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An NHNE Y2K Special Report

The Millennium Time Bomb: Part One
Thursday, July 2, 1998

 

"News,
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& Consumer Protection
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NHNE Special Report:
The Millennium Time Bomb
Thursday, July 2, 1998

This is a long report, but very important to read. It could help you make informed decisions concerning what could be one of the most dramatic events of our century.

PART ONE OF TWO

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Our work is made possible
by the kind and generous support
of people everywhere
who want to solve the fundamental mysteries of life
and help give birth
to a new, more spirit-filled and loving, world.

See the end of this report for more information.

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Last Mailing: 1084
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LIFE IS NOT RANDOM OR CHAOTIC

"Life is not random or chaotic. There is a directionality, a thrust to life. There is a movement throughout history toward perfection and unity, toward the fullest expression of the intelligence behind all creation -- what the Declaration of Independence calls Nature's God. Life emerges in the simplest form and evolves through evermore complex, evermore conscious forms which are evermore godlike in their capabilities and knowledge. In short, there is a divine intelligence behind evolution and the drive in all life is toward God- realization. That's the big picture of all history -- not just human history, but also of cosmic history."

---From "The Perennial Philosophy and the Future of America", by John White

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CONTENTS:

PART ONE:

INTRODUCTION:
A Crisis of Epic Proportions

QUOTES, SPEECHES, INTERVIEWS & ARTICLES:
The Millennial Sun
The Y2K Crisis: A Global Ticking Time Bomb?
The Y2K Problem: Hype or Reality?

 

PART TWO:

MORE QUOTES, SPEECHES, INTERVIEWS & ARTICLES:
Military on Year 2000 Alert
An IRS Update
Why The Government's Machines Won't Make It
Apocalyptic Messengers & Messages
The Mob Takes Byte Out of Business
Misc. Facts & Figures
The Y2K Weatherman Report

IMPORTANT Y2K LINKS
CREDITS & GENERAL INFORMATION

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SPECIAL THANKS TO:

Robert Sniadach, Sherri Anderson, Einiyah ben-Elyon, Debra Hegerle, Charles Reuben, Allen Watson, Bruce Fraser, Michael Sohaski, and Kevin Seeds for help gathering the information contained in this report.

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"The Y2K problem is now a well-known bug -- the one demon in the bag of popular millennial nightmares that is based not on Nostradamus or other mythic Apocrypha, but on hard science."

---THE BOSTON GLOBE, 6/21/98

 

INTRODUCTION:

A CRISIS OF EPIC PROPORTIONS
By David Sunfellow

All of you know that we have been researching the Y2K (Y=year 2=two K=thousand) situation for several months now. My first impression was that it was another overly-hyped event that was being exaggerated by apocalyptic-minded soothsayers. Our world, according to them, wouldn't be destroyed by dramatic pole shifts, massive earthquakes, volcanic eruptions, or collisions with marauding comets. Instead, it would be brought down by a glitch in the way many of the world's computer systems track time. Simply put, computer systems all over the world would fail, catastrophically in some cases, because they hadn't been programmed to switch from one century to the next.

And it would all happen exactly 547 days from now, when December 31, 1999 couldn't make the leap to January 1, 2000.

Was it possible that a simple programming oversight could cause such far-reaching consequences -- and catch modern civilization so completely unprepared? Not likely, I thought. And then I started hearing about urgent government meetings and reading reports from a growing list of government, corporate, military, economic and computer experts. And while very few of these people were publicly claiming that the world as we know it was going to end, their warnings were almost as alarming as their doomsday brethren.

Just how serious is the Y2K situation? While no one knows for sure what is going to happen when the clock strikes midnight on December 31, 1999, we are apparently looking at a major worldwide crisis. If things go well -- if millions, no BILLIONS, of computer systems are upgraded and repaired before the new millennium arrives, vast portions of the world that rely on computers will experience isolated power outages, computer crashes, transportation problems, communication blackouts, billing and paycheck errors, and similar disturbances. If things go badly, well, we'll be looking at a new way of life on our planet that will be ushered in by the devastating collapse of the computer-based infrastructure that supports our present world.

As I have become increasingly familiar with the seriousness of the Y2K crisis, I have found myself wondering what forces are at work in the human psyche that caused programmers to build computers that couldn't track time beyond the turn of the century? Were the programmers all Christians who expected Christ to return and wrap things up around the turn of the century? Has humanity invested too much of itself and its future in technology? Did some part of our collective unconscious decide to program the old system to self destruct so a new one would be forced to emerge?

I also wondered if the cycles of change that William Strauss and Neil Howe describe in their thought-provoking book, "The Fourth Turning" (http://www.fourthturning.com/), were about to express themselves again. As reported in News Brief 45 (http://www.nhne.com/nhnenb45.html), Strauss and Howe predicted that a major crisis would be unleashing itself on the United States sometime around 2005. Although Strauss and Howe weren't sure what would trigger "the millennium crisis," they predicted it would match the trauma and intensity of the American Revolution, the American Civil War, and the Great Depression & World War II, which were "The Fourth Turnings" of previous eras.

According to Strauss and Howe, ever since the Renaissance, history has beat to a rhythm of four turnings, in a cycle of 80 to 100 years. The First Turning is an upbeat era of strengthening institutions and weakening individualism as a new civil order is established. The Second Turning is a passionate era of spiritual upheaval when civic order comes under attack from new values. The Third Turning is a downcast era of strengthening individualism and weakening institutions when civic order decays and new values implant. The Fourth Turning is an era of crisis in which the old civic order is replaced with a new one.

Here are the rhythms they see in U.S. history:

CYCLE ONE:

The High: 1704 - 1727, the Age of Empire
The Awakening: 1727 - 1746, the Great Awakening
The Unraveling: 1746 - 1773, the French & Indian Wars
The Crisis: 1773 - 1794, the American Revolution

CYCLE TWO:

The High: 1794 - 1822, the Era of Good Feelings
The Awakening: 1822 - 1844, the Transcendental Awakening
The Unraveling: 1844 - 1860, Sectionalism
The Crisis: 1860 - 1865, the American Civil War

CYCLE THREE:

The High: 1865 - 1886, Reconstruction & the Gilded Age
The Awakening: 1886 - 1908, the Third Great Awakening
The Unraveling: 1908 - 1929, World War I & Prohibition
The Crisis: 1929 - 1946, the Great Depression & World War II

CYCLE FOUR:

The High: 1946 - 1964, the post-war high
The Awakening: 1964 - 1984, the Consciousness Revolution
The Unraveling: 1984 - 2005?, Culture Wars
The Crisis: 2005? - 2025?, the Millennium Crisis

Have Strauss and Howe accurately identified a cyclical pattern in human history? And if so, is the Y2K crisis the trigger mechanism for The Fourth Turning of our era?

Maybe and maybe not. But whatever forces are at work in the Y2K crisis, things don't look good. Something very big and very ominous is approaching our collective (and personal) doorstep very fast.

Among other things, I have taken note of the following facts: 1. Our current computer systems, like most of today's institutions, are chillingly co-dependent (many of them are designed so that one faulty area can bring a whole network down); 2. The oldest, most archaic systems in the network, which often sustain the most critical parts of the infrastructure, are the ones most likely to crash; 3. Apocalyptic-minded groups are focusing on the Y2K situation as their chance to topple the dominant culture, while criminal elements are looking for ways to take advantage of it; 4. New worldviews and cultures are sometimes given a "jump start" by unexpected events that reduce old worldviews and cultures to rubble (ecological disasters, plagues, military confrontations, inventions, even ideas have sometimes profoundly upset and reshaped the course of human history in a very short time).

What can be done?

If we intend to be minimally affected by the Y2K crisis, we must begin to take it seriously now, today.

To be sure our network can effectively deal with whatever challenges/changes the Y2K situation has in store for us, we are organizing a special NHNE Y2K team to aggressively track this situation. Along with producing regular reports that highlight the most important aspects of this developing situation (including practical suggestions about how to cope with it), we will also be creating a special Y2K section in the NHNE website to database all the information our Y2K team gathers.

In addition, we are planning to organize an urgent NHNE Y2K gathering this fall in Sedona and are kicking our fund-raising efforts into overdrive. Acquiring and investing money now, before the clock strikes 2000 and potentially cripples or paralyzes our personal and collective resources, is critical. Acting now will also allow us to comfort, stabilize and calm others who may not have had the foresight or advance warning we now enjoy.

So those are some of my thoughts and our plans concerning the Y2K crisis.

Unlike many of the dire predictions we have investigated in the past, this one is for real. And if the Y2K crisis is as serious as it appears to be, and if part of its purpose is to help usher in the next phase in human development, then you and I should be some of the first people to recognize it for what it is -- and respond accordingly. It is my sincere hope that this report gets your attention and that we all begin to work together to prepare ourselves for whatever lies ahead. As the saying goes, "an ounce of prevention is worth a pound of cure." If nothing much comes of the Y2K situation, working together will have shaped us into a stronger network. And if, on the other hand, challenging times do come our way, we'll be ready for them...

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THE MILLENNIAL SUN
(Source: "The Year 2000: Social Chaos or Social Transformation?", by John L. Petersen, Margaret Wheatley, Myron Kellner-Rogers. Thanks to Robert Sniadach for this quote, which introduces a "draft article" on the Y2K situation that is scheduled for publication in the October 1998 issue of THE FUTURIST.)

The Millennial sun will first rise over human civilization in the independent republic of Kiribati, a group of some thirty low-lying coral islands in the Pacific Ocean that straddle the equator and the International Date Line, halfway between Hawaii and Australia. This long-awaited sunrise marks the dawn of the year 2000, and quite possibly, the onset of unheralded disruptions in life as we know it in many parts of the globe. Kiribati's 81,000 Micronesians may observe nothing different about this dawn; they only received TV in 1989. However, for those who live in a world that relies on satellites, air, rail and ground transportation, manufacturing plants, electricity, heat, telephones, or TV, when the calendar clicks from '99 to '00, we will experience a true millennial shift. As the sun moves westward on January 1, 2000, as the date shifts silently within millions of computerized systems, we will begin to experience our computer-dependent world in an entirely new way. We will finally see the extent of the networked and interdependent processes we have created. At the stroke of midnight, the new millennium heralds the greatest challenge to modern society we have yet to face as a planetary community. Whether we experience this as chaos or social transformation will be influenced by what we do immediately.

http://www.wfs.org/wfs/year2k.htm

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THE Y2K CRISIS: A GLOBAL TICKING TIME BOMB?
(Thanks to SwiftWing Researcher, Sherri Anderson, and Robert Sniadach for alerting us to the following information.)

[On June 2, 1998, THE CENTER FOR STRATEGIC & INTERNATIONAL STUDIES (CSIS) hosted a conference on the Y2K situation. Held in Washington D.C., the conference was attended by some of the world's leading Y2K experts from both the government and private sector. The following comments are from speeches that were presented by Bradley Belt, Vice President of International Finance and Economic Policy, CSIS, who gave the opening address, and Senator Robert Bennett, Chairman, Senate Special Committee on Year 2000 Technology Problem, who was the keynote speaker.]

MR. BELT:

They say that ignorance is bliss, and much of the world at this moment must be blissfully ignorant about what we are discussing today. It is, in fact, remarkable how unaware the general public is about the Y2K problem.

Indeed, most of the world is looking forward to the countdown to January 1, 2000, with great anticipation. Extraordinary millennium parties in exotic locales around the world -- the Great Pyramids of Egypt, Bora Bora near the International Date Line, and, of course, Times Square, New York City -- have been planned and booked at very high cost for a decade.

A small minority of people, however, those less blissfully ignorant, many of whom are here today, will watch the countdown with great trepidation. They view the event as a cause for great concern rather than joyous celebration. They will be thinking not of fireworks booming and champagne corks popping, but rather computer systems crashing, manufacturing plants grinding to a halt, air traffic control systems and public utilities failing.

Although the cognoscenti have long been aware of the looming Y2K problem, policymakers have only belatedly recognized the enormous challenges facing us. And the general public at best is only dimly aware of a problem on the horizon.

Some have suggested that the problems are overstated, that the alarmists are simply Chicken Littles. Clearly, there is a certain amount of speculation about Y2K issues. There is really no way to know exactly what will happen just 577 days from now. But there is much that we do know.

Y2K affects everyone at the same time and is global in scope. It's not just a business problem but affects governments and individuals; indeed, has the potential to touch upon almost every aspect of our daily lives. Billions of lines of computer code need to be scrubbed, and millions of products with embedded microprocessors tested. Individual companies are spending millions of dollars on remediation and testing, and governments are spending billions of dollars.

There is a worldwide shortage of capable software engineers. The bottomline is that many mission critical systems in the public and private sectors inevitably will not be year 2000 compliant. And in all likelihood, a litigation frenzy will ensue. The trial bar is already salivating at this one. They look at this as bigger than asbestos and as bigger than tobacco.

There certainly is a credible threat to international financial stability in the global economy that needs to be taken very seriously. We need to get a firm handle not only on the scope and magnitude of the threat, but also think creatively and constructively about allocating scarce resources to the most vulnerable sectors, developing contingency plans for responding to both foreseeable and unforeseeable problems, and enacting legislative and regulatory measures to address liability issues. And ultimately, providing better information to the public about these issues.

To address these matters, we are particularly fortunate to have assembled a group of individuals who bring an extraordinary wealth of knowledge and expertise about Y2K issues to the table. And to kick off our program, we are particularly delighted to have with us Senator Robert Bennett from Utah.

I first got to know Senator Bennett when he joined the Senate in 1992. In fact, when he was still Senator-Elect, I was working at that time on the Senate Banking Committee for his predecessor, Jake Garn. He has been a remarkable addition to the United States Senate. He brings a very refreshing perspective to the table. He's actually a businessman, an extraordinarily successful one at that.

In 1994, he became Chief Executive Officer of FRANKLIN INTERNATIONAL INSTITUTE, which at that time had only four full-time employees. When he left the corporation just six years later, it was listed on the NEW YORK STOCK EXCHANGE. It became known as FRANKLIN QUEST and employs nearly 1,000 people and has annual sales of over $90 million. Certainly, he brings a perspective to bear that's much needed in the Senate's deliberation.

He has an important role on the Senate Banking Committee. He chairs the Subcommittee on Financial Services and Technology. And particularly relevant to this discussion this morning, he has been, as my colleague Arnaud de Borchgrave would characterize it, the Paul Revere on this issue -- the lonely voice in the wilderness in the United States Congress about the challenges presented by Y2K.

For that reason, he was appointed by the leadership to chair a Senate special committee on the Y2K problem. It's my distinct pleasure to invite Senator Bennett to give our keynote address.

(Applause)

SENATOR BENNETT:

As indicated, my first real exposure to the Y2K challenge came as a result of my chairmanship of the Banking Subcommittee on Technology and Financial Services. We held a hearing focusing on what impact Y2K would have on the banking system.

When the hearing was over, the only Democrat who could stay in the room through the entire time, Chris Dodd of Connecticut, turned to me and said, "Mr. Chairman, we need another hearing. This is scary stuff." And we subsequently held six additional hearings.

Senator Dodd and I, sufficiently challenged and excited by the scary stuff, went to the leadership and now have a committee that goes beyond just the jurisdiction of the financial system. Senator Dodd is the Vice Chairman of the Special Committee for the Senate as a whole on Y2K problems.

As I approached the challenge of what contribution we could make in the Senate to deal with these problems, it occurred to me that the predominant approach to this has been very focused on the part of the people who are aware of it. That is, the IT (Information Technology) people at -- pick an organization -- say, GENERAL MOTORS are focusing on trying to get GENERAL MOTORS in shape so that it can produce cars after the first of January 2000.

For those of you who might think that this is a little overblown for us to talk about the crisis, I would refer you to the FORTUNE MAGAZINE article that makes it clear that if Y2K were to hit this coming weekend, GENERAL MOTORS could not produce a single car in any one of their 157 manufacturing plants. That's a fairly serious challenge of things to be fixed in the next 18 months -- if a corporation of that size would shut down completely, if they don't do the remediation that's necessary in the remaining time.

But as I say, I realize the IT person at GENERAL MOTORS is focusing on GENERAL MOTORS. When I talked with John Koskinen, the man appointed by President Clinton to be the czar of the executive branch, he very appropriately was focusing on getting the various agencies of the executive branch Y2K compliant. And, I think wisely, he is going around to the various cabinet officers making it clear to each one of them that the responsibility of fixing their departments is theirs, not his.

That's the first understanding that people need to come to in this area. This is a management problem every bit as much as it's a technology problem. And the biggest mistake you can make if you are a CEO or a responsible manager is to say, "My IT guy will fix this."

Indeed, I get a little concerned when senators walk by and say, "We have a Y2K problem, and, Bob, you're going to fix it."

(Laughter)

It's a management problem because it goes beyond the narrow confines of your organization and its challenges. Let me give you an example that demonstrates this. I made a phone call to an organization that I have a very strong interest in to see if it was going to be Y2K compliant. I called somebody in the management structure. His answer was, "Gee, I don't know. I haven't given it any thought. I'll have somebody call you."

And shortly after that I got a phone call from the head IT person in the organization. Now, he was very respectful. He wasn't patronizing at all, but he was also very confident that his organization had this under control. And he went down the list of things they had done.

He gave me the right answer as to how you deal with the Y2K problem. You deal with the Y2K problem by starting in 1996, and his organization had done that. And I listened to his litany of action and was appropriately impressed. And then I said to him, "That's very, very impressive. I am delighted to know that you are in such good shape. Let me ask you a few questions."

And he was ready. He had all of the specifics with respect to his organization. I said, "What's going to happen when, after January 1, 2000, you cannot get a dial tone on telephones to any of your branch offices in Asia, portions of Eastern Europe, or South America?" There was a long pause.

I said, "What's going to happen in your organization when you cannot transfer money into any of those branch offices or get any money out of any of the operations that are going on there because the banking systems in those countries will not be working?" And I said, "What's going to happen in your internal organization when many of your customers suddenly lose their jobs or lose their income because their organizations are not Y2K compliant, and they're facing serious layoffs?"

He said, "Senator, I've never thought about that. You need to have a conversation with our top management, because my responsibility has been to fix our computers. I have never thought about the implications of what will happen to this organization by virtue of the fact that other people may not be Y2K compliant." And I have an appointment to meet with the top management of that organization.

I will not be available to meet with the top management of all of your organizations. I hasten to say that this is one of the biggest constituents I have in the State of Utah, and I have a parochial interest in seeing that they think well of me, particularly with November coming up.

But this illustrates what I consider now to be the biggest challenge with respect to Y2K and our responsibility in the Senate Special Committee. And that is to get people thinking beyond the narrow lines of their own organizations because it is entirely possible that every organization in America could get its own computers fixed, its own embedded chips discovered and replaced, and still have major problems. And the world as a whole is almost doomed to have major problems because other countries are way behind us -- however badly prepared we are -- in their thinking and planning for Y2K.

So on the Special Committee, I told fellow committee members, "I've identified seven areas that are not neatly divided into the Commerce Department, the Transportation Department, or the Defense Department. They are across organizational lines. They are generic in their scope."

And I have prioritized them, and we are going to go after these seven areas in the following order to see if we can perform two services. Number 1, simply the awareness service -- to get people in each of these areas talking to each other and thinking about the systemic problem that they face, even if their own organization is okay, and create a place of accurate assessment so that people can come to our committee and say, "Where are we with respect to areas 1 or 4, or whatever?" and have us give honest answers.

If we can perform that function -- awareness, assessment, and dissemination of information across individual borders -- we will have more than justified our existence as a congressional committee.

The second function comes out of the first. As we go through that process of trying to get a handle on what can happen in each area, we can and should, indeed must, recommend legislative fixes, where they are appropriate, and I can report to you that our committee has already weighed in on two issues and so far been successful on both.

The first one had to do with the limit that exists in immigration law with respect to high tech immigrants allowed into this country. Senator Abraham had a bill that would raise that limit because we reached it for the first time in our history and are keeping out high tech immigrants in the name of trying to protect American jobs.

We weighed in on this one on the Senate floor and said, "It is absolutely essential for this country to get as many of these people in the country as we possibly can." And we stood off assaults by Senator Kennedy and others who were taking the traditional union position that we must protect American jobs and said, "If we get this expertise into this country, that's the best thing we can do to protect American jobs." And the Abraham bill passed.

Second, in the feeding frenzy to gang up on the IRS that possessed all politicians once we saw we had a good issue -- 97 to nothing. That's a pretty good indication.

(Laughter)

We went to the Finance Committee and said, "Important as these IRS reforms are, you must postpone the effective date of these reforms until after January of 2000, because you cannot simultaneously try to reprogram the computers at the IRS to take care of these different approaches this bill mandates, and reprogram the computers to solve Y2K. You've got to see to it that the Y2K problem is solved first before you address all of these others."

Now, there were those who said to me, "Shutting down the IRS is not a bad idea." And I said, "Well, you may think of that when you're filing your return. But when you're waiting for your refund, you're going to want the computers to come back up."

So we prevailed there as well, and the bill that finally passed did have a delay of effective date in it. So that's an illustration of the function of this new Senate committee.

All right. Now, these are the seven areas, in priority level, that I think must be addressed with respect to Y2K.

Number 1, utilities. And this means the power grid. Power must be available, even if every one of your computers is Y2K compliant. If you don't have any power to turn them on, it won't do you any good. And water -- every water purification plant in this country is run by a computerized system. And if it shuts down, you can imagine the social consequences that will occur in our major cities.

So the number one priority is to see to it that all of the utilities work, with power and water being available.

Number 2, telecommunications. It's practically a utility. If the phones don't give you a dial tone, if there's no way to communicate information, the nation also will shut down. Not quite as vital as power and water, but pretty close.

Number 3, transportation. Immediately people think of the FAA, and, of course, that is an agency that's in terrible Y2K trouble. But realize that all railroad traffic is computer controlled, and all of the raw materials that you need for manufacturing in this country goes by -- the heavy material -- all goes by rail, as does the coal that fires the power plants that takes us back up to the power grid, and you now see how connected all of this is. The super tankers that come from the Far East that bring us the oil that we need are also subject to Y2K embedded chip and programming problems. So transportation as a whole is a vast area that we have to talk about and talk about how it cuts across organizational lines.

Fourth is the financial system. I've done most of the work on that one through the Banking Committee because we have jurisdiction there. But if you have a system where checks won't clear, or electronic transfers of money won't happen, you have, obviously, a major, major social problem.

Fifth, general government services. On this, we would include probably health care because 40 percent of the health care dollar in the United States comes from HCFA, a government agency, the HEALTH CARE FINANCING ADMINISTRATION. And HCFA's computers are at this point, according to the GENERAL ACCOUNTING OFFICE, in terrible shape. But you can add any other governmental service you might want, all the way down to the county level. What is going to happen to the social fabric in this country if the county officials in Los Angeles or Manhattan or Queens, or any of the other counties or burroughs, cannot deliver welfare checks after the 1st of January of 2000? Police and fire protection, the DEFENSE DEPARTMENT -- I lump all of these together in general government services.

Number 6, general business activity. I've already told you the challenge that GENERAL MOTORS faces. Multiply that by every manufacturer and every business across the country, and you see the difficulty that we will be in if that doesn't work.

And then, number 7, and I place it last only because it is last in terms of time pressure. But by the time this whole thing is finished, it will probably be first in terms of dollar costs, and that is litigation.

The first lawsuits under Y2K have already been filed. You can guess which law firm filed them -- the king of the class action lawsuits, Bill Lerach of Milberg, Weiss, and Lerach, whom we thought we put out of business with security reform in the United States Senate, is back. And Y2K is the horse he will ride.

And I remind you of what he said, which we quoted on the floor of the Senate during the securities reform discussion, he said, "I have the perfect law practice. I have no clients." When you stop and think about the power of a class action lawsuit, with that attitude, connect it to a Y2K problem, you can imagine how much money this thing will eventually end up costing.

Is this inevitable? Sure. It's inevitable. Is the shape of it, the size of it, the cost of it inevitable? No. We do, indeed, still have 18 months. Yes, the best way to solve it is to start in 1996. But if you haven't done that, you can at least chip away. And if you are part way through it, as I'm discovering most people are -- they didn't start in '96. They started in '97. If they didn't start it in '97, they started it in early '98.

If you're part way through it, you can make your own priority choices and say, "This is what we have to do." Or you can discover that you cannot get it fixed in the next 18 months, and so you can begin to spend 18 months developing contingency plans that will see to it that you will at least not shutdown. So the size of it is still very much in question. The inevitability of it is not.

And when people say to me, "Is the world going to come to an end?" I say, "I don't know." I don't know whether this will be a bump in the road -- that's the most optimistic assessment of what we've got, a fairly serious bump in the road -- or whether this will, in fact, trigger a major worldwide recession with absolutely devastating economic consequences in some parts of the world.

So I summarize the assignment that I have as Chairman of the Senate Committee this way. Telling my colleagues, "We must be Paul Revere. We must tell everyone that the British indeed are coming." Or, in this case, Y2K is coming. But we must not be Chicken Little and tell them that the sky is falling, and, therefore, they need do nothing but plow up their backyard to put in a propane tank, a bomb shelter, and a large supply of dried food that they will live in until the world finally comes back in three or four years.

Because that kind of attitude in the next 18 months will, indeed, turn into a self-fulfilling prophecy that will produce the disaster that we want to do whatever we can to try to avoid.

That is my view now of the way things stand. We must start thinking across the individual lines of our own organization, indeed across the individual lines of our own country's borders, think in these macro terms of these whole systems that must be preserved.

We must get the attention of top management and recognize that this is not an IT problem that will be solved by the propeller heads and the computer geeks. This is a management challenge that must be addressed by the highest CEO immediately, and that we must coldly, calculatingly divide up the next 18 months to determine what we can do, what we can't do, do what we can, and then provide for contingency plans for that which we cannot, and recognize that this problem is coming, must be dealt with coldly, intelligently, and efficiently. Don't panic, but don't spend a lot of time sleeping either.

Thank you very much.

http://www.csis.org/html/y2ktran.html

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QUOTES FROM OTHER SPEAKERS
AT THE CSIS CONFERENCE:

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"If today were December 31, 1999, and our systems were in the current state they are in today, tomorrow our economy worldwide would stop. It wouldn't grind to a halt. It would snap to a halt. You would not have dial tone tomorrow if tomorrow were January 1st, year 2000. You would not have air travel. You would not have Federal Express. You would not have the Postal Service. You would not have water. You would not have power. Because the systems are broken."

A View From Gound Zero
By Peter de Jager, author,
"Managing 00: Surviving the Year 2000 Computing Crisis"

http://www.csis.org/html/y2ktran.html#dejager

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"I'm not a doomsdayer, and I'm not talking about the end of life on the planet Earth. But I agree with what has been said so far. If we continue to pretend there isn't a problem coming, doomsday scenarios are conceivable, and we have to stop that. We have to make sure there isn't panic. We have to tell the public, you know, some things you depend on may simply not work.

"There are no contingency plans, by the way, for IT failure. You can't go back and do things manually or by paper... So the contingency plan is to prepare people for the fact that certain products, services and information that they really need aren't going to be available. You're going to have to conduct your business, your life, without some things for a while.

"And what we have to do is we have to do two things. We have to operate on two levels. One is we have to make it the number one priority, stop everything else, and fix the problem. And, two, we have to prepare for the fact that we're not going to completely fix it. There are going to be failures, and we have to be able to reconstruct as quickly as possible. We have to minimize the panic because the panic will make the crisis much worse than otherwise it needs to be."

The Global Economic Consequences of Y2K
Dr. Edward Yardeni, Chief Economist,
DEUTSCHE MORGAN GRENFELL

http://www.csis.org/html/y2ktran.html#yardeni

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"The year 2000 problem is a global problem. One of the things we've heard said here today, which is spoken a lot in the media, is that the United States is ahead of the rest of the world. Correct. But also it's more dependent on technology than the rest of the world. So while we are ahead in awareness, the effects will be more pronounced here than anywhere else, in any country. Some Third World countries won't even notice it. Other Third World countries, because they use hand-me-down computers from the West, will come to a grinding halt."

"... it was Bruce Webster here who mentioned... there could be famine in the United States in 2000. And like most of you here I thought rubbish, rubbish, until we started looking at the infrastructure and started the wildfire scenarios on what if.

"And looking at New York and California, I walk into a supermarket and I get lettuce, fresh vegetables, any day of the year. Seven days ago they were in a field in California. Now they're in a supermarket just outside New York. We know the switches on the railroads are faulty. We know because of mergers, even today, many of the major corporations in the railroad business don't know where the railway stop is.

"When you move this way through, come 2000 you could have a scenario -- and when you look at this, it's the Soviet Union in the '80s -- where there's plentiful supply of food in the fields, but you can't get it from the fields to the towns to feed the population. This is not a way-out, whacko scenario. This is for real."

The Global Food Chains
Alan Simpson, President
COMMUNICATIONS LINKS

http://www.csis.org/html/y2ktran.html#simpson

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"Okay, I've got to give you this analogy. This is Titanic America. They went down to the ocean floor and they found the rivets. They brought the rivets up from the Titanic. They cut them in half. They found crystal in the metal. What sunk the Titanic is it sideswiped the iceberg and the rivets popped. It didn't cut it like a can opener. The rivets were defective. Think of the rivets -- think of computers as the rivets of our global economy. They're defective. And we're going at full steam ahead in the middle of the night in the Atlantic when it's freezing cold so everything is brittle straight for an iceberg and we're dancing in steerage and having first class meals on top. Okay, and that's the analogy."

---Dr. Edward Yardeni, Chief Economist
DEUTSCHE MORGAN GRENFELL

http://www.csis.org/html/y2ktran.html#q&a

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THE Y2K PROBLEM: HYPE OR REALITY?
By Martin A. Armstrong
(Thanks to SwiftWing Researcher Sherri Amderson for tracking down this article.)

[Martin A. Armstrong is associated with PRINCETON ECONOMICS INTERNATIONAL which is one of the largest global strategic advisory firms in the world with assets in excess of one billion dollars.]

Computer science is something I've been deeply involved in since the mid-1960's when the invention of transistors replaced vacuum tubes allowing the football size main frames to shrink to the size of a 1,000 sq. feet. It was my background in computer design and software that enabled me to see the potential benefits to further advance my passion in economics and market behavior. Therefore, on this unique subject, I have experience in both fields. It is important to understand that there is a significant difference between a Y2K bug in software and chips that have software programs already embedded.

There is NO doubt whatsoever that the Y2K hype is really out of control. Certain firms have a vested interest in scaring everyone for the sole purpose of taking advantage of them for huge profits. We literally have perhaps the largest database in the world. With over 25 gigs of data, if anyone should be panicking it would be PEI. We solved our Y2K problems in 3 days. That was accomplished by merely writing a program to open a data file and altering a record such as 890515 to 19890515. Both numbers are stored in a 4-bit field so increasing the number does NOT even take up more disk space. A file saved in ASCII format would take up more space than a binary file.

There are many firms reaping in billions of dollars based upon hype. One part-time programmer, who recently applied to us for a job, had a job at a major accounting firm. His position was to write a program that would check software to determine if it would fail due to Y2K problems. The program took 3 days to write. The accounting firm is charging their clients $400,000 as a starting price to run the program on their systems to check for Y2K bugs. The accounting firm is charging their clients on a per line of code basis. If they find a problem, then the bill jumps into the millions to fix it. While this accounting firm tells its clients that the checking process is tedious and takes weeks, in fact the program can complete its analysis in less than 3 minutes per piece of software. So let us make no mistake. There is huge profit in making everyone think the world will end on January 1st, 2000. The billions that industry is spending is in reality much to do with a rip off on a grand scale.

We believe that the private sector will be ready for the most part when we are dealing on a software basis. Work arounds are always possible such as advancing the date to 2001 or moving it back to 1960 until the problem is solved. In this respect, the world does not need to end. However, the real problem stems from the hardware side and government itself.

Microprocessors by the billions are embedded throughout the manufacturing industry as well as electricity and systems run by the government. Microprocessors have a predefined task and the programs, which they run, are burned into the chip itself. This means that the software cannot be replaced. The chips must be replaced. Here we are talking about sheer man-hours, not just money. The task to replace this hardware is very big. One manufacturer shut down a plant and attempted to refit its equipment to be Y2K compliant. After testing, the doors locked the staff inside and they needed help just to get out. What was learned from the test was that they missed a few areas that still caused the system to fail.

We have refrained from joining the hype about Y2K doom and gloom because it is an important issue that should not be taken lightly either way. We have determined through careful investigation the following:

1. Non-nuclear power plants may be ready, but it will be a close race. Here we are taking about hardware problems that are serious. Because the nation works on a power grid, one plant could still cause a massive failure through a region where other plants had complied.

2. Nuclear power plants are generally more modern facilities. Due to the dangers involved, they have taken this issue seriously and ironically may be the safest within the energy sector as well as the best prepared.

3. Air Traffic control is a disaster. The equipment is so old, new chips cannot be expected to save it. Here we have a classic case where government is ALWAYS the worst offender because it is the worst managed. In our opinion, this industry needs to be privatized or the government must replace the vast majority of the equipment right away. We recommend that you should stay where you are and NOT travel to any place you might not want to be for a few months.

4. INTERNAL REVENUE SERVICE is totally unprepared. Based upon reliable sources in Washington, we have been told that the IRS may not be able to collect taxes. This is one that has not been told to the press nor will you hear about it in open government sessions. There are a few members in Congress who believe that this could lead to a tax reform being implemented since the IRS may have no other choice. The billions they spent a few years ago on computer upgrades were not Y2K compliant. Government never seems to think that far ahead.

5. There is likely to be a shortage of manufactured goods that develops in 2000. This could spark a new round of demand-led inflation. Those who did not make the cut can be expected to do so within less than 9 months after the problem hits. Therefore, the world does not end -- it is just inconvenienced.

6. Europe, with the exception of Britain, is even farther behind than the US on a governmental basis. All these problems that are being aired in the US, also need to be addressed throughout Europe. The same problems exist in Japan.

7. The Internet itself is likely to survive. Most of the growth has been within the last few years and therefore the computers involved are Y2K compliant PC based servers. [Editor's Note: I think this is a very important point that has potentially far-reaching ramifications for all of us. -DS]

From what we can see, the vast majority of the world will survive. Government stands as the least prepared of all sectors. Russia could collapse entirely since they have no money to replace their infrastructure. We believe that the Y2K issue could cause geopolitical problems outside the US and Europe and that these will be the issues that dominate our thought between 2000 and 2004. We do see that the Y2K issue is likely to spur on inflation in 2000 and if the government doesn't try to hide the truth about collecting taxes, maybe some good may come out of this issue. It may be prudent to stock up on some food and energy supplies depending where you live. It would also be wise NOT to travel by air to some place you would not like to spend a vacation.

The world will survive. The US is moving much faster than any nation on Earth toward becoming compliant. For this reason, we believe that our long-term models calling for a bull market in the dollar until 2002 are supported by the Y2K problem. We also believe that while some industries will fail on January 1st, 2000, they will NOT remain down for long. In most circumstances, those problems could be overcome very quickly. For this reason, we do NOT see the end of the world, as we know it. Nuclear weapons will not start shooting off indiscriminately and we will survive. At worst, some of us could find a little unexpected vacation time on our hands and the birth rate might shoot up as a result. In the end, the hype is far too much about a problem that will be solved certainly by mid 2000 in the United States. We should be far more concerned about the Y2K problems outside the US that could easily send the dollar soaring back to the highs of 1985 by 2002.

http://www.pei-intl.com/TOPICS/Y2K.HTM

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END OF PART ONE OF TWO

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Copyright 1998 by NewHeavenNewEarth

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