Yardeni's article makes absolutely no mention of y2k. He says that based on his version of the Fed's Stock Valuation Model (FSVM) the Dow should currently be just under 8000.

He says in early July FSVM showed the S&P 500 at 50% overvalued, an all time record since the statistic began in 1979.

The prior record was 34% just before the 1987 crash.

Puddintame says if y2k is ABITR, Yardeni is no worse off. It it's more than ABITR, then he is the one and only candidate for the Nobel in economics. The man knows how to hedge his bets.

One troubling aspect is that Yardeni's messages have a range of pessimism that seems to closely correlate to the sophistication of the reader.

In the consumber publication, Bottom Line, he is almost giddy, stating that Y2k will have lasting positive effects. (Maybe that's the fault of dopey editors at Bottom Line.)

In the more sophisticated publication Barron's he is pessimistic based on current fundamental analysis.

Finally, if you have taken the trouble to find him at his Deutsche Bank website, he is making rumblings akin to Paul Milne's "Won't be long now!" while talking about y2k bursting the bubble and saying that the end game is here.

I guess that's consistent with the whole y2k leadership theory. If it's 9 or 10, then the sheep get slaughtered and the survivors will sort out the rest of the world.

Which is not to say that those of us on this forum will not be among the sheep. Oh, we're knowledgable in a consumer/retail sort of way. We're like the Consumer Report junkies of the y2k world.

We've got Cory and some others in the field giving us reports of how bad it can be. But as entertaining, knowledgable and earnest as Cory seems to be, its not the same as having your own team behind the lines.

By the time information makes it to the papers or the web even, it's old, stinking, fly-ridden and picked over. The CEO's for the most part know where they stand on a microeconomic level. Koskinen knows the score. Remember all the military intelligence that we salivate over goes straight to the President's office.

Koskinen is not an idiot. As a matter of fact, He may be as smart as Clinton but without the white trash behavioral patterns. I believe there is a good chance that he is a liar. I also believe there is a good chance that he is a benevolent person who truly believes that the means(lying) justify the ends (avoiding certain economic chaos in anticipation of uncertain danger). If that is the case, I believe he has made the wrong moral judgment.

So Kosky knows the score. We don't. No one will give us the details of remediation of infrastructural pillars such as Exxon. We've lived long enough to know pretty damn well that conclusions with no facts are probably faulty conclusions. If you're like me, you've seen enough of what I call hoodoo artists to be able to spot 'em a mile away, and this whole spin and perception management job looks like a world-class hoodoo from where I sit. I hope I'm wrong.

-- Puddintame (achillesg@hotmail.com), September 04, 1999

Answers

Just to clarify, I don't believe that Kosky is acting in a way that is actually furthering the common good. I do think that in his own mind he thinks he is doing the right thing.

-- Puddintame (achillesg@hotmail.com), September 04, 1999.

Kosky don't know squat. Y2K is the great leveler - it doesn't matter about your wealth or status or knowledge - the computers don't care. Kosky is just as clueless as ANY other human being on the planet.

No one is in control. Forty years of haphazard and mismanaged computer code is in control - and no one knows the size or scope of it. Old rules are out. Y2K is another order of magnitude up on the scale of problem solving capability.

-- Jim (x@x.x), September 04, 1999.

If it isn't hoodoo, it will be the first time in my life I have been snookered big-time. Not to mention that my friends know I NEVER prepare for anything. NEVER. Nor do I follow conspiracy theories. It's a laugh riot that I have been preparing like crazy for Y2K for 18 months. Hardy-har-har.

While the CINC and K. have all the speculations that are top-secret, I wouldn't necessarily bet on their having the "facts". Don't forget, the hoodoo is coming from every which direction and flying in every which direction. They're probably being snookered too.

-- BigDog (BigDog@duffer.com), September 04, 1999.

Actually, Yardeni's web site is a bit optimistic. He seems to think we can have a short Y2K recession. After a few months of cleanup, it's up-up-and-away again! Hence his prediction of DOW 15000 by 2005. However courageous his position is on Y2K, he's also basing this on very little information. The reports we see on company web sites, 10-Q reports, trade association reports (ex: NERC), government hearing reports, and surveys, are exactly the same materials that Yardeni, Koskinen, the State department, etc. are using to make their own decisions. Koskinen's Y2K committee has not held secret hearings. Their public ones would not be so ambigious if they had good information from anywhere. And they definitely have not done independent audits. Neither has NERC or NRC. They've written up what they've done. If they had done real audits, they would include them (possibly with a happy face gloss) to help make their BITR case. But even if they had, consider again the scope of the problem. To make a solid Y2K prediction, you would have to:

1. Know what software is actually in use, and how vital it is. Many companies/governments have never done a software inventory.
2. Know how much of it will fail. Even the manufacturers do not generally know this. One study said that up to 50% of assurances were wrong, and many of the manufacturers have recently revised the status of their products. Including of course, Microsoft and IBM.
3. Know how long it will take to fix the failed software. Given the uncertainties of project management, available programmers (U.S. and worldwide), there's no way to do more than guess at this.
4. Know how much work has already been done. You can look at budgets, (the company's best guess) and company progress reports (which have their own happy-face politics internally), but this also results in only a vague guess.
5. Know what the failures will do to the world economy. No one can predict the world economy from year to year as it is, even without a major shock like Y2K.

So give up on the idea that you are going to be able to predict anything.

A government that was not trying to calm us down would come right out and say "We don't know, and can't know, but there's certainly the possibility of disaster. Some preparations are in order." But no one wants to pop the stock market bubble and get blamed for the end of our wonderful "New Economy." Instead they just hope for the best.

-- You Know... (notme@nothere.com), September 04, 1999.

Projections...Oil loses 30% refining capacity, Fortune 1000 companies thak a 40% hit...Bankruptcy rates 15%...Dow at 15,000.

-- K. Stevens (kstevens@ It's ALL going away in January.com), September 04, 1999.

IMHO the market IS wildly overpriced. I won't rehash all the widely read reasons why. I would like to share some of the numbers I've been watching-- like the commodity future's market-- which, IMHO, is widly UNDERpriced. Just take a look at the Settle prices of Friday's close. The future's market doesn't appear to be at all concerned about Y2K: Light sweet crude oil for Jan00 delivery settled at $21.43, down from Oct99 delivery at $22.00. Heating oil is up slightly (which you'd expect). All the numbers are in your local paper; probably on-line somewhere too. Unleaded gas-- down to $.6197 for Jan00 del'y and $.6476 for Oct99 del'y. Cotton: up only slightly. Sugar: up only slightly. Coffee: up slightly. Coccoa: up only slightly. O.J. (sorry, orange juice): down slightly for Jan00 delivery. Cattle: up slightly for Feb00 del'y, then back to Oct99 level for Jun00 del'y. Hogs: up slightly. Corn: up from $209 for Sep.99 to $233 for Mar00 del'y. Also up (but not as high up as I'D place demand): oats, soybeans/oil/meal, and wheat. Down: lumber. Gold for Sep99 del'y: $253.90, and for Jan00 del'y, $256.10 [Wow!] Silver: $5.12 for Sep00 del'y and $5.17 for Jan00 del'y. Platinum, down to $348.10 from $348.60 for Oct99 del'y. Also down: all Treasury bond issues for del'y in Dec99/Jan00, Municipals, AND the 30- Day interest rate (94.74 for Sep99 vs. 94.53 for Jan00). I noticed hat Thursday the major market indicators (DJIA, Nasdaq, S&P500, NYSE, & AMEX) closed down; then on Friday each one closed UP, and the 30-yr bond yield dropped to 6.02% from 6.13%. I'd also like to draw your attention to the "fact" that as a nation we aren't pulling our money out of savings to become more liquid (no surprise about that). [Visit http://www.federalreserve.gov/releases/H6/current/] In Mar98 total savings on deposit in the nation was $3067.8 billion; week ending 23Aug99 it was $3454.2 billion. Demand deposits (electronic money) in Mar98 was $351.4 billion; in Jul99 was $376.5 billion. Non-federal debt in Mar98 was $11523.1 billion; in Jun99 it had risen to $12787.8 billion (I think that's 12.8 quadrillion dollars)-- twice the amount of all our cash on hand (as electronic money) and savings on deposit (as electronic money). Talk about cross cascading defaults... Just thought I'd share this with you all. Can any of you financial guru's out there put some meaning (y2k spin) into/onto these numbers?

-- Dewer Dye (querty@!!!.com), September 05, 1999.

Dow at 15,000 ?

-- curtis schalek (cschale1@earthlink.net), September 05, 1999.

Dewer

Totally cool, that is a great slice of the conditions as they now stand. The Non Fed. debt is a real eye opener. I wonder what the amount of colateral there is on that debt. And what it is REALLY worth.

With the objectivity of business it is strange that they base there optimism on the subjective worth of assets. I would consider that a fickle reasoning after watching Japan implode land value wise. And of course stocks is actually just a really cool idea that works. But it is still little more than an "idea" that people buy into. I am sure the reality will be much more sobering if Y2K is in anyway bad.

-- Brian (imager@home.com), September 05, 1999.

Have read most of what Yardeni himself has written on his website on Y2K, what you find is usually a prediction such as 70% chance of recession and then accompanying documentation. The supporting documentation is invariably well-prepared, impecably referenced and well-thought out, it is also usually enough to possibly making a thinking person blanch. Yardeni, like everyone else has a job to keep, but if you read what he is actually documenting, its hard not to wonder if he isn't talking about the best case scenario in his predictions.

-- PD (PD@Yahoo.com), September 05, 1999.

There was a thread recently concerning the latest material from his website. I think someone converted a PDF file to text and posted it. I remember the first part talked about a stock market bubble, but I have not been able to find it today. If anyone has the URL, I would like to read it again.

-- Dave (dannco@hotmail.com), September 05, 1999.

Curtis:

I think there was an extra zero added.

Dow at 1500.

Is that *better*?

-- Randolph (dinosaur@williams-net.com), September 05, 1999.

PD,

I had the exact same reaction.

Here were figures and a breakdown of how shaky the information available its. All laid out in his report.

I have agreed with Yardeni's analysis of Y2K as oil shock for some time now.

All this and he was vacillating between 40% minor recession and 25% major recession and vice versa?

Oy, what a mess!

-- nothere nothere (notherethere@hotmail.com), September 05, 1999.