No Panic in Wall Street : LUSENET : TimeBomb 2000 (Y2000) : One Thread

This was posted today at the USAGOLD forum:

The Stranger (11/2/99; 13:42:33MDT - Msg ID:18193) Still No Panic in Sight The latest figures released from Vickers indicate that, despite y2k, there is still net equity buying among insiders in corporate America. This is telling us that those who are in a position to know consider y2k a non-event.

I know this won't persuade every last survivalist in the Forum, but maybe it will help somebody.


The "Stranger" is an ex Wall street banker who probably has no axe to grind, no special interest, no reason to deceive. And he has made similar statements before.

I read some of this stuff and I see some of the things that people are doing in the financial world, and I have to think that we are either the smartest people in the world, or the dumbest, with no place in between. And there is no way to test or prove reality.

Why are we so sure that there will be more than just a BITR as we move into and beyond the year 2000? How did we get so smart? What can we see that others can't or won't see?

I didn't mean to invite the pollies, but I can hear them coming.


-- dave (, November 02, 1999


Why should Wall Street be any more aware of Y2K dangers than anyone else? Nobody wants to believe the system may crash; everyone's incentive is to keep pushing stocks so as to keep the money wheels turning.

The only people who know the real dangers are a few people in the oil industry. This is where the first dominoes will start to fall.

-- cody (, November 02, 1999.

Time for some of those pre-1929 stock market crash quotes.

-- bardou (, November 02, 1999.

Believe it or not, sometimes the majority ARE just plain wrong. Denial is a very powerfull belief and it's power over large groups of people can often be seen only AFTER the fact. I personally witnessed an entire city of 50,000 people stay in denial for several months. In 1997 we had record snow falls and the FEDS were running TV ads telling people to buy flood insurance. But, nobody had ever seen a huge flood here (an unprecidented expierience) and I would be a rich man if I had a nickle for every person who said "If it floods my house the whole city will be under water".

Well, the spring arrived and it DID flood 90% of the city, resulting in the largest evacuation in the US since Atlanta was evacuated during the Civil War. WEEKS of no utilities for most people. And guess what now? Even with all that expierience with their denial (less than 1000 people had flood insurance) they are about to have the same thing happen with Y2K. Most people never learn.

-- Kevin Lemke (, November 02, 1999.

The unexpected swiftness of the stock market crash will shock America and the world. Various experts have been wrong, and many have scoffed at their erroneous predictions.

But myopic mocking will not save us from the coming collapse. Godly pastors have warned those who will hear that America will fall hard, never to rise again as a world power.

-- Randolph (, November 02, 1999.

My mother who has cancer, is treated each month with a very expensive drug for which she normally pays 2 grand out of pocket towards the costs, insurance picks up the rest.

About July, she began missing her monthly bill. It never arrived. It never has, neither has Aug, Sep, or Oct. That's about 8 grand from one patient at a retional medical center. They treat an awful lot of people. Wonder how their cash flow is?

Market is really asleep right now, frozen in stupidity in some cases and fear in others. Don't worry, they're definitely underestimating the problem in typical WS fashion.

Read today that LIFFE interest rate derivatives were down in notional value by 2 trillion pounds year on year from last October to 8.7 million. This is an indication of the comming liquidity crisis. Also read today that Ashanti's counterparty's forgave it's hedge book margin calls for three years! Have you ever heard of something so absurd and artificial.

Here's a trading company that gets a competitor over the barrel for millions, a mining company for God's sake, virtually allowing them to take the keys awaay from the owners and they walk away! You wait your whole life for an upside like that and these guys walked away. Trust me it wasn't their idea..

-- Gordon (, November 02, 1999.

Forgot a crucial part of my mom's story. When she called, like a good honest person would in July to ask about her late bill, the person in billing said, "we just got done installing our new Y2K system, it'll probably take a week or so to work out the kinks"


-- Gordon (, November 02, 1999.

In moments of doubt, I rereadInterntational Monitoring's report on Y2K and Herstatt Risk. It's like opening the door and feeling the blizzard just outside.

-- Roch Steinbach (, November 02, 1999.


Wish I could get insurance for Y2K, not that it would be any good. Every day is almost surreal for me. I feel like a robot, my y2k projects complete, now I am going back and reviewing all of the patches released for Y2k (many (ms) came out with updates after I installed them) most of my big it projects have been postponed until about Feb. 2000, know one I know in the 'real world' likes to even talk about Y2k. I read information everyday, from left right and center and although I am preparing to a certain extant, I feel like I'm riding an "E" ticket ride at Disney Land with regard to my Optimistic/Pessimistic views on Y2k. I still feel that most of the assurances that are being given are feeble and I never see hard core detailed evidence to support most of these claims, its just so weird knowing all that I know - and nobody else has a clue. Its so weird.

Always on the outside looking in...

Joe Jackson

-- MIS (, November 03, 1999.

The stock market is a question of risk versus reward. To invest in the early 90's with increasing earnings and lowering interest rates provided one of those close to can't lose conditions. Only early in the cycle you would have been a gambler to invest in stocks.

With earnings at still high by historic standards and rising interest rates, AND the unknown of y2k. What is the potential gain in the market as measured against the risks.

As many who lurk would say, if you invest in commodities (3-g's) gold, gas, grains you are a "gambler."

If you are bearish in wall street today you are unemployed. Money is made ahead of the herd not in it...

-- squid (, November 03, 1999.

Those ahead of the herd.


Worries of Year 2000 disruptions spark rash of corporate offerings

The Wall Street Journal

Monday, August 23, 1999

Richard J. Almeida, chairman and chief executive officer of Heller Financial, isn't sure if the markets will go haywire as Year 2000 approaches.

But he'd rather be safe than sorry.

So Mr. Almeida's company, a major lender to midsize and smaller companies, has raised $750 million over the past month, capping more than $3 billion raised so far this year, to square away its funding needs before any possible market turmoil related to Y2K.

``It was really anticipating the fact that there could be market disruptions in the fourth quarter,'' Mr. Almeida says. ``Our feeling is there would probably be a lot of adverse psychology, so we should try to anticipate our funding needs early.''

U.S. companies are scurrying to raise money, in part to sock away cash before any market disruptions caused by the Y2K computer bug. Or to be more precise, disruptions caused by fear of the Y2K bug.

Since May 1, $23.8 billion of initial public offerings have been completed, up from $14.7 billion in the same period last year, according to CommScan LLC, in part due to an impetus to go public ahead of potential Year 2000 market problems. Meanwhile, nearly $31 billion of investment-grade corporate bonds were sold last month, up from $17 billion in June and $11 billion in May, according to Credit Suisse First Boston. And $20 billion of bonds have already been sold this month.

Says Geoffrey Coley, co-head of global capital markets at Salomon Smith Barney: ``Y2K has been part of the calculus in virtually every decision by corporate issuers in the last three months.''

It's difficult to distinguish exactly how much of the rush is from Y2K-specific fears, of course. Also driving the capital-raising drive are fears of rising interest rates by the Federal Reserve, concern about a fourth quarter that has been difficult for bond investors for the past two years, and a desire to issue before summer vacation season peaks.

But executives say worries about Y2K troubles are playing a big part in the race to raise funding. Even companies with overflowing coffers are concerned: AT&T raised $3 billion in one-year securities last month, in part to ensure the company will have enough cash on hand at year end, according to people close to AT&T.

``My fear is we're ready for Y2K, but will there be redemptions from mutual funds hurting liquidity in the market?'' asks Thomas Capo, treasurer of DaimlerChrysler, which sold a massive $4.5 billion in bonds last week, the seventh-largest investment-grade bond deal ever. ``There's a huge question of how investors will behave near the end of the year, and as an issuer it's prudent to get the majority of the year's requirements done now.''

Ford Motor is itself ready for Year 2000. But the company was glad to get its record-breaking $8.6 billion bond deal done last month, rather than test the market later this year or early next year, after the start of 2000.

``You never know what will happen and it's not a bad idea to put some money away as a precaution,'' says Dave Cosper, Ford's executive director of corporate finance.

Corporate leaders are more prone to view Y2K as a mass mania fueled by consulting companies and the survivalist industry than as a fundamental threat to society. Few believe the financial system will stop functioning as computer clocks attempt to flip over to Jan. 1, 2000.

But many corporate chiefs and investment bankers fear that investors will shift away from riskier bonds, like corporate and junk bonds, later this year and stick to cash or safe Treasurys. This could handicap companies in need of financing, causing fallout in corporate boardrooms.

``If for some reason something goes wrong and a CEO turns around and says to a treasurer `Hey, where's my funding?' +the treasurert is likely out of a job,'' says Dominic Konstam, senior strategist at First Boston. ``There's little upside for these guys'' in waiting to raise financing later in the year.

Executives may be right in being nervous about the availability of financing ahead of 2000: 58 percent of investors surveyed recently by Merrill Lynch said they plan to build their cash on hand ahead of Y2K, and 29 percent said they plan to increase their holdings of Treasurys. And 87 percent of corporate-bond investors expect ``liquidity'' - or ease of trading without price disruptions - to fall moderately or seriously as Y2K approaches. Moderate or serious liquidity problems are expected by 53 percent of money-market investors.

The move to juggle funding has been notable in the market for commercial paper, the short-term securities sold by companies looking for short-term borrowing. Many corporations don't want to have commercial paper that expires, and needs to be refinanced, near year- end. So they have been replacing shorter-term instruments, which often must be refinanced every seven to 28 days, with securities maturing next year. The result: a surge in the supply of commercial paper, with spreads widening.

At a recent meeting of the Financial Executives Institute, members said ``they're all avoiding settlements from Dec. 30 to Jan 7,'' said Philip B. Livingston, president and chief executive officer of the Morristown, N.J., professional organization. ``They're trying to avoid any kinds of deal closings in that period. It's going to be a dead period in financial markets.''

Even if big money managers stay the course and computer systems stay afloat, individuals are a wild card. Frightened by the end-of-the- world hype that the banking system will collapse, people may decide to go out after Thanksgiving and pull an extra $1,000 in cash out of their money market funds.

-- (Aug@23.1999), November 03, 1999.


"its just so weird knowing all that I know - and nobody else has a clue" pretty much sums it up. I think most of us who are not a super Polly or a super Doomer feel the same way. I have been in computers as a programmer of mainframe systems and now micros on the Internet since 1971. I KNOW what it takes to make these things work (sounds like you do too) and the "average" man on the street hasn't a clue.

So is it the end of the world? Probably not, but only probably. I'm beginning to see enough in the news to see the likely outcome for most will be the "Hersheys" scenario. Their inability to run their business efficiently since putting in SAP in July is a typical Y2K outcome in my opinion. They are shaking down the bugs for 6 to 12 months, some of it over the millenium rollover. Unfortunately many, many more will be slamming the "remediated" or replacement systems into place over the next few months with almost no time to shake it down prior to the rollover. We ARE ALL in for that Disneyland ride in the next year. So will it be "Dumbo" where only the kiddies get scared or "Space Mountain" where even a few adults leave their lunch behind? That we cannot know until we are already on the ride.

-- Kevin Lemke (, November 03, 1999.

This post raises a good question, and here's my answer. All of us have seen how most people seem to adopt the Y2K dichotomy where, either everything falls apart or nothing much goes wrong. Most people seem uncomfortable thinking in terms of probabilities; e.g., I won't wear my seat belt, since I'm almost certainly not going to have an accident this trip.

For every enterprise, there is a chance nothing bad will go wrong with Y2K. Many people sum this up to mean nothing much will go wrong anywhere that could affect them. That's why they didn't pay attention last spring when the Senate Special Committee on Y2K said the problem could have profound effects, and that BITR people are "simply misinformed." Just because Wall Street chooses to ignore that statement doesn't mean we all have to.

-- Bill Byars (, November 03, 1999.

Human nature is the answer to your question. When a person is engaged in a GOOD thing, what ever that may be, they want to get the MOST out of it, they can. They always stay engaged until the last minute, which turns out to be a minute to long. I've done it, and so have all of you. Think about it.

-- FLAME AWAY (, November 03, 1999.

From Aug. 23's Wall Street Journal post, above:

"U.S. companies are scurrying to raise money, in part to sock away cash before any market disruptions caused by the Y2K computer bug. Or to be more precise, disruptions caused by fear of the Y2K bug."

Since when is "fear of the Y2K bug" a more precise phrasing of "market disruptions caused by the Y2K computer bug"? THESE ARE NOT THE SAME CONCEPTS, and the Journal doesn't get it. Or maybe it does, and is obfuscating. Which is scarier? Stupidity or duplicity? Your choice.

-- silver ion (, November 03, 1999.

Two possible scenarios:

1. Y2K surprises Wall street by being a big or biggish deal. The market opens 1000 points south on the first trading day of 2000 and continues down.

2. Y2K is a non-event. The market takes off with the good news, headed for 20000, and then re-runs 1929 or 1987 for no reason other than that it's a bubble now and will still be a bubble in 2000!

I won't answer to polly or doomer, but I'm definitely a bear.

-- Nigel Arnot (, November 03, 1999.

Human nature is the answer to your question. When a person is engaged in a GOOD thing, what ever that may be, they want to get the MOST out of it, they can. They always stay engaged until the last minute, which turns out to be a minute to long. I've done it, and so have all of you. Think about it.

That's why it's important to use birth control!

-- (hee@hee.hee), November 03, 1999.

The stock market is a careful balance of greed and fear - neither wrong but the extremes of emotions. People bid up stocks out of greed until fear causes them to sell. There is another old saying that hasn't been repeated for several years and it goes somewhat like this "the market will do what ever it takes to fool the majority of people."

-- Garyh (, November 03, 1999.

Since I've already gotten out, it's tough to watch the Nasdaq busting to new highs. But my strategy has been this: better safe than sorry and, "safe" before everyone else. Since everyone appears to be asleep and in denial at this stage, and probably will continue through the end of the year, I agree with the gentleman who put forth 2 scenarios: 1)Stuff happens come Jan. 1, everyone panics, and the market drops 1000+ points. I'm prepared and await the next opportunity. 2) Nothing of consequence happens come Jan.1 and the market continues on to new highs until the next bubble busting. I miss out on a bit of profit and get back to playing the market at hand.

The scenario of significant drops in Nov.-Dec. seems at this point to be unlikely. I'm surprised and have an eery feeling about it. What can one do but prepare for the worst and hope for the best?

-- Jim Muneno (, November 03, 1999.

This situation feels like those old Warner Brothers cartoons. You know, how Wile. E. Coyote is chasing Roadrunner, runs off a cliff, and keeps running for a few seconds before he realises that he's no longer on solid ground.

I think we're like that. The market left solid ground a while ago, but is still running uphill. Occasionally someone looks down and there's a scare, but the market subconsciously KNOWS that the loss of confidence will mean a fall. Besides, nobody else's selling, so why should I? So they look down, but their brain produces the image that they want to see -solid ground, justified in any way possible. People believe what they want to believe.

And so, impelled by itself, the market keeps on going up.. and up.. as more people join in, and the hype increases.

Two quotes, or at least paraphrases. The first is someone, possibly Heinlein or maybe Asimov, talking about "A society at its peak is always on the eve of collapse." The quote says something along the lines of, "The ruling elites of the society are subconsciously or consciously aware of this; they realise that they can no longer take their eliteness or their superiority for granted, so they do things to reaffirm it, to display it."

The second is from someone back in 1929, I think. "When bellboys and streetcar drivers start getting into the market, you know that it's time to get out."


-- Leo (, November 03, 1999.

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