Should Y2K become a full fledged crisis after Jan. 1, would you expect a depression like the 1930's, or could we not expect inflation to be the villain as demand for goods exceeds our available supply?

-- Tommy Rogers (Been there@Just a Thought.com), September 18, 1999

Answers

Here is a guess for you.

I see both inflation and deflation, depending on the goods. With oil imports declining (especially from non-prepared Saudi Arabia and Venezuela) and domestic refineries failing (spectacularly in Texas and California this year already) I would expect to see gasoline prices above $5 per gallon and rationed. If the oil companies can get the domestic "unprofitable" wells and some refineries back in production, then gas prices would fall again, but not to today's levels.

Trucking rates will go up to pay for the higher cost of fuel and airline schedules will loosen up considerably. Because of higher shipping costs and longer delays, fresh vegetables in the winter and oranges in the summer will either be unavailable or priced out of the reach of most people.

Electricity costs to consumers will be up, because so many power companies will be bankrupt the local utility commissions will rubber- stamp rate increases for the surviving companies in order to pay for SCADA failures in 2000 and preparedness costs from this year. (whew)

Rail rates will be up because the few trains that are allowed to run will be mostly allocated to shipping fuel to the power plants still running.

Auto prices will be down because nobody could afford to refuel a gas- guzzling SUV at such high prices. Also, who could afford to buy a car when everybody is being laid off? Repo men will have lots of work, however, and they will be trying to dump their inventory as fast as they could. So auto values would decline but nobody could afford them anyway.

Bicycles, I think, will retain their value or appreciate. Solar panels and water filters will probably appreciate.

For somebody with cash, real estate may be a bargain, especially if all you have to do is pay off the local land taxes to acquire. Other bargains would likely be in collectibles, fine art, etc. as former high rollers retrench and sell off their collections.

Shoes would be expensive because most of them are imports, and supply would be sporadic until we rebuild domestic factories.

Chocolate - another import - will always have a strong market if it ever gets here. Yum. Stock up now. Italian pine nuts and French wine will be gone for a while. Coffee will either be unavailable or very expensive. Got chicory?

Grain will probably stay the price it is now for consumers and go slightly lower for farmers. We won't be able to export our surplus as easily, driving farmer prices lower, but the higher cost of internal shipping will keep consumer prices up. Same for pork, beef. Not sure about chickens as I don't think we export them now. Maybe chicken will be more expensive.

So, am I way off?

-- Margaret J (janssm@aol.com), September 18, 1999.

Your comments above were very eye-opening regarding your veiws on individual products. The question keeps popping up in my Y2K preps. So what should one do; hold large amount of liquid assets or purchase goods above our expected need. personally, I think if y2k approachs a 8-9, we will enter a full scale depression and the bottom will fall out of all prices. No market, No sale. However, should y2k reach a scale of 5 or below, inflation will rule the day.

Help, too much on my mind!

-- Tommy Rogers (Been there@Just a Thought.com), September 19, 1999.

I agree with MargaretJ, both inflation and deflation, probably at different times, in different places and on different items. In other words, it's all so complicated, there are so many variables, and so much uncertainty that it's virtually impossible to say with any certainty exactly what's going to happen.

But still she came up with a very plausible list of possibilities.

I think the best preparedness plan is one that includes lots of redundancy and is highly diversified so you are prepared for as many different eventualities as possible. The alternative is to _assume_ you know what's going to happen and then prepare for _that_ eventuality.

Personally, my crystal ball is shot and I no longer believe that I can predict the future so I'm trying to hedge my bets. That means I can't prepare in great depth for just one or two scenarios, but that's a tradeoff I'm willing to make.

-- dhg (dhgold@pacbell.net), September 20, 1999.

A very brief period of inflation followed by deflation. Real estate values will decrease dramatically. Those who have cash in hand will be able to buy a deep discounts. Cash will be king. Many more goods will be sought by a lot fewer dollars (yen, pounds, marks, etc.).

A good position would be to take care of forseeable necessities like water, food, shelter, medicines, post crash employment, etc. Then diversify assets into cash, hard metals, skills, and safe haven real estate which one can personally oversee.

This is just my humble opinion. I look forward to reading other views. Thank

-- M. Hawkins (hawkeye@iamerica.net), September 20, 1999.

Good question. Follow the loaf of bread.

In a very serious breakdown then money (cash) and gold become worthless. No one will sell the loaf of bread, they will eat it.

In a more moderate scenario goods are not so scarce and money (cash) very scarce. There for a loaf of bread sells for a penney because shoes are selling for a dime. (This is my favorite, after all "electronic" money disappears only cash and gold left)Greed and envy may require all "hoarders" to turn in gold (the 1930's revisited) In this scenario 5-10 ounces of gold might buy a nice house.

Bad scenario, the goods are not so scarce but the gov. tries to jump- start ecomomy by printing lots of money. Money (cash) plentiful and a loaf of bread sells for $1,000 because shoes are selling for $10,000. (This is the confederate money or Wiemar(sp?) Republic hyperinflation problem) Gold is a very good hedge against this possibility. But may not be "popular" and "hoarders" may be required to turn in gold for everyones benifit. Not that it helps anyone else, just an "Eat the Rich" response.

-- LM (latemarch@usa.net), September 20, 1999.

Gosh, LM

Can't we take the middle road? IMHO most Americans are living on this road and even if they GI, they are limited in resourses, as I am, to prepare beyond a given timeframe. Even those with great wealth may find themselves forced on this road because of their highly leveraged position.

Thanks for all the responses! "Walking thru the Valley of Decision"

Tommy

-- Tommy Rogers (Been there@Just a Thought.com), September 20, 1999.

I tend to agree with M. Hawkins. I would posit that inflation (due to scarcity) would be followed by severe unemployment, which would lead to equally severe deflation. The deflationary period could last for years...

-- Mad Monk (madmonk@hawaiian.net), September 20, 1999.

I like Margaret's list. She's connected some dots. In terms of markets dominated by the imports, it seems we are likely to see some higher prices. But I wonder if those countries won't be so desparate for cash that they'll eventually find a way to get those goods to our shores. So it may depend more on their ability to produce goods than getting it here. If they can keep on making shoes, that's my hope. Whatever imports are replaced by "made in usa" is likely to hit us at a much higher price. Everywhere I look, it seems things are made overseas. If there was a good list of common import purchases of the American consumer, this might help us figure out what things might be worth stocking up on (at least for the short term as in 3 months to a year).

What government agency has that data?

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 21, 1999.

Correction:

But I sometimes think that those countries will be so desparate for cash that they will eventually find many ways to get those goods to our shores.

-- Stan Faryna (info@giglobal.com), September 22, 1999.

Based on the Senate Special Committee's 100 Day Report, here's some domestic goods with reduced availability and fetch more dollars:

Chicken, Cheese, Infant Food, Beef, Breakfast Cereals, Fresh Vegetables, Bread, and Milk.

Also from the report:

"One of the most revealing findings in the Gartner Groups current status assessment is that 25% of food supply companies have not addressed supply chain and embedded systems issues. While this number represents an increaseof 10% since the March assessment, it is cause for concern and should be a signal to the industry that increased remediation and contingency planning effort is warranted in this area."

"... suppliers of food products to the U.S., mainly Central and South American countries..."

"In response to Senator Dodds question regarding product contingency planning, FMIs president said ' for processed products, there are somewhere between three and five weeks of products on hand in retail facilities, and in the pipeline all the way through from the processor to retail, there would be several months of supply on the way already here and available for consumption.'"

"The weak link in the chain may be the ability to transport this robust inventory to the needed locations for sale."

"As with most of the industry assessments, most of the information base upon which analysis is conducted is founded upon self-reported information."

...

Anyone know where to get a list of imported foods from South and Central America?

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 23, 1999.

IMPORTS (MILLIONS OF DOLLARS)

Foods, feeds, and beverages: July 1999 = 3,680 : June 1999 = 3,759

Cane and beet sugar: July 1999 = 39 : June 1999 = 74

Fruits, frozen juices: July 1999 = 394 : June 1999 = 427

Meat products: July 1999 = 358: June 1999 = 382

Feedstuff and foodgrains: July 1999 = 122 : June 1999 = 143

Green coffee: July 1999 = 219 : June 1999 = 234

Vegetables: July 1999 = 321 : June 1999 = 330

Nonagricultural foods, etc.: July 1999 = 52 : June 1999 = 52

Food oils, oilseeds: July 1999 = 120 : June 1999 = 120

Bakery products: July 1999 = 214 : June 1999 = 214

Other foods: July 1999 = 217 : June 1999 = 216

Alcoholic bevs, exc. wine: July 1999 = 241 : June 1999 = 238

Nuts: July 1999 = 71 : June 1999 = 68

Tea, spices, etc.: July 1999 = 77 : June 1999 = 74

Dairy products and eggs: July 1999 = 83 : June 1999 = 77

Fish and shellfish: July 1999 = 747 : June 1999 = 739

Cocoa beans: July 1999 = 46 : June 1999 = 30

Wine and related products: July 1999 = 359 : June 1999 = 342

http://www.bea.doc.gov/bea/newsrel/trad0799.htm

-- Stan Faryna (info@giglobal.com), September 23, 1999.

Commerce Dot Gov Definition of South and Central America:

South/Central America - Anguilla, Antigua and Barbuda, Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bolivia, Brazil, British Virgin Islands, Cayman Islands, Chile, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, El Salvador, Falkland Islands, French Guiana, Grenada, Guadeloupe, Guatemala, Guyana, Haiti, Honduras, Jamaica, Martinique, Montserrat, Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands,Uruguay,Venezuela.

-- Stan Faryna (info@giglobal.com), September 23, 1999.

According to U.S. Commerce...

Selected Imports and Exports (in millions)

Alcoholic bev.,distilled: July 1999 : Exports = 30 : Imports = 228

Animal feeds: July 1999 : Exports = 242 : Imports = 48

Basketware, etc.: July 1999 : Exports = 253 : Imports = 372

Chemicals - medicinal: July 1999 : Exports = 870 : Imports = 1,258

Cereal flour: July 1999 : Exports = 110 : Imports = 122

Cigarettes: July 1999 : Exports = 239 : Imports = 10

Clothing: July 1999 : Exports = 636 : Imports = 5,557

Coal: July 1999 : Exports = 183 : Imports = 44

Coffee: July 1999 : Exports = 1 : Imports = 194

Copper: July 1999 : Exports = 82 : Imports = 256

Cork, wood, lumber: July 1999 : Exports = 322 : Imports = 881

Corn: July 1999 : Exports = 453 : Imports = 2

Cotton, raw and linters: July 1999 : Exports = 100 : Imports = 24

Crude oil: July 1999 : Exports = 72 : Imports = 4,435

Fish and preparations: July 1999 : Exports = 309 : Imports = 760

Footwear: July 1999 : Exports = 57 : Imports = 1,339

Furniture and bedding: July 1999 : Exports = 312 : Imports = 1,292

Glassware: July 1999 : Exports = 54 : Imports = 172

Iron and steel mill prod: July 1999 : Exports = 397 : Imports = 1,141

Lighting, plumbing: July 1999 : Exports = 107 : Imports = 412

Liquified propane/butane: July 1999 : Exports = 16 : Imports = 73

Meat and preparations: July 1999 : Exports = 539 : Imports = 279

Metal manufactures, n.e.s.: July 1999 : Exports = 856 : Imports = 1,229

Metalworking machinery: July 1999 : Exports = 460 : Imports = 561

Natural gas: July 1999 : Exports = 19 : Imports = 497

Nickel: July 1999 : Exports = 25 : Imports = 53

Oils/fats, vegetable: July 1999 : Exports = 77 : Imports = 117

Optical goods: July 1999 : Exports = 191 : Imports = 243

Paper and paperboard: July 1999 : Exports = 793 : Imports = 1,073

Petroleum preparations: July 1999 : Exports = 263 : Imports = 1,318

Platinum: July 1999 : Exports = 50 : Imports = 149

Pottery: July 1999 : Exports = 8 : Imports = 151

Rice: July 1999 : Exports = 66 : Imports = 10

Rubber articles, n.e.s.: July 1999 : Exports = 120 : Imports = 144

Rubber tires and tubes: July 1999 : Exports = 188 : Imports = 391

Silver and bullion: July 1999 : Exports = 19 : Imports = 62

Soybeans: July 1999 : Exports = 200 : Imports = 1

Sugar: July 1999 : Exports = 0 : Imports = 37

Textile yearn, fabric: July 1999 : Exports = 708 : Imports = 1,181

Toys/games/sporting goods: July 1999 : Exports = 266 : Imports = 1,793

Travel goods: July 1999 : Exports = 25 : Imports = 375

Vegetables and fruits: July 1999 : Exports = 561 : Imports = 652

Watches/clocks/parts: July 1999 : Exports = 30 : Imports = 271

Vehicles: July 1999 : Exports = 2,936 : Imports = 10,761

Wheat: July 1999 : Exports = 351 : Imports = 31

-- Stan Faryna (info@giglobal.com), September 23, 1999.

Some interesting tables:

Current-Cost Net Stock of Fixed Reproducible Tangible Wealth, 1929 to 1995
http://www.bea .doc.gov/bea/an/0597niw/table1.htm

Value of the Resource, Additions, and Depletion of Oil, Current Rent Method I (Rate of Return)
http://www.bea .doc.gov/bea/an/0494od2/tab1-1.htm

Value of the Resource, Additions, and Depletion of Gas, Current Rent Method I (Rate of Return)
http://www.bea .doc.gov/bea/an/0494od2/tab2-1.htm

Value of the Resource, Additions, and Depletion of Coal, Current Rent Method I (Rate of Return)
http://www.bea .doc.gov/bea/an/0494od2/tab3-1.htm

Value of the Resource, Additions, and Depletion of All Metals, Current Rent Method I (Rate of Return)
http://www.bea .doc.gov/bea/an/0494od2/tab4-1.htm

Value of the Resource, Additions, and Depletion of Other Minerals, Current Rent Method I (Rate of
Return)
http://www.bea .doc.gov/bea/an/0494od2/tab5-1.htm

Sincerely,
Stan Faryna

Got 14 days of preps? If not, get started now. Click here.

-- Stan Faryna (info@giglobal.com), September 23, 1999.

It took a bit of digging but I finally located a post by "doggystyle" that was on csy2k last March. I've cut and pasted part of it below. I think you might find it pretty interesting:

There seems to be a growing consensus that countries throughout the world will be devastated by Y2K, even if the U.S. escapes relatively unscathed. Furthermore, there seems to be widespread acceptance of the idea that significant international transport failures are likely -- i.e. in shipping, ports, airlines, airports, trains, mail etc. As an admittedly preliminary attempt to understand the effects of all this, I looked up a Table entitled +Imports and Exports of Leading Commodities+ in the 1999 Time Almanac. This Table gives 1997 import and export amounts for the U.S. in millions of dollars for a range of commodity types. As a primitive measure of export or import dependence, I simply divided the import amount by the export amount. For example, for Aluminum the figures are: 3,761 exports, 5,558 imports. Thus my value for Aluminum is 5,558/3,761 = 1.48. I then determined the Top 15(i.e. those commodities for which I/E is highest) and the Bottom 15 (i.e. those for which I/E is lowest). The results were as follows: TOP 15 1. Coffee 510.7 2. Sugar 319.3 3. Gem diamonds 70.36 4. Crude oil 69.35 5. Footwear 17.48 6. Pottery 16.6 7. Natural gas 16.32 8. Travel goods 11.61 9. Watches/clocks/parts 9.18 10. Jewelry 6.2 11. Clothing 5.7 12. Alcohol bev., distilled 4.54 13. Toys/games/sporting goods 4.54 14. Platinum 4.45 15. Liquefied propane/butane 3.9 BOTTOM 15 1. Soybeans 0.01 2. Cotton, raw, and linters 0.02 3. Corn 0.02 4. Wheat 0.08 5. Hides and skins 0.09 6. Animal feeds 0.14 7. Coal 0.18 8. Cigarettes 0.20 9. Rice 0.23 10. Spacecraft 0.23 11. Airplanes and airplane parts 0.25 12. Meat and preparations 0.39 13. Gold, nonmonetary 0.53 14. Mineral fuels 0.55 15. Scientific instruments 0.58

-- dhg (dhgold@pacbell.net), September 24, 1999.

Sorry, looks like the formating was fouled up in transmission. I'll try to resend the lists as they should have been:

TOP 15

1. Coffee 510.7 2. Sugar 319.3 3. Gem diamonds 70.36 4. Crude oil 69.35 5. Footwear 17.48 6. Pottery 16.6 7. Natural gas 16.32 8. Travel goods 11.61 9. Watches/clocks/parts 9.18 10. Jewelry 6.2 11. Clothing 5.7 12. Alcohol bev., distilled 4.54 13. Toys/games/sporting goods 4.54 14. Platinum 4.45 15. Liquefied propane/butane 3.9

BOTTOM 15

1. Soybeans 0.01 2. Cotton, raw, and linters 0.02 3. Corn 0.02 4. Wheat 0.08 5. Hides and skins 0.09 6. Animal feeds 0.14 7. Coal 0.18 8. Cigarettes 0.20 9. Rice 0.23 10. Spacecraft 0.23 11. Airplanes and airplane parts 0.25 12. Meat and preparations 0.39 13. Gold, nonmonetary 0.53 14. Mineral fuels 0.55 15. Scientific instruments 0.58

Well, the lists are nice and readable on _my_ screen now. Let's see if they survive the transmission.

-- dhg (dhgold@pacbell.net), September 24, 1999.

Oh, well, I give up.

-- dhg (dhgold@pacbell.net), September 24, 1999.