Paul Revere vs. Chicken Little

Why Y2K guru Peter de Jager says fear itself is our greatest fear

By Mark K. Anderson Published 05/06/99

At the end of the year, plenty of people will feel up in the air. Peter de Jager, on the other hand, will actually be there. Thirty-two-thousand feet up there.

As the grand-daddy of Y2K specialists -- he wrote what's considered to be the original Y2K article, "Doomsday 2000" for Computer World on Sept. 6, 1993 -- de Jager holds an exalted place among a growing population of concerned citizens around the world, aware that some computers will malfunction and/or shut down after the first of the year and puzzled about the implications beyond that.

De Jager was advocating awareness about the Y2K bug back when it would have been wise to start trying to fix it. Instead, most public and private sector Y2K remediation programs in this country didn't begin until 1996 or '97. As a result, many computers, chips and systems will not be fixed in time.

It should be a cause for concern. Still, de Jager fears that the rising tide of concern could turn into a tsunami of panic. Such panic, de Jager says, may be the most troublesome side effect of Y2K.

To help make his point that Y2K problems will indeed crop up but will not grind civilization to a crawl, de Jager has booked a flight to London on Dec. 31, 1999. When the calendar turns over to 00:00, 01/01/00 Greenwich Mean Time -- the moment when many believe computers will go haywire -- he plans to be over the Atlantic Ocean. (He'll catch a nap in a hotel room in London on Saturday, Jan. 1, 2000, give a few interviews, and then fly back home later in the day.)

"A tremendous amount of work has been done," de Jager noted in a recent interview. "There's no doubt that many, even most, organizations started late. But today most organizations are working really hard -- as hard as they can -- to get this thing fixed. There's huge amounts of money being spent to fix this."

De Jager outlines his current perspective in a widely quoted and downloaded recent article, "Doomsday Avoided" -- which can be accessed on his Web site at www.year2000.com.

"As I say in the article, I really believe that the end-of-the-world-as-we-know-it scenarios that are so rampant on the Internet and in much of the media too are, quite frankly, no longer possible," he said.

And here is where the misunderstandings begin.

As the senior Y2K guru in the world, de Jager's prognostications carry considerable weight. And for good reason. Since he first commented publicly about the problem in 1993, he's been living, writing, reading, talking and dealing with Y2K straight through -- considerably longer than the population of doomsayers now disseminating bile and misinformation around the world.

"You know, there was a point in time where it was conceivable that the entire banking system would collapse," de Jager observed. "And I know it sounds like hype and exaggeration, but the reality is that the financial system runs on computers and the computers were broken. That's why companies like Chase Manhattan are spending $500 million. It wasn't that there wasn't a problem and now all of a sudden we've realized there wasn't a problem. It's that at a point in time there was a significant problem and people weren't paying enough attention. And these risks were real."

The unsettling thing that de Jager has found is that, as the situation in the United States has begun to look up, Y2K newcomers have sprung up forecasting destruction, mayhem and global depression in bleak terms that continually astonish him. While his message has remained roughly the same over the past six years -- we have a problem, folks; let's fix it -- the context in which that message has been received and interpreted has shifted drastically.

"In terms of perception, I've gone from being a doomsayer to being a Pollyanna," de Jager said. "My view hasn't changed. It's the perception of the audience that's changed. I've stayed steady.

"Two years ago, I stopped worrying about the banking system," he said. "When I say I stopped worrying, though, I'm not saying that two years ago I was now convinced that everything had been taken care of. I'm saying that two years ago, I came to the conclusion that enough momentum had been reached in that industry, enough work and resources were being thrown at the problem, the federal regulators were now serious about this and they were interrogating the banks, the Federal Reserve Board had identified that an increase in the money supply could be necessary. So all the pieces were in place for this thing to resolve itself. I stopped worrying about it. There was no reason anymore to rant and rave about the banking system."

In two other crucial sectors of American infrastructure -- telecommunications and power -- de Jager has also found reasons for hope sprinkled among the causes for concern.

"If you look at the different reports that say how many companies have actually gone out and looked for problems ... you'll get a number like 45 percent of the utilities have done a full inventory and assessment," he said. "And people seize on that and say, 'Oh my God. You see: 55 percent of the utilities haven't looked at their systems. We're all doomed.' ... But when I speak to [utility Y2K team managers] one on one, under non-disclosure, off the record, they have the same answer: 'Peter, we searched. We didn't find anything. But the lawyers won't let us say that. Because that is a form of a guarantee that everything's going to be fine.' So they have these wishy-washy statements that don't quite say we didn't find anything."

However, the message he finds most disturbing -- and irresponsible -- is the prediction of nationwide blackouts and serious disruptions in everything from phone service to food supplies. Had the calendar turned over to 2000 on Dec. 31, 1995, these things may have happened. But considering the work that's been done in the past year alone, such doomsday scenarios are no longer realistic, de Jager argues.

He points to a recent WIRED magazine cover story: "It says, 'Learning to love Y2K. Lights out.' They basically make the statement that lights will be out. This is all nonsense. And it's scaring the hell out of people. That's what 'Doomsday Avoided' was all about. The banks will not fail. We will have dialtone. The lights will be on. That's what the article said. It didn't say that we've beaten Y2K. It said that the most significant failures are no longer a possibility. There will still be problems. We're still leaving systems behind. We're going to see the most interesting times we've ever experienced."

Widen the scope beyond America, Canada, the U.K., Australia and some parts of continental Europe, however, and the picture begins to look much more than simply "interesting."

While the picture domestically has been getting better and better, the picture overseas has been looking more grim. According to the standard-bearer of Y2K forecasting, the Connecticut-based information technology advisory organization The GartnerGroup, countries such as Russia, Romania, China, Ethiopia, Laos, Nepal, Pakistan, Uruguay and Vietnam now face potentially severe Y2K-related disruptions in their economies, living standards and infrastructures. (The GartnerGroup's Y2K reports are available for free download at www.gartner.org/y2k.)

Even countries further along than these hard-luck cases still leave de Jager less than optimistic.

"France is behind the eight ball," de Jager said. "They have focused on the Euro. They're not as far as the rest of Europe. They hate hearing that assessment. They get indignant when they hear that. But, quite frankly, that's where I think they are. They're behind us, and it's going to be quite interesting to see what happens to their companies. The prep work has not been done in France. Germany's even worse. And forget Italy. I have no idea what's going to happen to Italy. They are so far behind -- way further behind France and Germany. The minister of finance said several years ago, 'Y2K's not a problem. It's a long weekend. We'll fix it then.' He's on record as saying that. They have been totally oblivious to this. I just don't know what's going to happen in those places. ... My work has been available to everybody. It's all on the Internet. And these folks have just ignored it."

The fact that the American banking system is as well prepared for Y2K as any sector of any country in the world gives rise to a counterintuitive scenario that de Jager has speculated about recently.

"International banking is as far ahead as the States' banking system," he said. "Your India branch is as caught up as your boss' branch. A true statement about any country, in fact, is that the banks are further ahead than any other industry sector. No matter how far a country is behind, banks are always ahead. But there's no doubt in my mind that the multinational banks are much, much further ahead than the local banks. So here's the scenario: Let's go to Italy. If Italy has been so far behind, and there is a tremendous amount of uncertainty and even problems when we get to the year 2000, it would be a natural move for a local citizen of Italy to take all of his or her money out from a local bank [and move it] to a multinational bank. There you generate a flight of capital. A huge flight of capital. And there the benefiting currency will be either the Euro or the dollar. I see those rising because of the flood into the multinational banks."

While Y2K-specialist economists such as Ed Yardeni (www.yardeni.com) continue to forecast a Y2K-related recession or depression in the United States' near future, de Jager's scenario, should it come true, could be a bulwark against serious Y2K-related economic downturns.

Still, de Jager is the first to point out that no one knows for sure how Y2K problems will play out. Instead, his chief frustrations have arisen from the press coverage of Y2K.

"What I've learned is the press doesn't know how to sing middle C," he said. "They know high C, and they know low C. Either this isn't a problem or it's the end of the world. But they don't know how to sing the middle phrase. Hey, folks, we have an issue. It's going to be interesting. It's going to be severe. It's not the end of the world. But we still need to be diligent.

"When we first started to write about this, it was a really simple outline: We used two-digit years; it's a problem; we better start working on this now. And by the way, it's going to cost a lot of money. We said that time and time and time again. But no one was listening. We made the assumption, naively, that once people understood there was a problem, they'd go off and fix it. So we had to change the tone and go into this mode: Listen, you dumb shmuck, don't you realize that if you don't fix this, your company's going to go in the tank? At some point, you have to turn it around, not to create fear, but to concentrate on the consequences of inaction. If you know a different strategy, I wish you'd have been around to tell me, 'cause this was the only thing that worked."

Such a tactic, he added, has its downside: "I wish we never had to do that. I wish I didn't, during interviews, have to talk about the consequences of failure. Because what happened was people who had no right knowing about Year 2000, who had no control over Year 2000, now became aware that there was this big problem that people weren't paying attention to. But it was the only way to communicate to management, to businesses, to government. ... While it did introduce activity amongst those who could take action, it also produced anxiety amongst those who had no control. So now, today, I believe that while the technical problem has been fixed, it's being surpassed or replaced by the problem of panic."

This is why de Jager is asserting his confidence in the state of Y2K fixes today. Through his own actions. Yes, some Y2K specialists now sow fear and dread and speak of imminent collapse. But in de Jager's book, the situation on Dec. 31, 1999, will boil down to a single sentence: Heathrow, we have no problem. *

-- Norm (nwo@hotmail.com), May 06, 1999

Answers

Norm,

Whew! That sure was a long winded eulogy for good ole Pete. Actually, Pete has admitted that he is in a state of mental distress right now. It may be a personality split, a fragmentation if you will, from trying to make the transition from Doomer to Pollyanna. When you are confronted by horrendous mounting evidence that everything you have worked for, dreamed of, planned for, is slowly going down the drain, it takes a terrible toll on your rationality. Attempting to be a confirmed denialist at this point in time is very dangerous to your mental health. It leads to fantasy thinking, and grandiose plans for the future. But I don't really have to tell you about that now, do I?

-- Gordon (gpconnolly@aol.com), May 06, 1999.

Norm,

On April 14, 1999, Peter de Jager gave his answer to the question of whether or not he thought that people should be preparing for Y2K problems. The answer was that people should really prepare for the bump in the road. Whether or not he's on an airplane on New Year's Eve, Peter de Jager has not revised his answer and recommendations. If you agree to de Jager's recommendations, you might want to add to it additional preparations as necessary. The after math may require it. "If your level of preparation is sufficient to cope with a 2 - 3 week disruption of services equivalent to what happened in Montreal during the Ice Storm, then I would state youve a sufficient level of preparation to cope with anything Y2K might throw at you in the proactive countries such as Canada, USA, UK, Australia, New Zealand, the Nordic Countries, Israel, Belgium, Holland, Ireland, and even South America to a certain degree." (Peter de Jager, "How Bad, How Long, How Likely?", April 14. 1999)

Most people might not know much about this little Montreal Ice Storm, but it's impact was not insignificant. As CNEWS reported: "It (the Montreal Ice Storm) brought Eastern Ontario and Western Quebec to its knees." Six months after the storm, insurance claims had reached a staggering $1.1 billion and continued to climb. The Eastern Ontario Disaster Relief Committee, which handled claims for damages not covered by insurance received claims exceeding hundreds of millions. Many of the storm survivors never received appropriate assistance in the aftermath. Businesses failed, food production was crippled, and industries were battered.

According to CNEWS, "Nearly 10 percent of Canada's population was without power at some point. Between one quarter and a third of Canada's total dairy production was within the affected region, and some 13.5 million litres of milk were dumped during the storm and its cleanup. Nearly a fifth of all the country's hogs are farmed in the region. One of the hardest hit sectors was Canada's $120-million a year maple syrup industry." An estimated 60 to 70 per cent of Canada's producing maple bush was affected by the storm and it would take 20 years for the maple canopy to recover to the growth that existed prior to the storm.

According to CNEWS' coverage at the time... "More than 1,000 power transmission towers and 30,000 wooden utility poles (were damaged), for starters. Close to 1.4 million people in Quebec and 230,000 in Ontario without electricity. In many municipalities, power not fully restored for at least a week." Some complained civil servants did not act fast enough waiting for the end of the storm to provide needed supplies and assistance to the survivors.

Six months after the storm, there were still problems as CNEWS reported. "It has been six months since the Ice Storm of the Century challenged the resources, the stamina and the will of people in Eastern Ontario and Western Quebec. Victims are still rebuilding farms, yards and lives. For some, that may take years... Today, many victims are growing increasingly frustrated with the stalled pace of financial compensation they need to move on."

IMHO, de Jager's recent comparisons of potential Y2K problems to the Montreal Ice Storm is somewhat disturbing. Many people will have no idea what really happened during and after the Montreal Ice Storm and they may think it was something like what happened this year on the East Coast. That's not the case. I don't see the Montreal Ice storm as a bump in the road.

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), May 07, 1999.

Did Peter de Jager actually say this, or was he misquoted?

http://www.newmassmedia.com/nac.phtml?code=wma&db=nac_fea&ref=481

[snip]

Such a tactic, he added, has its downside: "I wish we never had to do that. I wish I didn't, during interviews, have to talk about the consequences of failure. Because what happened was people who had no right knowing about Year 2000, who had no control over Year 2000, now became aware that there was this big problem that people weren't paying attention to.

[snip]

-- Kevin (mixesmusic@worldnet.att.net), May 10, 1999.

That link I posted wasn't correct for some reason. You can get to the article by way of this link at Gary North's site:

http://www.garynorth.com/y2k/detail_.cfm/4633

-- Kevin (mixesmusic@worldnet.att.net), May 10, 1999.