(AP) Figures and excerpts from latest gov. reportgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Figures and excerpts from government's latest Y2K report Information from the latest report from the Commerce Department on the effects of the Year 2000 technology problem on the nation's economy.
Spending on the Year 2000 technology problem:
-Total U.S. repair bill: $100 billion
-Fortune 500 companies repair bill: $50 billion
-U.S. banks repair bill: $9 billion
-Federal government repair bill: $8.4 billion
-State and local governments repair bill: $5 billion
-White House Y2K crisis center price tag: $50 million
Excerpts from the report:
-''It is our best judgment that Y2K problems will not be of sufficient size or scope to have more than a transient effect on U.S. economic growth.''
-''The major U.S. trading partners of Canada, Mexico, Europe, and Japan, where information technology plays a large role in the economy, report a strong degree of preparation and Y2K readiness.''
-''A sudden rise in risk aversion associated with Y2K concerns translated into unusual demand for cash or household goodscould prove disruptive to finance and commerce even with advance preparation. Current polls, however, suggest that the public is becoming less worried about Y2K as the date approaches.''
Lots 'o moolah. My most humble apologies if this is a repeat,I did search...anyhoo, here's the link:
-- Deborah (email@example.com), November 18, 1999
Huh? Me no comprendo... that adds up to $124 billion.
These figures are all grossly distorted to make it appear that the effect on the economy will be minimal.
We know that Citicorp spent near $1 billion, so they are saying that ALL of the other banks combined only spent $8 billion? B.S. detector now going off ... wooooo, wooooo, wooooo!!
-- Hawk (firstname.lastname@example.org), November 18, 1999.
Just a guess, but I think they calculate these economic impacts simply by looking at percent changes in gross productivity figures. So you take your estimate of costs, multiply by some guess to get impact, subtract that from expected output, and get a minimal impact. Same thing when considering non-U.S. failures. Since our trade with country X is only a few percent of GDP, then even a huge drop in output in country X cannot affect the U.S. economy much.
And they are reassured that this model is adequate by last years economic mess in Asia. Countries there went into a tailspin and hardly affected the U.S. Similarly with Japenese recession/depression. So their common sense is also telling them that Y2K can't be that bad.
The problem is they are ignoring system effects and interdependencies. It's not just a matter of dollars. If a key import (like, say, oil) is reduced, many domestic companies will be affected out of proportion to the dollar cost. Same thing with items like rail, shipping, etc. A small problem (in dollars) with a huge impact.
And of course, they are assuming that government systems at all levels in most countries will be intact. Whereas the reality is probably that many tax/benefit/regulatory systems will be severely impacted next year. If a customs agency can't process imports and exports, will the country be sensible and just let everything through, or will it stop it all, creating huge bottlenecks? And of course, if tax systems are inoperative, many business can be affected, out of all proportion to the dollar "productivity" or cost of those parts of the economy.
The basic problem is lack of precedent. Other than the 70's oil shortages, there's really nothing for policymakers and economists to compare this to.
-- You Know... (email@example.com), November 18, 1999.
The money spent on Y2K is a tiny fraction of GDP, and (important point) it's money being SPENT. It's moving through the economy, going into people's pockets and being recycled back into the economy again.
The danger is that there will be a FAILURE TO PRODUCE OR SPEND. That is, goods not being built or shipped, factories standing idle, or (shock!) consultants and programmers with nothing to do. Even taking drastic remedial action will keep that wealth moving around in the short term. The danger is with people (like me) sitting on what they have and waiting for everyone else to "get things moving"
Of course, we could always counter that by giving all of our money to lawyers. ;)
-- Colin MacDonald (firstname.lastname@example.org), November 18, 1999.