Edward Yardeni's One-Man Show -- Y2K

Just Y2K surfing and picked this up in the fishing net. -- Diane

The Globe & Mail -- Canada

http://www.GlobeAndMail.ca/docs/news/19981128/ROBColumn/RERIC.html

Edward Yardeni's one-man show

Saturday, November 28, 1998 ERIC REGULY (Readers can leave phone messages at (416) 585-5399, or send E-mail to ereguly@globeandmail.ca)

NEW YORK -- Who does Edward Yardeni work for? Himself, apparently. His Web site is yardeni.com. His E-mail is yardeni@yardeni. The fact that Dr. Ed, as he is known, is chief economist in New York of a rather large financial institution called Deutsche Bank seems, well, irrelevant. Dr. Ed pretty much runs his own show and the impression you get after spending an hour with him is that the German owners are there to provide backup support.

Dr. Yardeni, 48, is one of the best-known economists in the United States and is certainly the soothsayer-of-the-moment. On Wall Street, he has achieved celebrity status. His mug has adorned the covers of a dozen or so business publications, including Barron's, which called him "Wall Street Wizard." He makes regular appearances on TV shows such as CNN's Moneyline and his award-winning Web site is heavily travelled. He says it attracts more than 6,000 users a day and by "users," he doesn't mean quick hits; on average, they spend 29 minutes cruising the site.

Dr. Yardeni, in effect, has created a signature brand and it has served him well. Wall Street has hundreds of economists and the majority of them seem well-suited to the dreary task of dissecting statistics ranging from farm cash receipts to the ever-sexy monthly building permits roundup. They are the types who inspired Shaw to note that "If all economists were laid end to end, they would not reach a conclusion."

Dr. Yardeni has reached a conclusion that has set him apart from the pack. It is that the year 2000 problem -- Y2K for short -- is a monster set to wreck the American, and world, economies like Hollywood's Godzilla wrecked New York. In his latest study, he spends 124 pages exploring every angle of the Y2K problem, from Latin America's "clueless" response to Y2K investment strategies, and concludes a worldwide recession is a 70-per-cent probability as computer systems seize up at the stroke of midnight on Dec. 31, 1999. He compares the coming recession to the downturn caused by the OPEC crisis in 1973 and 1974: "Just as oil is a vital resource for our global economy, so is information. If the supply of information is disrupted, many economic activities will be impaired, if not entirely halted."

The forecast is brilliant because it appeals to society's paranoid element (which includes anyone over the age of two in New York), thus generating headlines, yet is not so paranoid as to be incredible. It's hard to find an economist who thinks Y2K will have no effect whatsoever on economic performance, and many think Dr. Ed has fair chance of not waking up with egg on his face two New Years from now. "It's a good gamble on his part," says Sherry Cooper, the Nesbitt Burns chief economist who is no slouch in the self-promotion department herself. "As long as there is some Y2K disruption anywhere, he can claim to be right."

Dr. Yardeni's Y2K theory can't be dismissed as the ravings of a publicity-mad economist because his research is thorough and his background impressive. He is a Yale PhD who has been the chief economist at C.J. Lawrence, Prudential Securities and E.F. Hutton. He also taught business at Columbia and was an economist at the Federal Reserve Bank of New York. He rose to prominence in the late 1980s when, correctly as it turned out, he predicted the spending power of middle-age baby boomers and the end of the Cold War would trigger an enduring stock market rally. In mid-1997, he latched on to the computer bug problem and didn't look back.

Now he can't get off the Y2K treadmill. He has become Mr. Y2K and can't afford to slip up. He spent almost all of last weekend, for example, reading about 400 Y2K updates buried in the quarterly filings of the S&P 500 companies. "Clearly, I do need to get a life," he says from his cluttered office in midtown Manhattan.

His conclusion: "The Y2K problem is not being taken seriously in the stock market." He highlights some "real beauts," including AT&T's admission that the computer systems of almost half of its suppliers are not Y2K compliant, and that General Motors' true Y2K fix-up costs might be closer to $800-million (U.S.) than the official $500-million figure.

The Yardeni Web site, which made its debut in 1995, is a treasure of Y2K information. His volumes of research on the topic are published there, and tons more. The site presents a wealth of economic information and resources. It includes on-line chart rooms, business news, quick connections to other sites, ranging from Amazon.com to the Adam Smith think-tank. Dr. Ed's movie picks are included (Elizabeth and Enemy of the State his latest favourites) and, if you want, you can call up the soundtrack of Mission Impossible or Ghost Busters while you dip in and out of his pages. His favourite restaurants and recipes will probably be next.

While Deutsche Bank, his employer, gets subsidiary billing at the top of the home page, the site is Yardeni through and through. Obviously, this is no accident. The Yardeni.com is a powerful marketing tool and if he starts his own company, a persistent rumour, all he has to do is erase the bank reference and he's in business. The launch of Yardeni Inc. seems only a matter of time.

-- Diane J. Squire (sacredspaces@yahoo.com), December 06, 1998

Answers

A refreshing change - something first hand that is true. Thanks Diane. Even nicer is that it supports my own position - economic disruption yes - TEOTWAWKI - no. I lived through 73-74 - wasn't fun but it wasn't TEOTW. If we have food and power we will make it - and I think it looks pretty good from that standpoint. And BTW - I really really really don't care about the actual costs of remediation. Ya spend what it takes and if the stockholders don't like it they can ----.

-- Paul Davis (davisp1953@yahoo.com), December 06, 1998.

Strikes me as being biased against the man, undeservedly.

Yes, he has his own name on his own email address at his own site. If I had a http://www.lchampion.com, then I'd probably call myself lchampion@lchampion.com. Who wouldn't?

I think Yardeni is correct. He's made the right predictions before, and a man of his intelligence wouldn't bet his reputation on something that wasn't going to happen. If anything, from what I've read elsewhere he may be a little too optimistic.

Paul, are you sure we will have food and power, though?

--Leo

-- Leo (leo_champion@hotmail.com), December 06, 1998.

Yardeni is waaaaay too optimistic. But he does serve to alert many people who will become aware of the problem because they are afraid of losing money.

-- David Hammer (davidone@worldnet.att.net), December 06, 1998.

With nothing to really back this up except "gut feel", I have always wondered if perhaps Yardeni was deliberately trying to stay within his specific field (economics), and use the melodramatic "raising the per centages" game, to get attention to Y2K without having to worry about being accused of talking about things that are outside of his expertise (e.g., the utilities). If this is the case, I think that he has probably done as much as anyone could do. Unfortunately, the reality is that at this point its really too late to do much more, other than watch TEOTWAWKI happen....

-- Jack (jsprat@eld.net), December 06, 1998.

Psychotic article to me. He points out all the credibility about Yardeni and his y2k facts, all the while denigrating him as a ruthless oportunist, effectively making his whole article as a not-so-subtle way of saying that Y2K is hype from the money gloutons.

Illogical denial. Logical denial is putting your head in the sand and ignoring facts and credibility.

-- Chris (catsy@pond.com), December 06, 1998.

I agree with Jack. Dr. Yardeni isn't optimistic; he just keeps his comments to what people know is his expertise--economics.

I ran across an article in the Kansas City Star about a debate Dr. Yardeni had with another economist about Y2K. The article makes it clear that Yardeni does NOT believe most major problems will be fixed within a a few days of January 1, 2000.

http://www.kcstar.com/item/pages/business.pat,business/30da930f.c04,.h tml

He doesn't talk about preparation, but he "gets it". As a matter of fact, Yardeni is the guy that popularized the phrase "gets it" in its Y2K sense.

-- Kevin (mixesmusic@worldnet.att.net), December 07, 1998.