Best CAse Scenario

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There is something about this piece that makes me feel this is to be our reality. If you have not read it, do so.

-- Linda A. (adahi@muhlon.com), January 16, 1999

Answers

Uh Linda,

What piece might that be?

-- Bill S. (Bill_S3@juno.com), January 16, 1999.


HaHaHa, Linda! This da best!

Our reality is BLANK.
We YourDynAMites are tryin ta fill in da blanks. This a "create your own reality" exercise? ;-)

xxxxxxx xxxxxxx xxxxxxx

-- Leska (allaha@earthlink.net), January 16, 1999.


Sorry, I was following an earlier thread but could not get to the URL. Some one sent me the piece by email and that is how I was able to read it. I still think it is pretty good and am sorry I do not know how to share it with you. I am not going to post anymore for a while since I am so embarrassed.

-- Linda A. (adahi@muhlon.com), January 16, 1999.

Linda A, no need to be embarrassed at all, it's been a refreshing moment. eMail me your inspiring piece and I'll post it right away. Thanks, I want to read it. :)

xxxxxxx xxxxxxx xxxxxxx

-- Leska (allaha@earthlink.net), January 16, 1999.


Best Case Scenario
By Stefan Stackhouse on November 19, 1998


OK, let's try the flip side of this. Here is what I see as being the best possible case scenario. If you don't plan for at least this, you are being pretty foolish indeed!

First, there will be some system glitches in the first 2 quarters of 1999. This will rattle some people, and we will see the stock markets drop a little lower than they did a couple months ago. (That was the smart money getting out of the market. This second wave will be most of the rest of the governing elites getting out while the getting is good.) There will be the predictable public announcements by various government and corporate big shots that this is a serious matter, but that everyone is hard at work, and that they are confident that everything will either be fixed or "manageable." There will be a partial recovery in stock values as fools rush in to buy "bargains" with their 401K money. "Survival" type supplies and equipment will get increasingly scarce and expensive through the first 6 months of 1999 -- if you don't get them by then, it will be virtually impossible to get anything after June '99.

The third quarter 1999 will be the moment of truth. That is when we will start to get a pretty good idea which corporate and government systems will and won't be ready for Y2K. A fairly substantial number will, some won't including some pretty big names. This will be the time period when investment managers will be making some serious decisions about portfolio allocation and who they will and won't invest in. Companies will also be making some serious decisions about who they will continue to rely on for suppliers. Y2K will start to become more than just a "blip on the radar screen" in the media, and stocks will start to drift downward.

Beginning of the 4th quarter, October 1999. The "Black October" to end all "Black Octobers. There will be a new record one-day drop in the DJI. I expect that by the end of 1999, the DJI will be trading at no more than 1/2 - to - 2/3 of its peak. The media & corporations will be under enormous pressure from the government to try to calm things down and avoid causing a panic -- expect on not being told everything, and to be told deliberate disinformation then. Nevertheless, expect store shelves to be pretty bare of necessities throughout the 4th quarter. This may not be a good time to drive long distances, as gasoline may be in short supply as well. As we move toward December, there is a very high probability of bank runs, especially on any smaller bank which is not able to give the public prompt and credible assurances that they really are Y2K compliant. At first the government might try to handle this by merging the smaller banks with bigger ones. However, I would rate the probability as greater than 50% that a "bank holiday" will be declared for at least the entire last week of December (i.e., between Christmas & New Years.) There will be tremendous political pressure brought to bear on the government to not impose a bank holiday prior to Christmas. There will probably also be an announcement that all airlines will be grounded for the first few days of Jan. 2000. This might be by government action, or by insurers, or both.

People will be extremely tense going into the 12/31/99 - 1/1/2000 transition. In the U.S. -- on which our population & media will be almost exclusively focused -- people will be relieved to discover that it is NOT "TEOTWAWKI". The lights will not go off in Times square at one second after midnight, nor in any but a handful of places. There is a small possibility that a few local system glitches might cause one of the regional grids to go down, but it should be brought back up within a few hours. There will be a few other isolated problems in transportation, utility, and communication systems, but they will be pretty isolated. Very quickly, there will be a sense of relief, of joking -- "I told you so!", etc.

Meanwhile, things won't be going nearly so well in the rest of the world. There will be far more widespread system failures in many other countries. However, this will barely get reported in the U.S., and most people will ignore it.

Then, on Monday, 1/3/2000, there will be a few system failures at some U.S. production facilities. However, there will be thousands, if not tens of thousands, overseas. Very little of this will be reported, partially due to the usual U.S. inattention to foreign affairs, but also due to the fact that many communications systems overseas will not be fully operational.

As the days and weeks progress, however, import supply chains for crude oil, raw materials, parts, and finished goods will become increasingly disrupted. Given the "just-in-time" inventory management system which is the current management fad, this will start very quickly to result in production lines shutting down, workers being laid off, and store shelves emptying. This will initially be most noticeable in industries dominated by imports, and the initial convential wisdom is that this is just "a temporary import problem." However, the interconnectedness of the modern global economy will gradually become evident over the following months as domestic manufacturers find that they can't operate without supplies based on imported materials and parts. Exporters will find that their export markets have dried up. And sellers of goods and services in the U.S. will find that they have less stuff to sell, and fewer people who can afford to buy.

In short, the U.S. (and global) economy will be sinking into a recession. Think of it being at least as bad as 1973/74. There is a very good possibility that it will be as bad as the 1930s. The reason is that we will also see a profound credit crunch. The stock market will continue falling. In 1973/74, it traded at a P/E ratio of 8, now it is at 24. A drop from 24 to 8 is 2/3, suggesting that by December 200 or 2001 the DJI could be trading in the 2000 - 3000 range. This means that most people who were still substantially invested in the stocks -- i.e., most people with 401Ks, the elites will have mostly pulled their money out by 6/99 -- will have suffered at least a 2/3 decline in net worth. Many of them -- at least 10%, possibly 25-35% -- will also be unemplo yed. The banking system will have suffered a major loss of confidence. FDIC insurance will be honored, even if the fed has to hyperinflate to do so. But they will counter this by raising interest rates way up and tightening credit substantially. This means that almost no one will be able to get mortgages, and a lot of people will be in default on their mortgages, and eventually a lot of mortgages will be foreclosed, and there will be a glut of foreclosed houses on the market, which few people can buy because there is no mortgage money. Meanwhile, look for increasing populations of unemployed and homeless people to set up shantytown "Clintonvilles". The credit crunch will also result in a wave of business failrues, further driving up unemployment and causing var ious goods to be in scarce supply.

Those who will cope best are those who can hold on to their homes, can find some way to earn at least a little money, can produce at least some food, fuel, clothing, or other goods at home, and can resort to barter and avoid the cash economy. Those who got out of stocks, preserved their cash, and had minimal debt will be in relatively good shape financially. Eventually, the elimination of competition from foreign and failed domestic businesses will open up a lot of new entrepreneurial opportunities for the survivors.

The big question in this scenario, of course, is at what point civil unrest starts among the urban underclass, how bad and widespread it will be, what the suburbanites do in response, and what the government does in response. Since this is supposed to be a "BEST CASE" scenario, let's just say that there will be some riots in a few cities along the lines of LA or Miami, but that it will not be all the cities, it will not be all at once, and that it will not all start on 1/1/2000. Some suburbanites will head for the hills, some will get together with their neighbors and guns, put up barricades, and protect their own turf, and some cities will start to look a little more like Beirut or Sarajevo for a while, but most won't. Expect the government to be ready with mo bilized regular and national guard troops to quell any disturbance. However, since this is "Best Case", I am going to assume that Clinton doesn't have the support of the military to proclaim a general martial law as a power grab.

Another big question is whether or not Sadaam, the N. Koreans, the Chinese, etc., will use Y2K as an opportunity to launch a land grab against coveted neighboring territory. If there is any substantial unremediated Y2K problem with our weaponry, communnications, intelligence or logistics systems, then the danger of this will become extremely high. There could also be substantial hostility overseas directed against American targets, as foreign populations may blame U.S. technology for their Y2K problems. If there are one or more foreign conflicts, it is very possible that the U.S. will lose, and may lose badly. That will not be the end of the world, but may worsen general conditions here. It may also increase the possibility of a military coup d'etat, especially if the military believes that they were sent in to an ill-advised foreign conflict with inadequate support from the government, and especially if a country in the throes of a severe economic depression and civil unrest holds the military in high esteem and the government in low esteem.

This is what I see as the best case scenario. Even in this best case, the world five or ten years from now will not be much like the one we live in today. It will be a functioning world. Most people who prepared wisely will have homes, they will be raising food on their property, they will have a source of heat, they will have some way of earning some money, and there will be some basic level of law, order, and peace, at least in smaller and rural communities. Cash and the basic necessities of life will be scarce and valuable, stocks, real estate, and labor will be abundant and cheap. There will be a lot of poor people many more than we have now. Our government will be pretty much of a shambles, it may no longer be a civilian government, and in any case will not be able to do much to help people. There will be no "New Deal" or World War to lift the country out of the economic depression this time. This time all of the speculative and governmental excesses will have to be pruned out of the economy, and then will follow the long, painful, and difficult effort to rebuild by honest hard work.

I am basing my plans and preparations on this as a given, and then trying to do what I can to deal with more pessimistic scenarios. Don't say you were not forewarned!

---------------------------------------------------------------------- - llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll llllllllll lll

-- Leska (allaha@earthlink.net), January 16, 1999.



Thank you, Leska for posting this.

-- Linda A. (adahi@muhlon.com), January 16, 1999.

Linda A, you are most welcome, and I'm delighted to see you post again; please don't ever be unpostably embarrassed! Ignore the trolls and ask for help; some of the older regulars on here are wonderfully considerate and will help one learn/do just about anything. Cheers!

And thank you very much for taking the time to share the above Best Case Scenario with us.

xxxxxxx xxxxxxx xxxx

-- Leska (allaha@earthlink.net), January 16, 1999.


Oooo, not a very pleasant Best Case. Somehow with all the homeless don't think there will be many vacant homes. Squatters will hold on fiercely. If millions of ppl died, maybe then there would be some empty homes. Otherwise, people with Leo's plans would proliferate. ;-)

xxxxxxx xxxxxxx xxxxx

-- Leska (allaha@earthlink.net), January 16, 1999.


I pretty much agree except for a few blank spots. Its unlikely that all of the major govt "entitlement" programs will function. I would expect "delay" in SSA, (HCFA)Medicare/Medicaid, VA, USDA money distribution. That will crunch millions of people. The government will blame the non-compliant banking and telecommunications companys and then set up some "manual" system that is unworkable.

Expect gasoline and other refined fuels to be in very short supply and probably rationed in 2000 - 2001. If you look at the chain from crude oil production overseas (50% of our need) through refining, the potential for major disruption is very high.

And this is the Best case scenario - it will likely be worse.

-- RD. ->H (drherr@erols.com), January 16, 1999.

Should be interesting. The old on SS and the unemployed on welfare trying to get money/help directly from the producers. Good ole Uncle Sam and the boys from the IRS unable to extract a toll from the working class. The government without the power to transfer payments? Will the welfare class (you too Granny) lay down and die, or will they fight for what isn't there's? Social Security is a Ponzi scheme of the greatest proportions. Welfare is a crime. Will they blame the government or will they come after you and I? Will they shout like in Atlas Shrugged, "You have to take care of us, you always have." Perhaps we will have to take care of our own families, the deadbeat brother or sick grandma?

The homeless can cram into the Civic Centers paid for by taxpayers along with the Mayor, Tax assesor and other transfer agents. What a sight thousands of near do wells and a few blow hard politicians living together in a grand sports arena you and I paid for. No cops, no protection just a hungery mob asking for their dole.

"To each according to their ability."

This could be the best change that y2k has to offer.

-- Bill (bill@microsoft.com), January 16, 1999.



Thanks, Linda and Leska. Had read this when it came out, absorbed it into my own best case scenario (ah, plagiarism), then forgotten it.

My hunch remains that, against all reason, the herd will not, in fact, panic until sometime in 1Q 2000 itself. A la the market, anything sort of TEOTWAWKI will be discounted (oh, that wasn't so bad; those survivalists really are morons, aren't they)? And I expect massive lying by governments and institutions in second half of 99, hiding of failures, etc, legal CYA stuff.

Stock market will get very weird and nervous in Oct. 99, but there will be plenty of experts to explain away and the Fed will make one last, temporarily successful attempt to put a floor under Y2K. That will "work" to ensure Christmas 99.

The one wild card is what people do with their bank deposits, but I will still bet that an amazing number of people do nothing to "show their faith in the system" or some such baloney. Still just denial by another name.

It's when people start losing their jobs and can't find the frozen dinners at the supermarket that there will be a wake-up call.

That said, I have always planned as though the panic would begin 4Q 98 and 85% of my survival planning is complete. How about you?

-- BigDog (BigDog@duffer.com), January 16, 1999.


When I saw this thread I thought perhaps you were referring to the following article by Sharif M. Abdullah. For you reading pleasure I include it here:

THE REAL BEST CASE SCENARIO FOR Y2K by Sharif M. Abdullah

I have read a number of "best case scenarios" for Y2K. The bottom line of these scenarios is that little will happen, the shortages, outages and other system fluctuations will be minor, and we will quickly get "back to normal".

I believe Y2K provides a perfect opportunity for us to question "normal".

"Normal" for most of the world's human population is a bureaucratic, corporate profit driven mess that is destroying ecologies, destroying democracy and turning our citizens into superficial, materialistic consumers. "Normal" is where good and bad are turned on their heads -- we know we are destroying the planet, yet find ourselves unable to stop the destruction. "Normal" is a system where Americans consume 40 times the world resources and produce the overwhelming amount of the world's pollution. "Normal" is constant low-level warfare on every continent, including the warfare in our inner cities in America and the warfare in each of our hearts, where the casualty list is the suicide list.

In my new book, "Creating a World That Works For All", I call this the BREAKER Society.

For most of us, we cannot even imagine any other way to live. We have been raised in the belly of this story. Although we can see its negative effects, we lack a viable alternative.

Someone told me a great metaphor: we are all on a great train, one that is heading north, the direction of destruction. Some of us are walking south on this northbound train, congratulating ourselves that we are not heading in the direction of destruction. Needless to say, in this train scenario are walking south efforts are totally ineffective. Y2K brings the train to a screeching halt (or, at least gets it to slow down long enough for us to look for alternative transportation).

For me, the Y2K "best case scenario" is not based on the Breaker "normal". Another story has been trying to emerge for a long time -- a story based on values such as inclusivity, sustainability, authenticity, and a reverent respect for ecologies. This story will mend the excesses of the Breaker society. I call this the "Mender Story".

Regardless of the severity of Y2K, if given enough time and resources, America will get back to the Breaker "normal". However, if we are courageous and dedicated, if we are committed to the Mender values of inclusivity, authenticity and sustainability, we can leave the "normal" Breaker society behind, and embark on the course of a true new society.

So, what follows is my "best case scenario", based on very serious Y2K disruptions. Part of this scenario is based on the work I have been doing in Havana, Cuba over the past three years. Cuba has already experienced its own mini- Y2K, with the dual challenge of the meltdown of the Soviet system and the US Embargo. They have already had people eating dogs and cats, widespread power outages and the rest. Water is still delivered to some sections of Havana by government tanker truck.

The people of Cuba are emerging from the "Special Period" with a sense of greater community, resiliency and optimism. They found so many ways around the government bureaucracy that the government was forced to respond to the people's economy. The most notable aspect of the government's change was the US dollar going from the black- market to become the primary currency for Cuba.

THE DEATH OF CORPORATISM The global corporate economy collapses -- and things get better!

In Y2K, the interlinked, merger-crazed global corporate structure collapses. Each part of the picture suffers collapse, and drags down each other part. The unraveling can start anywhere: hotels, air transportation, entertainment industry, manufacturing, telecommunications, etc.

When that structure collapses, we realize something that should have been obvious for awhile: there are TWO economies, and most of us were never a real part of the global corporate structure. We realize that global corporatism has as little to do with markets as modern televangelism has to do with the word of Jesus. Y2K provides us with an opportunity to repair and expand local markets and local economies.

You may lose your retirement funds and even your job, but your actual present value is the same. (Your value may go up, if your mortgage company, a part of global corporatism, dissolves or otherwise loses the ability to collect the mortgage payment you can no longer make.)

Your stress level decreases, because you are no longer going to work on a job that is driving you crazy. The elevators don't work: you can't get up to the 22nd floor of the building to do your job. The telecommunications system is seriously compromised; you can't use the minimal services available to "wheel and deal" for your corporation. You don't get a paycheck anymore (but, you don't have mortgage, credit card payments, student loans, car payments and other connections to the global corporate structure). Life processes become much simpler: food, shelter, necessary energy, community.

The global corporate structure transforms to: return to local economic structures, driven by human markets decentralized and under local control information connected economic structures responsible and committed to local markets organic and flexible; subject to local changes focused on goals other than "making money" locally enriching economic environment; wealth accumulates in local communities, not individuals.

THE GROWTH OF PEOPLE-CENTERED MONETARY SYSTEMS The Financial System Collapses -- and Spawns 10,000 Currencies! In Y2K, the interlinked, computer-dependent, telecommunications- dependent global banking system fails. Each bank loses liquidity, suffers from a run on deposits, and melts down as their large global corporate depositors fail. Weak banks drag down strong ones. People lose faith in the mega-banking system, and the system collapses.

When people take their money out of the banks, it jump-starts local economic activity, bartering for goods and services, that is separate from banks. As the dollars wear out, other local currencies replace it. Dollars are still used as exchanges between local economies.

FOCUS ON THE BASICS

1. Food Gets Scarce -- And Your Health Gets Better! In Y2K, the global agribusiness structure also collapses. From factory farms in the Midwest to the factory plantations in Central and South America and throughout the world, the system that impoverished the people of the world in order to put an over-abundance of food on the tables (and in the garbage dumps) of America falls apart. The companies themselves go belly up, and/or the transportation companies that moved millions of tons of food disappear.

>From the American point of view, less food is available. You can't go to the supermarket, buy a bag of potato chips and scarf them down, along with a six-pack of beer, while watching television. Processed foods are almost non-existent, and it takes a tremendous amount of energy (physical and mental) to make a potato chip.

Because you have joined a Community Supported Agriculture (CSA) group, you have enough food to feed your family. Because food is rationed (carefully measured and used), we have to think carefully about our daily calorie intake and the nutritional value of the food we eat. Also, since you have to bicycle to the collection point for your bi-weekly food allotment, you are getting plenty of exercise without having to join a health club! Living becomes its own health club.

You pay for your food by trading your time and talents in the community for credits, applied to our food account. Everyone in the family works for credits, including the kids, who earn credits by delivering food to elderly people.

2. The Government Collapses -- And Things Get Better! In Y2K, the federal government ceases to be a realistic player in the lives of most people. What is left by Y2K induced collapse of government support systems is further eroded by the gridlock of bickering and blaming among politicians. State and local governments step into the void created by the collapse of federal government. The city-state becomes the primary political focus of our lives.

Veterans, welfare, social security and other types of government transfers fail. So does the ability of the federal government to levy and collect income tax. Community economic structures institute voluntary taxes of members credits to provide a real social safety net for those within their local communities who are truly in need.

We find out during this time that everyone can do something to help themselves.

3. Who Gets The Power? The electrical grid east of the Rockies collapses. The Western and Texas grids hold up, but are weakened. Everybody gets half as much electricity as before.

The fuel delivery system collapses. Refineries halt production, and fuels are used for emergency and important community purposes. Black- market gasoline, of dubious quality, is available for up to $10.00 per gallon.

Who gets this electricity and fuel? By pre-arrangement, electricity and fuel is made available to neighborhoods and sub-neighborhoods, not individuals. Each community makes decisions on how much each family and individual gets.

Also by pre-arrangement, certain industries do NOT get power. Industries that were harmful, wasteful, produced toxics or produced nothing of human value (like arms manufacturers, leafblowers and microwave ovens) are put on a waiting list for available power. Hospitals get power, but only for basic treatments and operations, not cosmetic surgery or exotic treatments.

CIVIL UNREST? WHAT CIVIL UNREST?

In Y2K, the biggest worry is that America's civil populations turn on each other, in an orgy of violence and rioting. Or, that low-level stealing and violence erode the social fabric. There is a fear that different communities will have different resources, and that fighting will take place between neighborhoods.

This just doesn't happen. Diverse communities realize that they have months in which to get to know each other, to talk about their fears, their hopes and their resources. They work things out. Looting is at a minimum, since people realize the typical things that are stolen during a riot just won't have any value in a post- Y2K environment (starving to death in a room full of VCRs...). The word has spread: the only way to survive in Y2K is TO BELONG TO A COMMUNITY. The only way communities will survive is to be linked to as many other communities as possible. People join together and help each other, not because they like each other, but because they recognize that it is in their own self-interest to do so.

OUR VALUES GET CLARIFIED

Because our resources are restricted, we are forced, on a societal basis, to understand and agree upon a common set of values. 200+ years after the Declaration of Independence and Bill of Rights, we get to think about just what is important to us.

We abandon the values of Breakers: Fear Scarcity/greed Control/manipulation Self-centeredness Exclusivity Technology Consumption Individuality.

We support/adopt the values of Menders: Wisdom inclusivity compassion sacredness empowerment community.

These scenarios are optimistic but not pollyanna-ish. I fully recognize that there may be pain and discomfort in our lives. (It's there right now, under the Breaker society. Y2K means different people get to experience deprivation.)

In these times, we must remember that fear and suffering is an internal condition, our response to difficult times. We can decide to respond otherwise, with hope, optimism and enthusiasm. It's our choice.

I am very interested in how you see these scenarios. Let me know your thoughts.

Peace, Sharif

********************************************************************** *** Sharif M. Abdullah COMMONWAY INSTITUTE P.O. BOX 12541 Portland, OR 97212 (503) 281-1667 VISIT THE COMMONWAY WEBSITE: http://www.commonway.org ********************************************************************** *** sharif@commonway.org (Sharif M. Abdullah) Please send private responses directly to the above address



-- Joseph (jbabinsky@theriver.com), January 16, 1999.


Joseph,

Must admit I expected the Sharif stuff to be some sort of socialist utiopia kind of stuff, but it wasn't. Don't agree with all of it, but why do I have to?

What's right on: community-directedness post Y2K will converge with individual self-interest (BTW, this used to be the norm 50 years ago in the deeply rural county I live in for reasons not entirely divorced from Y2K; this consciousness still not entirely erased which is why rural areas still best bet).

But reckon on: governments and corporations will go bananas to restore status quo or their version of post status quo. And, because life isn't simple, corporations aren't THE bad guy whose wipe-out will magically help us all. Governments, ditto.

Thanks.

-- BigDog (BigDog@duffer.com), January 16, 1999.


Ok I am new here and I have to ask who is Stefan Stackhouse? This is the "best" case scenario? After reading this forum I am definetly rethinking all the "its going to be ok" stuff I hear but still would like to know more about the experts that write these postings. Any info would be greatly appreciated. thanks

-- lbank (mlbanks@hotmail.com), January 16, 1999.

Hello, and thanks for re-posting my little essay!

Yes, I am the author, and originally posted this to the Gary North forums. My intent was to demonstrate to the "pollyannas" and those in "denial" that even if you don't believe that Y2K=TEOTWAWKI, even if you believe that the vast majority of the computer systems in THIS country will be fixed or OK, that by no means suggests that we will all live happily ever after and that Y2K will have no impact on anything.

I tried as much as possible to build this scenario around things we presently know with a high degree of credibility and reliability. For example, we know through the work of the Gartner Group that much of the rest of the world is not nearly as far along aw the US is in Y2K efforts, and some countries -- including some major countries -- have barely started. "Fix on failure" is very close to being the international standard, and given that many of our government agencies and corporations have been working on Y2K for YEARS, that suggests to me that some major and widespread disruptions in our imports, our export markets, and in the general global economy and financial systems must at this point be regarded as a given. Much of my scenario builds upon that given.

I also draw very heavily from the historical precedents of the 73/74 oil embargo, energy crisis, and recession, and from the great depression of the 1930s. I don't expect this next time around to be exactly like either of those, yet there will be some familiar echos, and I tried to anticipate the more likely ones.

Someone mentioned that there were some "holes" in my scenario, and I agree. I was probably more charitable to the federal government than they deserve to be. It is looking very likely that the HCFA will not be able to process Medicare payments for a long time, and that will result in very serious cash flow problems within a few months for most hospitals and other health care providers, and after a few months we will start to see the health care system either rationing care by price or government regulation, or else contracting as health care businesses start failing. I was probably also too optimistic regarding electric power generating capacity. If the disruptions in crude oil imports materialize as I predict, if many nuclear power plants have to be shut down for safety concerns, and if there are any disruptions at all in the railroad system, then we will see our generating capacity effectively reduced by 25-50%, and rotating blackouts or some other form of power rationing will become a long-term necessity. This will be another driving factor behind the recession/depression, because business and industry will have to take a large share of the cuts.

I was also probably a little too optimistic about the timing and extent of bank runs. We now have reliable polling data indicating that approximately half of the U.S. population PLANS to withdraw either all or an extraordinary part of their account ballances prior to 12/31/1999. Given that this is with the present low levels of awareness and understanding among our population, these percentages will surely rise as the end of the year approaches. Those of us who understand how the fractional-reserve banking system works know that this is a sure recipie for disaster. I would now rate the imposition of a bank holiday preceeding 1/1/2000 as a near certainty, and it is increasingly likely that it will have to be imposed prior to Christmas. That will really hurth the Christmas retail season, and help plunge the economy into a recession even sooner. I would also look for some cash withdrawal rules to be imposed, perhaps as early as summer or fall.

Recent information that I have seen indicated that at least a limited National Guard mobilization is actually in the planning, so it now rates a near certainty. It is still anyone's guess as to whether, when, and to what extent martial law will be declared, and how people will react to that. Civil unrest and overseas aggression still remain unpredictable wildcards, and will be the main factors responsible for reality turning out much worse than my best case secnario.

Best regards,

Stefan Stackhouse

-- Stefan Stackhouse (stefans@mindspring.com), January 18, 1999.



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