In a very candid and sobering prepared statement, a representative of the International Association of Independent Tanker Owners explained the risks of Y2K to the House committee. This group represents 70% of all oil imported into the U.S. He makes it fairly clear that loss of insurance could result from failing to finish Y2K repairs. These tankers will never leave port because their owners will have massive liablity if they encounter trouble, even if caused by another vessel, the GPS system or the Port Authority of the country they are unloading in.

He claims that some owners have already seen Y2K failures occur. Some of them were induced by Y2K date rollovers for testing. One company reported that 20% of their embedded systems or chips were not Y2K compliant. That is a wee bit more than the 1 to 3% we have been told recently. A similar number was reported by Tava Technlogies in their remediation efforts for 4 large manufacturing corporations. So how is it that none of these chips or systems that can fail made it into airplanes or satellites. Don't they have navigation systems, communication systems, real time process controls, sensors and monitors? Why do the airlines claim that they have no date dependant systems or chips to check? What about Satellite companies. Were all these commercial sat companies checking every component for Y2K compliance in 1988 or 1992? I doubt it very much. Can they do anything about it if they discovered through ground testing components on the ground that showed date sensitivity or overflow errors (a chip doesn't have to use the date to fail)? The answer is no. You can't replace a system or chip on a satellite or reset a real time embedded clock. Why would you admit this problem to the public or your customers? So your stock could fall, your customers sue you and cancel future orders and give them to another sat company that is less open about the embedded chip problem or for the panic it would cause to those trying to prepare contingency plans when you don't know for certain that the sat will fail.

Ed Yardeni took a big risk in 1997 by predicting a recession on the dual premise of Y2k and global financial problems. He risked his reputation. Today, JP Morgan is now predicting a recession. The Nasdaq is down 33% from the high. JP Morgan just figured it out. When enough of Yardeni's peers get on his side (he had been standing alone on this call for over 12 months), then he will have the conviction (as well as not appearing to be a wacko) to predict the obvious, a depression begining in 1999 and lasting for many years.

The writing is on the wall. Y2K, GPS problem, hostile space enviornment threating the satellite infrastructure, the Euro conversion, emerging market currency devaluations and debt defaults, Japanese banking crisis, Russian economic collapse, inevitable social instability world wide, La Nina, deflation, an inflated US and European equity market, inverted yield curve, and the stupid notion that Alan Greenspan can save the markets and manipulate the world through the Fed's market operations. Not since the crash of 1929, the trade barriers of 1930 and the bank panic of 1933, have this many events lined up against both the domestic and global economy. Their combined threat dwarf the looming and eventual problems of the 1920,s and 1930,s (remember to use the 19 from now on).

Those looking for similarity between the time of the great depression and today need to look only as far as this: In 1928 and 1929, investors felt the market would never go down because JP Morgan and the other powerful bankers wouldn't let it (let's sub Alan Greenspan for JP), Even after the crash, many market participants did not see that things would get worse, nobody beleived a depression was coming. (sub the fact that the world is collapsing around us and we believe that we are immune somehow, like a bubble or an island, as we stay healthy by our own over consumption and service economy). The trade barriers enacted in 1930 to protect our economy killed the global economy and killed the domestic economy as well (sub in Y2K as the killer of communication, transportation and trade, Y2K is the greatest trade barrier ever and it won't come in the form of a protectionist bill, but I am sure our government will find a way to pass legislation to compound the problem). In the early 1930's, depostitors were like deer in headlights. Bank after bank would fail and people would lose their life savings, but others would look at their bank and say "that won't happen to XYZ, its a strong bank". The bank panic of 1933 was the moment of mass realization that there was a severe problem and the system was at risk. That is why we have the OTS, OCC and FDIC today. (sub in the bank runs or panics of late 1999 or early 2000 for this).

What took 4 years to unfold in this dark chapter of American history will unfold several times faster in our modern times. I would like to think this is not the case, but the die is cast. There is no way out. Safeguard your assets or profit by the decline of the market over the next 15 months. Trust me, it is not too late to bet against this market or any other market for that matter. Thanks for letting me get this off my chest.

-- Johnny B Good (jeffsmack@aol.com), October 08, 1998

Answers

Good reporting, johnny b. Unfortunately, I have a feeling that you are largely preaching to the converted on this forum. The problem is: how do you let the other 5 billion people on the planet know, get them talking about it honestly, and solve this mess without global chaos? Our civilization is unsustainable. It's about to crack...

-- pshannon (pshannon@inch.com), October 08, 1998.

Johnny B., Interesting post. The embedded systems I have tested are not Y2k compliant but they cause no problem because the application software doesn't care. In fact, they roll over to 1980 and keep on trucking, one of them has been running in a production environment for two months now with the date in 1980 and it is alive and well since we don't read that date with our application software. You gotta keep up Johnny B. if you want to retain your membership in this mutual admiration society of doom and gloomers. You can no longer buttress your gloomy forecast with support from Yardenni because that turncoat has moderated his forecast in recent days and abandoned the cause of societal meltdown just as de Jager did. Those guys looked pretty smart on this forum when their rhetoric supported the extreme pessimism that dominates the discussions here but they will now be person nongrata. We can survive these defections by reciting numerous "Hail Garys."

-- Woe is Me (wem@doom.net), October 08, 1998.

I agree with "Woe is Me." Everything is under control. Think of good things, not bad. No banks or major institutions are compliant, or likely to be by 2000, but that will just be a bump in the road. The so-called "Great Depression" may not have been as bad as is claimed. WWs I&II were it; all that nastiness is over. If there's a bank run, it will be YOUR fault, for spreading panic; if the economy collapses it will be the CONSUMER's fault for losing confidence. Y2k isn't really happening; just close your eyes and think of Christmas, everyone...

E.

-- E. Coli (nunayo@beeswax.com), October 08, 1998.

I think you read that wrong E.

-- Beltway Buddy (buddy@bellatlantic.net), October 08, 1998.

E. was just being facetious. He didn't miss read anything, he was just using sarcasm to make a point.

Texas Terri

-- Terri Symington (TJSYM@AOL.com), October 08, 1998.

Well, there's not much harm in telling people about Y2K troubles with oil tankers. When's the last time an oil tanker fell on a house?

-- Mike (gartner@execpc.com), October 08, 1998.

Johnny - great post, thank you for the info on tankers. Interesting statistic. In 1973 (the days of the last "Oil Crisis") the U.S. was 25% dependent on foreign oil. Today, we are about 50% dependent on foreign oil.

-- melissa (financed@forbin.com), October 08, 1998.

We are missing anobvious point here: oil tankers are real BIG and so there's lots of room to fit embedded chips.

A satellite or an airplane is smaller, they are very weight critical, so obviously the designers didn't want to waste space and create a weight penalty by stuffing electronic chips everywhere = so they used all analog circuits and transformers and batteries and circuit breakers and tubes and wires and soldered connectors and transistors and probably even crystal tuned radios.

Besides, if they used all analog equipment, they would have a Y2K problem, even now on the surface in their control software, would they?

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), October 08, 1998.

Don't know about satellites but aircraft are very, very wired. Ever hear of FADEC? It's full authority digital engine control. Or how about fly-by-wire? You don't hear that phrase so much now as in years past because it is the rule, not the exception. Many airliner flight decks are digital now as well. The only things aircraft have going for them y2k-wise are almost obsessive documentation about what equipment is on a particular aircraft and generally excellent safety awareness on the part of the manufacturers, the FAA, and the customers. I don't worry too much about the cliched planes-falling-from-the-sky bit, though. When in doubt, they simply won't leave the ground.

-- anon (anon@anon.com), October 09, 1998.

Fly-by-wire is Airbus, and some US military such as f-16.

-- Uncle Deedah (oncebitten@twiceshy.com), October 09, 1998.

Ships are in use much longer than satellites. You cannot make a computer from pre 1990 compliant, and you would have trouble making any other piece of solid, integrated equipment from pre 1990 that used embedded dates extensively compliant. On a ship or plane you must identify every chip that uses dates in a critical manner ( those that have dating functions that aren't compliant and aren't 'don't cares' ) and replace every one of them. Otherwise you have failures. Satellites are generally expected to have a life of about 5 years. Very little equipment made since 1994 is not compliant. So I don't spend much time worrying about satellites - esp since a lot of their functions are capable of being reset or rewritten from the ground.

-- Paul Davis (davisp1953@yahoo.com), October 09, 1998.

Once again there seems to be a misapprehension that all chips will fail. Fortunately this is UNTRUE. Unfortunately the untrue applies to "all" not to "fail"; the few that will fail are a very real problem.

In order for an embedded system to fail because of Y2K: 1. It must contain a realtime clock Good engineering practice (and fear of lawsuits) dictates that a safety-critical system, such as that keeping a plane in the sky, should not contain a realtime clock unless the real time is essential to its function. More commonly, a counter is employed which starts at zero every time the system starts up (such as engine being started) and which cannot overflow (because the engine will be shut down first)

2. It must use the realtime clock, or the realtime clock must have an intrinsic Y2K flaw.

There are a few chips in existence where the clock implementation is faulty in such a way that reaching 2000 causes a hardware failure. These are not common, and are mostly found in PCs.

Unless the embedded contains a faulty chip, it can't fail if its code does not use the RTC, even if it's there .

3. The RTC must be set to the correct date and maintained by a battery or capacitor.

If the RTC is used only for time interval calculations, there is no need for a battery and the clock can safely be allowed to reset to its built-in base date every time the equipment is shut down. It'll never reach 2000.

If the RTC is battery-backed but no provision was made for setting the time, it will have started counting up from some arbitrary base- date when it was first energised. It may fail sometime well after Y2K because of this, but will not contribute to ant 1/1/2000 systemic chaos.

4. the code must cause something catastrophic when the clock rolls over.

many "failures" will in fact be glitches. The embedded system will calculate a time interval, get a ridiculously large number, and go awry. Provided this does not cause catastrophe, one interval later (or after the equipment gets reset in response to its failure), the clock will have rolled and the next time interval will be calculated correctly.

None of this is to say that there won't be problems, and that some of them won't cause disasters. Nevertheless, the majority of embedded failures in systems that don't need to know the date will be no worse than temporary annoyances, and the majority of embedded systems won't fail at all.

Security systems and traffic lights are the two obvious large problems, because they *do* have to know the date.

Ed's book says it's like being bitten by a thousand midges, a hundred mosquitoes, ten bees and a rattlesnake all at once. If you get the rattelesnake before it bites and aren't unlucky to be allergic to bee venom, you don't have too much to worry about. However, not all the snakes will be seen in time.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), October 09, 1998.

Another point; oil tankers all stranded because they can't get insurance?

No way!

In a crisis, this will be fixed one way or another. Either the law requiring insurance will be waived, or the government will draft the ship into the navy (which is doubtless exempt from this law: how do you insure a nuclear submarine?!)

Yes, there may be a tanker wreck or two extra as a result. There are one or two a year anyway. There will be seen to be no alternative.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), October 09, 1998.

Nigel,

Which governemnt would confiscate them?

US and UK have almost no international tankers registered: the owners have them registered to Liberia, Panama, Malta, Greece, and other flags of convenience. There are a few (4-5) for moving oil from Valdez to CA, a couple on the east coast (US) for trans Caribbean movement of refined products, but very little else.

Good observation about the "time" frames of satellites vice tankers. Thanks. I agree, a $120,000,000 airplane won't take off if there are questions about reliability or safety = losing the airliner, losing the flight the crew, losing the passengers.

If it is risky, they will pass on the flight, or make a 'empty' shuttle flight first.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), October 09, 1998.

Guess I slightly misstated myself above there - I did not mean to imply that every chip that used dates in a critical way would fail - I meant that you must identify every one that uses dates - then check to see if it will fail. Then you must replace every one of them that does fail. Sorry about that, I wrote that late at night and had a 4 year old get up crying because her back molars are coming in so it was rather hard trying to finish my message and comfort a baby that just woke up and crawled in my lap saying her teeth hurt.

-- Paul Davis (davisp1953@yahoo.com), October 09, 1998.

And another thing about oil - most of our foreign oil actually comes from Mexico. You see a lot of tankers on the east coast - but its because they are too big to fit in the Panama Canal. They offload their oil on the East Coast - and oil on the West Coast is loaded on tankers over there and shipped to Japan etc. Sort of a funny deal, but in theory that oil was shipped straight from Arabia to Japan with no stopovers on the way! There are some similar things to watch out for when shipping coal by barge - if you aren't careful they will unload the barges into an intermediate stockpile and then load other barges with coal from the stockpile and send them to the destination. Does no harm unless your contract calls for higher quality than the stuff they loaded out of the stockpile - then it causes major trouble and you have a hard time finding out what happened.

-- Paul Davis (davisp1953@yahoo.com), October 09, 1998.

I don't understand why anyone is worried. I can absolutely guarantee that no oil tankers will fall from the sky, and no airplanes will leak crude oil because of Y2k.

-- Dan Hunt (dhunt@hostscorp.com), October 09, 1998.

Which government will "confiscate" oil tankers?

I guess I should have been clearer. Any government that needs oil will offer to make tankers part of its navy for the duration of the crisis, on terms that will encourage any ship-owner to voluntarily accept the offer. (Since the alternative is leaving his tanker stuck in port losing money while simultaneously biting the hand that feeds him, I don't see that the offer will need to be generous!)

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), October 12, 1998.