of the world's largest lender (Japan) pulling the plug on the world's largest debtor (The U.S.).

Short-term interest rates are now virtually zero in Japan...and the economy is still getting worse. A credit crunch is in the cards for the U.S. starting about June.

But then again, as Mr. Gardner has correctly questioned... Imay not know what I'm talking about. Icertainly was correct when I projected that any problems during February corporate FY rollovers would not be significantly reported. I haven't read of many February rollover problems. My comments at the time were that FY's are not commerce and distribution and thatwill be the challenge that a substantial number of companies will not be prepared to meet.

Reason #2 tomorrow. exhausted today.

-- PNG (png@gol.com), February 18, 1999.


"Short-term interest rates are now virtually zero in Japan...and the economy is still getting worse."

That's really scary!

Is that due to a lack of confidence?

Mike ======================================================================

-- Michael Taylor (mtdesign3@aol.com), February 18, 1999.

PNG, and anyone knowledgable: What happens when when Japan calls in its loans? Also, if a credit crunch hits US, can banks "call in" home mortgages? Yikes.

-- a (a@a.a), February 18, 1999.


This may give you some food for thought.......the economic context of y2k...

February 17, 1999

Dow Jones Newswires

AWSJ: Japanese Bonds Face Different Y2K Test


Staff Reporter

TOKYO -- Japan's rising interest rates have drawn attention to Tokyo's plans to issue huge amounts of bonds. But the government's reluctance to buy bonds could play an important role in driving rates higher in the future.

The Japanese Finance Ministry -- the issuer of government debt -- also has been a huge buyer of that same debt through its Trust Fund Bureau, investing money deposited by savers in Japan's giant postal-savings network.

The fund's sway over the bond market has been clear in recent weeks: It sent bond yields soaring in January by suddenly announcing it would stop purchasing bonds. Then, on Tuesday, yields tumbled when the bureau reversed course and said that in February and March it would buy bonds after all.

But ultimately, the Trust Fund Bureau will probably have to pare bond purchases after March and some analysts predict it will become a major bond seller in the next three years. That's because the postal-savings system could see its recent steady inflow of deposits turn into a significant outflow over the next two years.

Almost half of the system's total deposits -- more than 100 trillion yen ($84.28 billion) -- sits in 10-year term accounts that expire in 2000 or 2001. If they aren't rolled over into new accounts paying far less interest, the money will flow out of the system, and thus perhaps out of the bond market.

Wags have labeled this "the other year-2000 problem," a reference to the computer bug that some fear will foul up computers world-wide on Jan. 1. J.P. Morgan & Co. estimates that as much as 50 trillion yen could flow out of the system, a threat that could force the bureau into selling bonds so as to raise cash needed to meet the payout. "It seems almost inevitable," says J.P. Morgan strategist William D. Campbell.

A finance ministry official denied that the recent changes in the bureau's buying plans have anything to do with manipulating market rates -- as some critics have suggested. The official, asking not to be named, says the bureau is boosting long-term loans to the private sector, and needs more short-term bond holdings to balance its investment portfolio. There is no knowing how much money will flow out of postal savings in the years ahead, the official said. Thus, he concluded, there is no way to predict the value of the bonds the trust fund will buy or sell.

Selling bonds would be a huge shift for the bureau -- and the bond market. For three years straight, the bureau has been the government's most reliable buyer of bonds, snapping up about one- quarter of all new issues. Last year it purchased 15 trillion yen in government bonds, raising its ownership of the bond market to 34%, according to J.P. Morgan.

The Japanese bureau's huge appetite for government bonds was one of the reasons yields on 10-year bonds last October dipped to 0.7% -- a historic low anywhere in the world. And its decision to first scale back, then halt, bond purchases late last year sent yields soaring towards the 2.44% peak they hit last week.

On Tuesday, as pressure mounted on the government to hold long-term rates, Finance Minister Kiichi Miyazawa announced that the bureau will resume bond purchases of 200 billion yen this month and next, helping to send yields tumbling back down to 1.925% on Wednesday.


-- Andy (2000EOD@prodigy.net), February 18, 1999.

Thanks Andy.

Does anyone think there might be an extended holiday placed on defaults for loans, etc?

What good will it do the banks if they foreclose in an economy where the property cannot be sold?

Mike ================================================================

-- Michael Taylor (mtdesign3@aol.com), February 20, 1999.

Commercial, unsecured (business) loans have always been subject to call. This is a fact of business. Residential mortgage loans are secured and can be called (foreclosed) only for nonpayment or destruction (devaluation) of the collateral (the property). The problem is business loans. The first ones to be cut off will be the money-losing, high tech, internet companies. They have never and may never show a profit.

-- PNG (png@gol.com), February 20, 1999.

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