Greenspan Sees Only Modest Y2K Impact On Markets CHICAGO (Reuters) - Federal Reserve Chairman Alan Greenspan said Thursday there was little reason to fear that the so-called millennium bug would pose a major problem for world financial markets.

``I'm increasingly less concerned about whether there will be true systemic problems,'' he told a Chicago Fed conference after delivering a speech. ``What I am concerned about are peoples' reactions to the fear that something momentous is going to happen on January 1st 2000.''

``I'm sure that people will get very wise soon and recognize that the last thing you want to do is to draw inordinate amounts of currency out of the banks,'' he said.

``I think at the end of the day the impact on the financial markets is going to be rather modest,'' he added.

The millennium bug, often referred to as Y2K, arises because many older computers record dates using only the last two digits of the year. If left uncorrected, such systems could treat 2000 as 1900, generating errors or system crashes.

-- Norm (nwo@hotmail.com), May 07, 1999

Answers

Somebody e-mail him a copy of the foreign Y2K compliance efforts report?

-- ? (?@?.?), May 07, 1999.

The pessimists love Greenie when he says things like "99% is not good enough", but then they turn on him like piranha when he makes more positive statements. Such ambivalence must be painful.

-- Polly (skippy@innermongolia.com), May 07, 1999.

There might be some uninformed people in positions of authority in Washington, D.C., but Alan Greenspan is not one of them. He's probably one of the best-informed persons on the planet, about an incredibly wide variety of things. Comes with the territory. No one could guide the unwieldy supertanker U.S.S. Economy (which breaks the water for the rest of the world's economies as well) in these perilous times as adroitly as he has, for as long as he has, without being keenly aware of whut's happ'nin all over the globe. Such a track record doesn't come from dumb luck. "Proof is in the pudding", as the saying goes.

I should certainly hope that no intelligent person is seriously considering blasting Greenspan for his comments, non-Doomer though they be. The person who does will be torpedoing his/her own credibility for a long time to come.

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Q. "What do they know that we don't know?" A. In Greenspan's case, a LOT.

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-- Chicken Little (panic@forthebirds.net), May 07, 1999.

What on earth do you think Grnspn is going to say? "Big problems loom for equities markets?" Yuh, right. Maybe there ARE no problems, but if there were, he'd be the last to tell YOU.

-- Spidey (in@jam.com), May 08, 1999.

If Mr. Greenspan knows so much, then I assume that he knows what the UK Financial Services Authority has to say about the Y2K status (bad) of some large British banks and what the Japanese Financial Services Agency has to say about the Y2K status (bad) about some of the very largest Japanese banks. I assume he also knows the Gartner assessment of the German banks. I assume he knows the NIC, CIA, UN, World Bank, BIS, and Commerce Dept. reports on severe Y2K threats worldwide.

But he expects the impact on financial markets worldwide to be very modest. Really? Really really?

Mr. Greenspan is not going to say anything that might spark bank runs or precipitate a massive sell-off in a dangerously overvalued and highly vulnerable U.S. stock market.

Again, the history lesson (endlessly necessary on this forum, apparently): on Dec. 5, 1996, a mere 29 months ago, Mr. Greenspan worried publicly about the obvious dangers and "irrational exuberance" of the stock market. At that time the Dow was at 6200. Now the Dow is over 11000 but Mr. Greenspan thinks things are just fine. Again, really? Really really?

-- Don Florence (dflorence@zianet.com), May 10, 1999.

1999 Speeches of Federal Reserve Board Members

http://www.federalreserve.gov/boarddocs/speeches/1999/

[Interesting speech on the role of information and technology in a growth economy].

May 6, 1999
Chairman Alan Greenspan

The American economy in a world context
At the 35th Annual Conference on Bank Structure and Competition of the Federal Reserve Bank of Chicago, Chicago, Illinois

http://www.federalreserve.gov/boarddocs/speeches/1999/ 19990506.htm

[snip]

... Now that there are tentative signs that we may be through the worst of the crisis abroad, an issue to which I shall return shortly, it would be useful to address the benevolent, but bedeviling, question of how the American economy, at least to date, has managed to remain an oasis of prosperity, in sharp contrast to badly sagging economies in the developing world, recession in Japan, and tepid growth in much of Europe. And, can we project how long our economy will be able to provide support to the rest of the world? ...

[snip]

... Of most concern is how long this remarkable period of prosperity can be extended. As I have said on previous occasions, there are imbalances in our expansion that, unless redressed, will bring this long run of strong growth and low inflation to a close. ...

[snip]

... To return to my opening question: can we project how long the economy of the United States can act as a buffer to weakness elsewhere?

The answer: not easily. History counsels us that sharp changes in direction are rarely, if ever, anticipated. Indeed, were these changes readily apparent, presumably, businesses would adjust to that anticipation and, hence, significantly damp the cyclical tendencies in the economy. ...

[snip]

... Let me conclude with an observation I have made before: We policymakers have been engaged in a lot of on-the-job training in recent years. The remarkable American economy, whose roots are still not conclusively known, and the Asian crises that caught us by surprise, among other humbling experiences, have made policymakers particularly sensitive to how fast the world can shift beneath our feet. We need to be alert to the dramatic changes that are continuously confronting us, but recognize that neither the fundamental laws of economics, nor human nature, on which they are based, has changed, or is likely to change. This will be an especially important notion to keep in mind as we continue to grapple with the rapidly changing global economic environment and its regulatory structure, which this symposium has been convened to address.

[end]

[He may have mentioned Y2K in the Q & A].

Diane

See also ...

Federal Reserve Board -- Testimony & Speechs

http:// www.federalreserve.gov/s-t.htm

Federal Reserve Board Y2K Page

With speeches and congressional testimony, Y2K resources, programs, and more ...

http:// www.federalreserve.gov/y2k/

Federal Financial Institutions Examination Council (Y2K info)

http://www.ffiec.gov/

-- Diane J. Squire (sacredspaces@yahoo.com), May 11, 1999.