I already asked this question on two other threads, but I took another's suggestion to start a new one, so here it is...

As someone who is neither in the "doomer" or "polly" camp (not publicly anyhow), I have a question for the Pollys: even Koskinen suggests that major infrastructure failures are likely in many countries abroad. The CIA has expressed the same beliefs many more times, and much more forcefully. So has the World Bank...and the UN...and Gartner...and...and...

My question, then, is twofold: (a) do you think this concern is overblown, and (b) if you think it is well-founded, and then you combine the infrastructure-level problems, secondary-level failures, human response, and economic fallout, isn't it naive to suggest that Y2K will be a nonevent for us...in essence, that we live in a vacuum from the rest of the world?

It seems to me that there is so much hangup about precisely predicting the exact impact of primary failures, and that the secondary cascading impacts are underplayed. But maybe that's just me.

I know your answers will be as unique as your personalities. Thanks for your consideration...

Scott Johnson
Editor,
y2ktoday

-- Scott Johnson (scojo@yahoo.com), April 30, 1999

Answers

a. No, it appears that the Establishment is down playing the "Middle of the Road - Various Shades of Gray Scenario". Koskinen has been quoted as saying to his staff: Do not offer advice on preparations, it could be misconstrued as a double standard AND given the choice between Y2K or Y2K and Panic, he will work to avert the panic.

So I assume Y2K is Real and will impact all of us in ways yet unknown.

b. Yes, it would be naive to say Y2K will be a non-event for everyone. I like Roleigh Martin's prediction for Y2K impact of a 5.5 to 9 based on location and individual circumstances.

So I beleive neither The Bump in the Road nor TEOTWAWKI will define the future.

-- Bill P (porterwn@one.net), April 30, 1999.

A thought about this subject and the "vacuum" that we live in: in 1997, the economies of the Pacific Rim collapsed. Many economists, highlighting the interconnectedness of these economies with the U.S.'s, predicted a U.S. downturn. It never happened. The reason was primarily due to stable monetary policies and level-headed thinking.

The lesson? Our economy is intertwined with the world economy (as it should be, thanks to rational supporters of free trade), but severe economic shocks in one nation do not always translate into cross- border disruptions.

Could Y2K derail the early stages of the european recovery? Could it disturb the (even earlier stage) Asian recovery? Of course. But recent history shows us it does not necessarily translate into an impact on the U.S. economy.

-- Jeff Donohue (jeff_donohue@hotmail.com), April 30, 1999.

Sensible stuff, Bill P. It occurs to me that people who might be defined as "pollys" by the folks on this forum are nothing of the kind relative to the general popualation. I haven't seen many people here try to make the argument that Y2K won't have any material impact at all, anywhere. It's just a matter of denying the likelihood of TEOTWAWKI or anything close to it, for the Pollys here.

But I don't think one can say the same for the general population. I here people all the time say "Oh, they've fixed that, haven't they?" I hear *smart* people recite the "bump in the road" and "the free market mandates that it'll be fixed" cliches. OR, people tell pollsters that they're taking their money out of the bank, "just in case." Where is honest examination of real issues? This is a slightly different animal from my original question, but I worry that people are simply refusing to think through the issues involved on a substantive level. What do you think?

Scott

-- Scott Johnson (scojo@yahoo.com), April 30, 1999.

JEff, you said that "severe economic shocks in one nation do not always translate into cross- border disruptions." True enough...but what about broadly distributed, sever economic shocks across the world? As for the Asian flu and its cousins, most of that was a result of financial mismanagement. Y2K has the potential to be a more "where the rubber meets the road" problem, with infrastructure risks and business continuity failures. Comments?

Scott

-- Scott Johnson (scojo@yahoo.com), April 30, 1999.

JEff...I'd also question whether our strong economy is entirely due to monetary policy and "level-headed thinking." On the part of the policymakers, perhaps...but investors? We have a stock market that is almost entirely riding the tiger of overvalued Internet and other digital companies... 1929, anyone?

-s-

-- Scott Johnson (scojo@yahoo.com), April 30, 1999.

Scott, Mentioning Asian flu gave me the analogy I was looking.I believe that to describe the effects of the lack of Y2K compliance in overseas trading partners will be similar to an epidemic.Asian flu,AIDS whatever...sooner or later it will reach our shores & could be devasting.

The only way to mitigate this may well be to operate a temporary "ring fence".Overseas aid could be cut or else targeted at Y2K remediation.

However,many companies with extensive overseas links would be hit,not least the clothing,food,vehicle & financial industries.

In the early '90's,our bank the NATWEST lost alot of money on some of their new USA banks.They tried to recoup their losses by tightening up on their UK customer accounts & drove alot of businesses to the wall.At the time they denied the USA losses were the reason for this change of policy in the UK but one of the big Sunday papers investigated & finally forced an admission.

This is just one kind of knock-on effect that could happen to Joe or Jill Public. I agree with you,the international domino effect has been played down.It is scary!!!!!

-- Chris (griffen@globalnet.co.uk), April 30, 1999.

Just wondering if Italy and Germany are as far behind as is reported how is this going to effect the euro? I see money moving to the US and Canada (believe it or not) because the banking situation will appear more stable. If there is problems in Europe that will be just a bit differant than countries in Asia and Africa.

-- Brian (imager@ampsc.com), April 30, 1999.

Jeff, the Asian financial crisis has made a big hole in the income of the hog industry in North Carolina. Prior to the meltdown, producers were exporting a lot of pork to Asian customers. Good news for me, they were polluting the rivers anyway, but it IS a measurable consequence. I hear some grain farmers in Washington state also suffereed losses from reduced exports--maybe someone has more specific info.

-- Old Git (anon@spamproblems.com), April 30, 1999.

My experience has been that out of all the people I know and love in and out of my community, I only know of TWO families who are taking y2k seriously (to ANY degree). These 2 families are making fairly substantial preparations. Everyone in my community that I have spoken to about it says that it is being fixed or that it's something that comes around every millenium???? We have such a long history of passing through so many milleniums that we have lots of data on that, right???

Also, if Scott's thinking is correct, and I believe it is, regarding the impact of other countries on the U.S. economy being the main problem of y2k, how do we plan accordingly? Is stockpiling food still rational? How about propane and fuel, etc... It would seem our preparations should be altered. Should we still worry about water?

Thanks for all the great posts! we have a good

-- LindaO (wondering@hotmail.com), April 30, 1999.

You miss an important point, Scott. The C.I.A. is not supposed to investigate and comment upon domestic U.S. situations. Reread their Senate report and at each paragraph, pause, and say to yourself, they are prohibited from making such statements about the U.S. itself.

In the case of Kosky, consider two things. Senator Bennett said that people were lieing to him; Senator Bennett said that he talks to Kosky all the time. This isn't malevolence on the part of Bennett or Kosky. The soft-news spin is they are swimming in a mis-information sea and just now realize it.

The second thing is Kosky's background is not computers. How in the world does he end up making pronouncements on information technology issues? Sure, we're all entitled to an opinion but some of us are a bit more cautious than Kosky is. It'd be one thing for him to say, "Computers are neat." But to essentially say, "I gaze into the future and know that all will be well with all computing systems and none will fail in such a way that we can't fix them. At least not so many that our economy tanks."

Well, that's the difference between Kosky and Dr. Ed Yourdon, Steve Heller, and Dr. Ed "Yes, I used to program IBM mainframes in Assembler, it was fun." Yardeni. Oy, and the clueless doofus who writes for the DC Y2K Weather Reports, the one with 30 years in IT and a Masters Degree in Computer Science. Darn, I can't remember his name....

-- cory (kiyoinc@ibm.XOUT.net), April 30, 1999.

Scott: Some food for thought:

1) It's too bad you're asking only "Pollys" to answer your question. There aren't many here.

2) Just because someone can piece together a grammatically correct and jargon-filled answer, doesn't mean their opinion has value. Informed opinion is vastly different than general opinion. Who's opinion about your golf swing has more merit - a 13 handicap or a PGA pro's? If only one out of eleven Americans can find Taiwan on a map, why would you accept the average American opinion on global business or finance?

-- PNG (png@gol.com), April 30, 1999.

OK, I'll try to answer comments directed to me sequentially.

Scott wrote: [Y2k will be a]"where the rubber meets the road" problem, with infrastructure risks and business continuity failures."

I'm not sure there's a significant difference between the results, although the cause may be different. The collapse of the bhat and the Japanese banking crises resulted in precisely those problems -- a huge number of business failures. A similar situation was the collapse of the Brazillian real about 6 months ago. Has anyone noticed the impact of that in the U.S.? As for "infrastructure" risks, your point is taken, but the impact on the U.S. of foreign infrastructure problems could presumably be quantified as though it were an economic disruption (at least from the point of view of an observer in the U.S.).

"I'd also question whether our strong economy is entirely due to monetary policy and 'level-headed thinking.' On the part of the policymakers, perhaps...but investors? We have a stock market that is almost entirely riding the tiger of overvalued Internet and other digital companies... 1929, anyone?"

You're mixing two issues: I was referring to monetary policy, not the stock market. The stock market run up (Greenspan's irrational exuberance) wasn't what prevented the impact of the Asian crises in the U.S. at all (in fact, it may have jeopardized it).

"Scott, Mentioning Asian flu gave me the analogy I was looking.I believe that to describe the effects of the lack of Y2K compliance in overseas trading partners will be similar to an epidemic.Asian flu,AIDS whatever...sooner or later it will reach our shores & could be devasting. The only way to mitigate this may well be to operate a temporary "ring fence".Overseas aid could be cut or else targeted at Y2K remediation."

While I agree with cutting foreign aid (domestic aid, too), I'm at a loss as to what a "ring fence" means in terms of Y2k? If by that you mean some sort of suspension of commerce between nations, I'd refer the poster to Messrs. Smoot and Hawley's ill-fated protectionist attempt at creating a "ring fence" to meet the turbulence created by the 1929 stock market crash.

Also I'm not sure that the Asian crisis turned out to be the "epidemic" it was purported to be....

"Jeff, the Asian financial crisis has made a big hole in the income of the hog industry in North Carolina. Prior to the meltdown, producers were exporting a lot of pork to Asian customers. Good news for me, they were polluting the rivers anyway, but it IS a measurable consequence. I hear some grain farmers in Washington state also suffereed losses from reduced exports--maybe someone has more specific info."

I didn't say it had no measurable impact. But the impact has been less than major, and far less than predicted. A back issue of The Economist has a good survey on the issue, and how it resulted in minimal damage, all things being equal.

"Just because someone can piece together a grammatically correct and jargon-filled answer, doesn't mean their opinion has value. Informed opinion is vastly different than general opinion. Who's opinion about your golf swing has more merit - a 13 handicap or a PGA pro's? If only one out of eleven Americans can find Taiwan on a map, why would you accept the average American opinion on global business or finance?"

Hmmm... This is an interesting position for someone who's posting to what is in effect a community bulletin board. Scott could probably find very well thought out surveys by professional economists, but he wanted the feel of the group. Also, I'm curious as to what the poster claims was "jargon-filled." "Jargon" is usually just a short-hand for a longer term. I suppose someone could write "actions to influence the cost and availability of credit with the target of promoting economic groth, full employment, price stability or other goals" instead of "monetary policy," but why bother if people understand what the term means? It's the same reason why we say "y2k" instead of "the computer disruptions caused by failure to property process computerized date information and the economic, social, political and religious impact (if any) of such failure." Wouldn't you agree?

On the other hand, I think that he was also targeting the question to "Pollys" with the idea that it was a debate-killer question (i.e., since foreign Y2k remediation has been far less extensive, foreign Y2k disruptions MUST impact the U.S. due to the interconnectedness of our economies). However, just because we accept the premise (foreign y2k efforts lag), we need not assume the conclusion (thus the U.S. will suffer). It's what logicians call a fallacy of presumption. So, following the abusive trend I noted in this discussion forum, I'll ask (intending as a joke):

Got reason?

-- Jeff Donohue (Jeff_Donohue@hotmail.com), April 30, 1999.

Cory, you "clueless doofus";

there is a post on another thread addressed to you. here is the snip

---- in response to Cory:

Been doing some checking on banking (no pun intended). Just in my local area, I was able to uncover three(3) seperate instances from three(3) seperate banks, in three(3) seperate years. I WILL NOT be naming any of the banks, but they are big-boys I assure you.

BANK 1

1987, mis-transfer of funds resulted in $65,000 added to an individual's account It took 6 months to straighten out! luckily, the individual did NOT touch the funds. (typical stuff of calling the bank, telling them "thats not my money" bank claiming "we've tracked this, its not our mistake". once the problem was found? "bank: you WILL relinquish those funds immediately!") nice.

BANK 2

1993, mis-transfer of funds results in $15,000 added to a business account. It took 4 months to fix that one! (bank lost several customers over that one)

BANK 3

1995, mis-transfer of funds results in (approx) $30,000 added to an individual's account. It took 2 months to straighten that out. (litigation ensued, as the individual attempted to "take the money and run" [in the words of Steve Miller])

Sorry, "Hadalittletomuchsaki". This has happened before, and will no doubt happen again. Better tell your friend not to touch the funds, or big trouble can result.

and to use your own words "Everyone, repeat after me, shout it out so Cory can hear you, "I am Cory, the almighty! I have a big-fat head!"

-- More Rice Wine, Anyone? (kissmy@ss.y2kfreaks), April 28, 1999

------

do you have a response to that?

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000l13

-- Just (curi@uo.s), April 30, 1999.

.....in 1997, the economies of the Pacific Rim collapsed. Many economists, highlighting the interconnectedness of these economies with the U.S.'s, predicted a U.S. downturn. It never happened. The reason was primarily due to stable monetary policies and level-headed thinking.

You mean that the effects havent been felt fully -- yet.

As the Pacific Rim countries bagged, two effects have been seen. First, prices (USD, Canadian $) have dropped on a lot of imported items. Dont believe it? -- compare prices on computers, clothing made in Asia (thats most of it), and footwear with corresponding prices two years ago. Asian manufacturers are looking for a place to dump their stuff. We still have the money. Thats good for us.

The second effect still hasnt worked its way through our economy. To see it, just head for farming country. Read the auction sheets to find the number of farmers who are going out of business. Corn, wheat and soybean prices are about half what they were a couple of years ago. The entire North American agricultural scene is a disaster.

This hasnt played through all the way. There are a few big companies (John Deere especially) that depend on selling ag machines. But used ag machines are plentiful -- and relatively cheap. Guess who take the next hit.

The full impact of this hasnt been felt here for one reason -- most Americans are now tied to 401k plans and the stock market. Our market has been going up at an obscene rate. Most Americans feel rich, and are still buying. Let just the right amount of panic creep in and that scene will change direction. When it does all of those stable money policies and level-headed thinking will disappear as the monster that is called derivatives is unwound.

Now, lets say that Y2K does throw a wrench or two in the cogs.

Perhaps Intel cant get their hands on enough chips -- what does that do to computer sales?

or Nike sneakers are held at dockside because there are no boats -- how about clothing sales?

or construction machinery breaks down and requires ball bearings from a non-compliant and non-functioning plant in Brazil -- how about construction?

or the oil wells in Venezuela stop producing, or the ships bringing oil from Saudia Arabia are held in some obscure ports until they satisfy requirements for entry into U.S. ports -- how about the transportation industry?

We still cant export wheat or beans -- they need the same boat. Moreover, they need the same oil that didnt get here from Saudia Arabia to get to local markets.

We are dependent on foreign trade and on foreign infrastructure. We simply havent fully felt the effect of the Asia collapse of a couple of years ago. We have only a sniffle now. We can get the full blown virus in a few short months.

-- De (delewis@inetone.net), April 30, 1999.

Scott, you asked:

"My question, then, is twofold: (b) if you think it is well-founded, and then you combine the infrastructure-level problems, secondary-level failures, human response, and economic fallout, isn't it naive to suggest that Y2K will be a nonevent for us...in essence, that we live in a vacuum from the rest of the world?"

One thing that I've seen a lot of on this forum (and elsewhere) when this question comes up is the concern with "how will it affect our economy and any of us economically" or sometimes "our pharmaceuticals (medicines) could be threatened". The second concern has more sympathy for me since I have a close friend whose is diabetic and so needs the insulin which is dependent upon imports (though he says he can get a six month supply). The first concern though, about "oh my gosh, will our GDP drop .5%" (and similar worries at the individual level of analysis) doesn't exactly tug at my heartstrings. I mean, really, if a number of countries have severe infrastructure problems, doesn't this mean that they (the people--like us) could have disruptions to drinking and irrigation water, to their food supplies, to THEIR medicines, to THEIR money, to THEIR safety from rioters and desperate violent non-inhibited individuals (unlike, say, PNG in Japan). I have a close friend that lives in Venezuela, and there was a news report recently (posted here also) with statements by the government IT honcho there that 40% of food processing plants won't be ready and that bank runs (real bad ones) are quite possible, and that in that part of the world (Latin American, but also elsewhere--Indonesia, places in Europe) people riot when they want to complain to the government. It doesn't comfort me a great deal thinking that our economy may not see a little dip, or that people's jobs here should be secure (hell-- my school contract is up in about 2 weeks and I WILL be out of work with nothing to replace it in sight). What does concern me though is the safety of my friend in Venezuela and the safety and health of lots of people in OTHER countries whose infrastructure may be severly damaged. If their water and food and medicine supply lines are crippled; if public order and safety is lost; if various Russian nuclear reactors meltdown; and if peoples' lives (not faceless demographic statistics) are lost, then I am NOT going to be smug about my or us Americans' physical and economic security. It will probably be the most hurtful time of my life. "Do not ask for whom the bell tolls, it tolls for thee."

-- bdb (cb_rex99@hotmail.com), April 30, 1999.

Scott:

Accelerating international turmoil (all 99) ... plus
Y2K confidence crisis in markets and banking (late 99) ... plus
Recessive effects of first Y2K headwinds (early 2000) ... plus
Gradual implosion of worldwide supply chain (by 2Q 2000) ... plus
Broken trust in political leadership due to Y2K lies (by 2Q 2000) ... plus
Inability to control derivative and further market unwinding (by 2Q 2000) ... plus
One or more cliff-edge international military crises (by 2Q 2000) ... equal
TEOTWAWKI by June, 2000.

-- BigDog (BigDog@duffer.com), April 30, 1999.

Jeff...I wasn't directing anything at you and I wasn't being abusive. I posted to Scott's loaded question. I saw it on another thread yesterday and thought it was too filled with pre-suppositions to be of any value. I resisted answering yesterday, believing he would counter any answers that didn't fit his agenda. I saw that happened this morning (it's Saturday AM for me). I don't have the energy to download 20 years of global business experience to someone who's already made up their mind. So, I guess I "dumbed down" the response too much.

I agree with most of what yousaid. The monetary and systemic Asian problems are distinct and shouldn't be handled separately. Thai, Indonesian and Malasyian currency problems were triggered more by hedge funds than most people are willing to admit. The IMF has also admitted it erred in it's advice to Thailand. The recent moves toward ASEAN currency stabilization by regionalizing the yen through the Miyasawa Plan will (hopefully) muffle any future currency attacks. Miyasawa warned of the potential for Asian currency attacks in talks with Rubin just months before it happened. His opinion was dismissed by Rubin.

Japan is fostering an Asian alliance by no-strings-attached financial aid - a dramatic shift in policy gone largely unnoticed in the western press. The financial package to Korea was offered carte blanche - Korea can spend it any way it sees fit. The intent is to create an economic union that will rival the best intented philosophies of the EU.

My "community bulletin board" experience and non-english language ability is a little more diverse and in depth than most here. I have the opportunity to circulate among diverse people from Europe and throughout Asia, I ask questions and do far more listening than talking. One of the sharpest guys I know is a fellow I'll call Boris. He speaks more languages fluently than I can count. The 'game' didn't end. It continues and our conversations are wonderful, cat-and-mouse, civilized exchanges. Far more civilized than many of the threads here.

I said long ago that the U.S. market affects the world more than the world affects the U.S. market. And the market perception and anticipation of potential y2k failures may impact the economy more than real failures. A big move in the U.S. market would trigger the reverse of Scott's thesis...pressure and momentum (b-type)on a global economy drifting in the doldrums.

-- PNG (png@gol.com), April 30, 1999.

I just went looking for a thread we had here 6 weeks or so ago, about what products are imported into this country, and where they come from. I couldn't find it, maybe someone else (Kevin?) can dig it up. Or better yet, does anyone have a .gov site with these statistics? I think this information would add a good point here. <:)=

-- Sysman (y2kboard@yahoo.com), April 30, 1999.

To Kissy-me,

So... you're saying that when the systems are working, the power is on and everything else is normal, banks are making multi-thousand dollar errors on a regular basis?

When the OCC is open for business, it normally takes months and months to get a bank to figure out that you don't want the money?

Is that what you're telling me? This three month error is normal, par for the course?

Can this be true?

Sorry pal, I am the clueless one. Banks, they have it under control. No problems at banks.

Where do we get these pollys from?

-- cory ... but not as clueless as some (kiyoinc@ibm.XOUT.net), April 30, 1999.

PNG - Is there any resentment of this renewed Japanese "leadership" - the "Greater East Asia Co-Prosperity Sphere" was only 60 years ago - again Japanese - dominated and centrally-focused.

Or are the combined threats of a BIG China and united Europe enough to generate the us-against-them regional issues?

DE - great analysis! What's your background?

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), April 30, 1999.

Also - watch the "publicity" of the prosperity - the national (Clinton) news media focus is only on what affects NY and Washington - if Wall Street is making money - then everbody is happy - as far as they are concerned. They are ignoring the troubles elsewhere - TX is a republican state, imports are widespread, and the farm troubles are not causing Clinton/Gore to lose votes - yet.

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), April 30, 1999.

Scott

I picked up a new book last week called Lexus and the Olive Tree. It is one of the best descriptions of global inter-connectedness I have read.

The IMF will not have enough money to prevent collapse this time. It is the IMF policy that has kept Asia afloat. And Russia. And Brazil. This time there will not be enough money. The new loans to Russia are enough to cover the interest on the old loans. Japan is still in trouble. Brazil has a shrinking economy.

Senator Bennett, at the DCY2K meeting, said that there were international fund managers moving money from countries that they considered to be a problem. He stated that they were doing this now.

You asked for my opinion and I think it will be very bad worldwide including the US. Apparently some of these fund managers think so too.

-- Mike Lang (webflier@erols.com), April 30, 1999.

Found this on the US Geophysical webb site about the volcano now brewing in CA's Long Valley:

" Based on the nature of earthquake activity in the eastern Sierra over the past several decades, there remains a small possibility (less than 1% over the next year or so) that another M=5 or larger earthquake could occur in the area. If you are in the backcountry and feel an earthquake, it's always prudent to check upslope to see if anything is coming your way. "

So - economically - if you feel a tremble, look upslope. Something might be coming your way........

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), April 30, 1999.

Robert-- Funny you should ask...this just in this morning:

-------------------------------------------------------

Saturday, May 1, 1999 Japan, ASEAN Finance Ministers Agree To Internationalize Yen

MANILA (Nikkei)--Finance ministers from Japan, China, South Korea and the Association of Southeast Asian Nations (ASEAN) here on Friday agreed to expand the yen's use in international trade and investment transactions in order to stabilize the Asian markets and strengthen economic relations between nations.

Finance Minister Kiichi Miyazawa said Japan will consolidate10-year interest-bearing government bonds to improve the investment climate for yen-denominated instruments, and will also settle accounts for its government bond transactions promptly.

ASEAN and other nations supported the Japanese initiative, with the Philippines vowing to increase its yen holdings in its foreign- exchange reserves.

Miyazawa also said Japan will add Vietnam to the list of nations receiving financial assistance under his plan launched last October. Some 17 billion dollars of the 30 billion dollar relief plan has already been allocated, he added.

A number of participants expressed support for a Japanese proposal linking Asian currencies to a basket of major currencies such as the yen and the euro.

---------------------

Last year I talked about the resentment hedge funds caused in Asia. The U.S. arranged bailout and failure to reign in hedge funds that destroyed the lives of so many by manipulating Asian markets has turned to action. I've never seen anti-American sentiment so high in Asia in my lifetime. Prime Minister Obuchi's visit to Washington may seem like all smiles, but no common ground was reached prior to the meeting. The diplomatic ignorance, arrogance and folly within this U.S. administration is, well...beyond words.

Should the president use this opportunity to lecture the Japanese Prime Minister (again) on Japanese domestic policy or spout any surprise, trade-balance sound bites, the pace of Asian resolve will increase.

-- PNG (png@gol.com), May 01, 1999.

I am a poor person who scratches out a living from month to month. To me, banking, retirement funds and the stock market are *games* of the elite. I don't know much about these games, nor do they directly effect my life. Other than the status of my checking account, they are insignificant to me.

I do know that, as harvest from the National Forests have been shut down, 40 timber mills have closed in Califonia in the past decade. Suits are currently in the works regarding salmon and sedimentation of water to virtually shut down harvest in almost all of California's watersheds. What mills now remain are generally near ports where they can import logs from the Pacific Rim. Have you checked the price of lumber lately?

California is one of the largest producers in the nation of fruits and nuts (please no wisecracks.) With intense population growth, pressure has been applied to divest and shift precious water resources from agricultural production to the filling of swimming pools and the watering of lawns. State legislation currently being pushed through on water quality (Total Maximum Daily Loads) and interpretation of pesticide residue in water as "toxic hot spots" would require every farmer or rancher to acquire a state/epa permit to farm and to pay a remediation fee per acre of farm. I don't know how many producers will survive such requirements or be willing to farm under them. The number of farms for sale locally is already high.

Currently 40% of our nation's fresh fruit and veggies are imported. Given the regulatory trend and cost of inputs, there is doubt that California and much of the nation's agriculture can maintain its international lead as a producer. See http://www.fb.com/views/focus/fo99/fo0412.html This would appear to bode an increase in our dependency on imported food in the world of NAFTA and GATT

Mineral extraction has, likewise, been mired in regulation and fees. It is known that one of the purest deposits of coal of its kind was located among the lands that President Clinton locked up in Utah. The only other comparable deposit is in Asia.

In the past decade I have seen a headlong regulatory and policy rush to destroy the domestic resource development industries and shift to importation of offshore materials and cheap value added products. Doemestic resource extraction and development industries, as well as maufacturers, have lost the leverage to push back in demand for reasonable compromise. We are fast becoming a "service" only economy, as touted by Newt Gingrich.

The scariest part, is that we are losing the infrastructure, the regulatory flexibility, the knowledge and the experience that would be required to reinstate a more self-contained domestic economic base. For instance, we just lost a large mill a few months back. It has been auctioned off and carted away, lock, stock and barrell. There is nothing left but the shell of a few drying sheds.

We lost the only county livestock auction yard a few years back. Now animals are sold to buyers who come to the ranch or are trucked down to the auction yard several hours away. The *average* age of a rancher today is in his/her 60s. We have suffocated our future generations of ranchers so that there is no recruitment. This is one vocation that you do not just select as a major and train for in school. We are losing the option to produce a domestic raw product.

Other than Tony Lama boots, I don't think we even manufacture leather shoes in America anymore.

We take basic necessities for granted (shelter, food, clothing, fiber) and the manufacture of a large portion of these commodities has been shipped offshore where raw materials can be extracted without cumbersome regulation and with cheap labor.

This is why the disaster of y2k on the international level will affect our shores so dramatically. This is one of the reasons why people are stockpiling. When China or Taiwan or Germany can't produce it or ship it to us, we will all do without until we can recreate the labor force, factories and marketplaces and the enabling legislation that will allow production of the domestic product once again.

-- marsh (armstrng@sisqtel.net), May 01, 1999.

Sysman,

I think following URLs maybe the ones you asked about. These show world trade data:

http://y2k.ita.doc.gov/y2k/y2k.nsf/dd5cab6801f1723585256474005327c8/dd 3950bec02d9d79852566b1007eed05?OpenDocument

http://y2k.ita.doc.gov/y2k/y2k.nsf/dd5cab6801f1723585256474005327c8/b3 cb5b3db231dd9b85256759004baaa5?OpenDocument

-- Bill P (porterwn@one.net), May 01, 1999.

Severe economic shocks in one nation do not always translate into cross- border disruptions. -- Jeff Donohue

Perhaps. In a normally abnormal, churning world.

Sometimes, however, it feels as if people think theres a wall of insulation around the United States. Even when they are vaguely aware of the manufacturing flight to overseas cost-savings and to an extreme reliance on imported goods, they assume someone, somewhere will figure out the inherent problems. Then they point at past experience for comparison.

America is no longer a generalist. Weve specialized to the point of vulnerability.

And then, we add Y2K. Which is like NOTHING ever experienced, before, in past millennia, IMHO.

Its not just about economics, but it can result in incalculable economic impact.

Its not just about critical infrastructures, worldwide, but life- support infrastructures within local communities, everywhere. And how well they work, or how poorly.

Its also not about a Mitch-like hurricane in one isolated part of the world, that cracks the pavement and twists the steel. Its about storm clouds, planetwide, where the forecasters cant get a grip on specifics. On "where" the individual and combined economic, infrastructure & supply chain tornado touchdowns will be. Or where the resulting ripples will flow.

Y2K is a completely unpredictable future experience, currently hidden. It is the unknown that causes extremes in fear and extremes in denial. There is a vacuum, of straight down the middle expectations and anticipations. And an overwhelming belief that whatever the impact, elsewhere ... HERE ... we will be A-okay.

Its the potential CHANGE, on such a staggering scale, that frightens. Joined with the inability to recognize the complete global interdependencies, weve created this century. The "big pictures" are almost incomprehensible. To most.

Many people just cant handle change. So, they hide from it.

There are no guarantees. The fact that one could suddenly loose a job, is often unthinkable. Then, when it happens, people are devastated. Why? Because they didnt plan for change. Perhaps people suddenly have to move, and often, they become paralyzed with indecision. Why? Because they havent cultivated the art of changing on a dime.

In business, and society, we admire the entrepreneurs.

The different ones who came out of left field, or behaved outside the box. The ones who were adaptable and flexible enough to beat the odds and stand out. We love and revere the rags to riches stories. Yet we TEACH most to be normal. Dont go against the common grain. Stay safe within your known little world. Be quiet, and dont make waves. Don't even "study" the waves.

Is it any wonder that seeing the international Y2K forest, for the local trees is so difficult?

We dont encourage beyond-our-borders strategic thinking, within the general populace. We dont train people to think creatively. Or even envision, over the horizon line.

So, when faced with a global challenge, the bulk of people, dont think about what could happen ... to them ... to their community ... at home. It's ignored.

They dont plan ... for changes ... for disruptions, to whats normal. Theyre taught to be re-active, rather than be pro-active.

So, how can we expect general Y2K reactions, to foreseeable global concerns, to be other than complacent?

No problem. Its not in my face, NOW, so I/we dont have to react. Yet.

People have been trained to fix their lives on failure. Why would our aggregate culture be any different?

Im no longer amazed that most of the U.S. populace and newsmedia dont get it with Y2K. Im surprised that a few, do.

Diane ...

... a midpointer between polly/doom

-- Diane J. Squire (sacredspaces@yahoo.com), May 01, 1999.

Quote:

As the Pacific Rim countries bagged, two effects have been seen. First, prices (USD, Canadian $) have dropped on a lot of imported items. Dont believe it? -- compare prices on computers, clothing made in Asia (thats most of it), and footwear with corresponding prices two years ago. Asian manufacturers are looking for a place to dump their stuff. We still have the money. Thats good for us.

The second effect still hasnt worked its way through our economy. To see it, just head for farming country. Read the auction sheets to find the number of farmers who are going out of business. Corn, wheat and soybean prices are about half what they were a couple of years ago. The entire North American agricultural scene is a disaster.

This hasnt played through all the way. There are a few big companies (John Deere especially) that depend on selling ag machines. But used ag machines are plentiful -- and relatively cheap. Guess who take the next hit. "

Forgetting about Y2k for a minute, what you've presented is an oversimplification. The drop in imported goods has spurred some of the lowest real inflation rates in recent memory (in fact, we may be in a deflationary economy, which has its own troubles). However, I guess I am a little confused: are you claiming that the drop in the agro market is a result of the Asian trouble? Do you have any economic analysis providing support for that? Assuming you do, then (again assuming out Y2k), its probably a good thing that all of those nations (and Brazil) are now bouncing back, isn't it. Might there be another variable at work?

Also -- what percentage of our economy is in the agro business? Anyone happen to know?

And as for "we still have their money," that's a little misleading in its own right. If Asian investors invested in the U.S. it was because it provided a greater rate of return than investing at home (why else would you invest, eh?), then yes, U.S. (or wherever they invested) businesses have the advantage of those funds. But are you claiming that if they invested at home, that would somehow be bad for the U.S.? Wouldn't that spur their domestic growth? You seem to be laboring under the common misperception that economics is a zero-sum game (i.e., if one side wins, the other loses). That's just flatly wrong... Read your David Ricardo or Adam Smith.

As for the Y2K impact, I've heard a lot of talk about the "interconnectedness" impact of Y2k (i.e., manufacturer misses some prodcution deadline, so shipper misses his, so retailer can't meet demand, and thus disaster...). I'm not going to take a position on that here, but I'd like to ask the group if anyone knows of any reputable economics professionals that have published any projections or analyses on this matter? Either pro or con? (By reputable, I mean someone who was a known quantity in the economics profession prior to the Y2k issue...) Has anyone at the Wharton School looked at this? The Sloan School? Anyone know? How about anyone at HBS?

-- Jeff Donohue (Jeff_Donohue@hotmail.com), May 01, 1999.

Cory Hamasaki -

For some time now, you have been touting a $30,000+ banking error as y2k/JAE related. This "kiss my @" person posted that this type of error is not unheard of.

I have checked with my bank. They told me that these kinds of errors are usually few and far between; but mistakes do happen. This does NOT mean they are y2k/JAE related.

I believe you have damaged your credibility by not addressing the issue, but merely attacking the 'polly' who posted it.

-- a disgusted regular (losingfaith @ in.experts), May 01, 1999.

Please "Regular", read with a critical mind. I described a problem. The Polly's reply is "This happens all the time."

My reaction is, "OK, allow me to strongly agree with you, if this happens all the time, what happens when other things go wrong too?"

Somehow you take this as a personal attack?

What is it with Pollys? I realize that you think I claim infallibility but, please, read the words.

What I am sure about is that the work has not been done. We'll experience serious and very odd problems. Beyond that, I'm clueless.

I've labeled my bank story as a rumor of a rumor. It's the polly side of the house that has provided details of bank problems and somehow, this is proof that we'll be fine.

Whatever. You guys think whatever you want. If persistant, multi-tens of thousands of dollars of bank problems is evidence that all is well. Great. I can't dispute that.

As for me, I'll be considering plans to cash out... based on what the Pollys say are normal events.

Thanks you've helped lots of people.

-- cory (kiyoinc@ibm.XOUT.net), May 01, 1999.

About 35% of the world is in a recession or worse; that has impacted our agricultural, mining, and manufacturing sectors to some extent, obviously. We do ship quite a bit of beef and pork to Asia, for instance. Or at least we used to. And the "export or perish" Asian philosophy, which translates into the dumping of very cheaply priced electronic goods, etc., over here, certainly has driven down the prices of comparable American goods. Good for the American consumer but not for the American companies making those goods. Also witness the recent flap over the Japanese dumping of rolled steel.

One might contend that, despite a record U.S. trade deficit of $19.6 billion in February, all of this hasn't affected the overall U.S. economy much. Foreign investors, troubled by their own markets, have flocked to U.S. financial markets; Asian buying of our treasury 10-year and long bonds have helped drive the yields very low on those bonds. Wall Street loves it when the "cost of capital" is so low; the primary factor in the stock valuation model developed by the Fed for Greenspan some years ago (a model also often used by Yardeni) is the yield on the 10-year treasury bond. Even at that, however, the same stock valuation model shows the U.S. stock market (specifically, the S&P 500 index) dangerously overvalued. Of course, you can always listen for comfort to, say, Abbey Joseph Cohen, who says that the stock market is fairly valued. She works for Goldman Sachs, you might remember. What was it that Mark Twain said about "cornpone opinions"? --tell me how a fellow earns his cornpone, and I'll tell you what his opinions are. The same might also apply to ladies.

It might be argued that financial troubles overseas have warped our own economy in certain ways, or at least pushed it in some rather risky directions and caused us to ignore certain warning signs. To keep things rosy at home, we have engaged in probably too much stock speculation and too much consumer spending (because we feel rich from capital gains in the stock market), and ignored warning signals: record consumer debt, record personal bankruptcy rates, a negative savings rate, way too much indulgence by financial institutions, etc., in hedge funds and other derivative-based investment vehicles (remember LTCM, BankAmerica, and the emergency Oct. 15 fed fund rate cut made by Greenspan between FOMC meetings?), etc. Consumptives have a rosy flush too, you know.

In short, there are some underlying dangers even in the U.S. economy that we are blissfully ignoring. (A good education may be had at the Princeton Economic Institute website, www.pei-intl.com) It's a safe bet that Greenspan is doing plenty of growling in private these days. And the student of history might do well to research the late 1920s-- there are some disturbing economic parallels to today, though, of course, plenty of differences also (our economy today is certainly much richer and more diversified).

How Y2K will impact economies overseas, I really don't know, though some of the CIA, NIC, UN, and GartnerGroup reports have been anything but encouraging. What nobody can predict, of course, is the specific domino effects, so there still seems a wide range of possibilities. At any rate, it seems to me that the economic situation, both abroad and at home, is rather fragile, and so we had all better hope that not too much goes wrong. Yardeni's main worry, of course, is supply chains.

It's interesting that Peter mentioned that he has never seen such anti-American sentiment in Asia. A few months ago, Stephen Cohen (formerly of Princeton, now at NYU), one of our top analysts of Russia and a fellow who has been making regular trips to Moscow for over 30 years, noted that he has never seen such virulent anti-American feeling in Russia, not even during the worst of the Cold War. Obviously, this was before our bombing of the Serbs, an act that, whatever our humanitarian motives, has enraged many of the Serbs' fellow Slavs in Russia and Belarus.

The one word that gets repeatedly applied to Americans these days, by our foreign friends and foes alike, is "arrogant." We think that Wall Street rules the world. Don't look for much sympathy from abroad if things do take a nasty turn next year. Well, countries abroad would be too preoccupied with their own problems anyway.

-- Don Florence (dflorence@zianet.com), May 01, 1999.

Disgusted, I think I gotta go with Cory on this one. You yourself say such errors have been few and far between. I don't see any way to avoid these errors being less few, and more frequent, and more difficult to correct. Too many things just won't be working right. Maybe these won't add up to broad economic consequences, and maybe Murphy will decide that today just isn't your day, sorry.

I don't think the gun is loaded, but I'd just as soon not stand right in front of it anyway, thank you.

-- Flint (flintc@mindspring.com), May 01, 1999.

Wow...my cup runneth over. I step away from the Internet for 24 hours and look what happens. Thanks to all who responded...still in the process of reading. I do want to respond to Jeff, who made some very well-considered points, one of which I'd better clarify my position on:

"On the other hand, I think that he was also targeting the question to "Pollys" with the idea that it was a debate-killer question (i.e., since foreign Y2k remediation has been far less extensive, foreign Y2k disruptions MUST impact the U.S. due to the interconnectedness of our economies)."

No, I don't think it's a debate-killer: on the contrary, I think it is one of the most crucial points that *needs* to be debated, and has mostly been ignored. That's why I brought it up! I did ask the pollys if they thought these concerns were overblown... if they are, then that has an impact on what the overall result of Y2K will be.

But I also want to point out that I am not merely talking about economic effects; indeed, one of my biggest pet peeves is the tendency, especially since the Cold War ended, of some people to reduce everything to economics. There are also geopolitical questions to be addressed that can be quite separate from the economic numbers. The world as a whole might weather Y2K disruptions, but if one group that doesn't weather them happens to have nuclear, chemical or biological weapons, and somehow blames the U.S. for their infrastructure problems, well, then, I think you get the point...

-s-

-- Scott Johnson (scojo@yahoo.com), May 01, 1999.

PNG said: "I posted to Scott's loaded question. I saw it on another thread yesterday and thought it was too filled with pre-suppositions to be of any value. I resisted answering yesterday, believing he would counter any answers that didn't fit his agenda. I saw that happened this morning (it's Saturday AM for me). I don't have the energy to download 20 years of global business experience to someone who's already made up their mind. So, I guess I "dumbed down" the response too much."

PNG, I'm at a loss to comprehend what you think my agenda is. Your answers about how the economic impact might not be what some doomers expect was very interesting, and I have no intention of trying to rip it apart to fit any "agenda" you think I might have. I think it is excellent food for thought, which was my whole "agenda," as you put it.

But I repeat my above response to Jeff, in big caps so you can hear me all the way over there in Nippon: I AM NOT JUST TALKING ABOUT ECONOMIC EFFECTS.

Scott

-- Scott Johnson (scojo@yahoo.com), May 01, 1999.

Scott:

I read once about a robber baron who called in his lawyer and asked the lawyer to find some legal way for the robber baron to do what he wanted. The lawyer said "but that's illegal." The robber baron said "I didn't ask if it was illegal. I asked you to find a legal way to do it."

When you ask *what* economic consequences y2k will have, this presupposes such consequences. When you ask *what* geopolitical consequences we'll see, this presumes there *will* be such consequences. This is an agenda -- a set of underlying assumptions taken for granted. Look at all the threads we suffer here, discussing the details of nonexistent conspiracies.

-- Flint (flintc@mindspring.com), May 01, 1999.

Flint...criminy. For an intelligent guy whose opinion I generally respect very much, that was a ridiculous comment. I asked, in my original question, if these reports were overblown. I have received some excellent answers on both sides of the question, which means that, as far as I am concerned, this has been a better thread than most. And with regards to your comment comparing this thread to the ones that debate "the details of nonexistent conspiracies," I'm not even going to dignify that with a response...

scott

-- Scott Johnson (scojo@yahoo.com), May 01, 1999.

Scott:

Sorry, that wasn't meant as a comparison. I was only trying to say (poorly, I admit) that once you start making presuppositions, anything goes.

I don't know whether there will be geopolitical consequences. I imagine it will be very difficult to tell -- these things happen all the time, and determining the extent to which y2k did or did not contribute isn't a task I'd relish. Historians won't agree 50 years from now.

-- Flint (flintc@mindspring.com), May 01, 1999.

Okay, Flint, you're out of my doghouse. :) And I agree... when people look back, it will be near-impossible to say with real precision what was Y2K-caused and what wasn't. In fact, I think the not-knowing will be a problem in the near term as well... another topic that I don't think has been carefully considered on this forum. Hmmm...time to start another thread? :) scott

-- Scott Johnson (scojo@yahoo.com), May 01, 1999.

The incentive to keep "Y2K" out of the political, cultural, corporate conversation will be 'x' times more intense next year than this year for the same PR and legal reasons and then some.

On top of everything, to the very degree Y2K approaches TEOTWAKI, the more vital it will be to spin the cause AWAY from "not having paid adequate attention" to it from 1995 on. This doesn't mean sharp eyes will miss the evidence. Also, if there are embedded system disasters, these will be impossible to spin.

Taking things generally, though, I believe Y2K will always be the cause of last resort .....

-- BigDog (BigDog@duffer.com), May 01, 1999.