Merry Christmas. Bank Holiday. Ho, Ho, Ho! Link: http://www.bmyers.com/y2knext.html Comment: Programmer speculates that the government will not do anything radical about y2k until Christmas day.

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. . . Holiday Retail Sales - those sales between November 27, and December 25, account for as much as 70% of total profits for a large percentage of US and world wide retailers and manufacturers.

And should anything cause those sales to drop more than a few percentage points from last year's levels, you'll see a tidal wave of economic losses and bankruptcies spread throughout the world.

Retailers know this. Manufacturers know this. And governments know this.

And that's why most governments want to make sure that nothing scares consumers into cutting back on their holiday shopping.

Last year, same store holiday sales were up by a mere 2.5% - and that was said to be a pretty good year. Nothing really great, but good enough that most businesses were happy.

But imagine what might happen if due to Y2K concerns, customers cut back on their holiday spending this year, took money out of the banks, and started stock piling food.

Imagine that by mid-December Holiday sales were off by 40% - or more. . . .

So, before the government can worry about alerting consumers about potential Y2K problems, they have to worry about making sure the Y2K 'Grinch' doesn't steal Christmas.

From a political standpoint, it would be certain suicide to do anything that could diminish Holiday sales. And scaring people about Y2K, even if they need to be scared for their own good, could definitely ruin the holiday shopping season.

So the government is most likely going to do everything it can do to keep consumers worry-free and spending money. . . .

So don't expect the government to do anything that might frighten consumers during the holiday shopping season. In fact, expect the opposite.

Expect the government to provide more and more reassurance that the Y2k computer problem is solved, and that consumers should spend extra money this holiday season to celebrate the millenium Christmas.

And expect them to discredit anyone who might suggest otherwise.

A fly in the ointment

Unfortunately, there is a problem with this plan. In fact, there are two big problems.

The first is that if you don't alert the citizens to potential Y2K problems, and then severe Y2K problems do surface, you end up with a populace unprepared, and unable to take care of itself. And this could lead to major social unrest and lots of other nasty things.

And second, what if, on their own, consumers decide to cut back on holiday spending, and the season is a bust from the retailers point of view?

Then, what if this is followed by a Y2K economic problem, and you have a situation where retailers are severely hurt by the busted holiday shopping season, and then hit again with Y2K problems.

It's the double whammy effect.

The best outcome and my prediction. . . .

My personal prediction is that we will see one of the strongest holiday shopping seasons ever - probably a record breaker.

I think the season will start early, and high ticket items will be big sellers. . . .

I also expect that beginning in mid December we'll start to see some panic food buying, as food stores start experiencing shortages (combined holiday buying with Y2K panic buying could leave many with shortages.)

And finally, I expect that on Christmas Day, the President of the US, and other world leaders will announce a bank and financial market holiday extending through the first few days of the new year - to prevent runs and market collapses.

And then should there not be any wide spread Y2K problems after the first of the year, things will open back up, and life will go on. . . .

An early warning sign

If you should see the government come out and advise consumers to cut back holiday spending, and use their money for Y2K preparations - that should a warning signal to how bad the Y2K problem will be.

If any government determines that it is worth killing the holiday season to prepare it's citizens for Y2K . . . then you've got to think they believe it will be bad.

Real bad.

If that happens, you'd certainly want to get your preparation done before the rest of the populace went into panic mode.

Because once you hear about the first food riot, it will be too late for you to shop for food (or anything else until things settle down).

After Y2K

I personally expect Y2K to cause some big problems (I develop and support software for a living and know what even minor bugs can do to a system).

I think many people, businesses and governments are going to learn the hard way how dangerous it can be to walk the technology high wire without a net.

But no matter how severe the problems, there will be a mad rush to get them fixed. No matter how long it takes, or how much it costs, the demand will be to 'get things fixed!!!'. . . .

Of course, in order to participate in the recovery phase, one has to survive the problem phase. And the best way to do that, is to prepare for the worst. . . .

Link: http://www.bmyers.com/y2knext.html

-- zoobie (zoobiezoob@yahoo.com), August 28, 1999

Answers

Hey Zoob, How ya been? This kinda follows my post on Der Sickmeister's fix on failure mode eh?

-- FLAME AWAY (BLehman202@aol.com), August 28, 1999.

Different ways to look at this,,,,,I bought all my family members sleeping bags and oil lamps (with oil & extra wicks) last year for Christmas...

Will buy more similar type items this year as well for Christmas gifts....(good stocking stuffer-water purification tablets/survival manuals/ammo)....

-- mmmm (mmmm@aol.com), August 28, 1999.

mammon rules ... but not forever

-- Ashton & Leska in Cascadia (allaha@earthlink.net), August 28, 1999.

A big part of the problem is too many stores. There is no need for chain grocery stores or drug stores to be located 2 miles apart but it happens frequently. This causes high overhead per dollar of sales and about the time a store gets profitable, another opens up and grabs a share of the business. Did you ever notice how many shopping centers last about 10 or 15 years and then turn into second class outlets for liquidation centers, libaries, offices etc. The bank takes a bath on the loan yet does the same thing again for a new center. Truly amazing. The dumbness is incredible. Instead of strengthening the balance sheet to better withstand next year, they open more stores to reduce net profit per store and wonder why profits are decreasing.

-- Moe (Moe@3stooges.gom), August 28, 1999.

and, as Murray Rothbard says in his great book, America's Great Depression; Richardson and Snyder; 1963/1972 : [paraphrasing]

there is a "minimum price" for any good or service;

charge less than this price and not only do YOU go broke, but so does the bank that lent you the money for the business, etc. [and the same effect ripples throughout the economic community]

but - so little Classic Economics it taught these days...[or understood...]

-- Perry Arnett (pjarnett@pdqnet.net), August 28, 1999.

There's also the big problem of credit card debt. People are still paying on their credit cards from last christmas. Also, grocery stores accept credit cards as payment for groceries. One of the contributing factors for the coming economic collapse will be corporate and consumer debt. There are companies and financial institutions that are playing the credit card debt game that were not in the market 5 years ago. People will continue to spend until their debt is so great that bankruptcy is their only option or they simply quit paying their bills, change their phone number and they won't answer the door. Public utilities lose millions of dollars in revenue from customers that simply cannot pay their bill. This is just a small sector of the economy, but it is nevertheless a sign that the money crunch is here.

-- bardou (bardou@baloney.com), August 28, 1999.

I agree with this analysis up to December 25. However, I will predict that the goverment will attempt to keep the lid on as long as it can.

That means December 26-30 and beyond if they can get away with it. They will attempt to cover up Y2K problems as best they can. Gary North made a comment about "dangerous squirrels" chewing up electric lines. Sound silly? Get used to it. Beginning January 1 cars will crash into utility lines, squirrels and birds will find a sudden taste for telephone and electric wires, and strange explosions and chemical spills will be caused by unknown forces.

Who knows, maybe the Clintonistas will blame it on an alien invasion or terrorists. Wait--they can blame all failures on right-wing terrorist hate crimes. Yeah, that's the ticket. :-(

-- cgbg jr (cgbgjr@webtv.net), August 28, 1999.

Credit card debt may be the key. Whatever the shoppers are told about Y2K, they will need their plastic. But the plastic depends on lots of people keeping their money in the banks so it can be lent out. What might happen as money shifts come the last couple of months of the year. Already advisors are hinting they may be coming to a time when they will advise shifting out of the stockmarket and into more cash positions. Would that mean more money to lend.. so lower interest rates? Or would that trigger the rush to hide your assets in your mattress which would lead to a banking and credit crisis? And remember.. all those businesses that cancelled employees vacations over rollover may decide to hold cash for payroll. And all those foreign countries that we hear aren't doing so well have populations that may want OUR dollars 'cause they figure they are a safer bet. Could get real interesting.

-- Linda (lwmb@psln.com), August 28, 1999.

How about buying everyone fruitcake for Christmas? It's high energy food, dense, high fiber, and lasts forever... Oh am I going to feel weird if everyone goes about their Christmas business as usual... Like, ho, ho,ho

-- Mara Wayne (MaraWayne@aol.com), August 28, 1999.

Pssst, Mara! sshhhh, typing that may get you inducted!

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001I zu

-- FRLians (loyal@ever.more), August 28, 1999.

There's been talk that the reason why the Feds raised interest rates was to shore up the dollar. No doubt the interest rates all around will be raised accordingly and will have little impact on consumer spending. No one is paying attention. As long as people have a balance left on their credit cards and they can rob Peter to pay Paul every month, they'll continue on the same path. Am I too far off base here to predict that banks and other credit card companies may cancel millions of cards or set very low buying limits in the near future? As money begins to tighten and a down turn in the economy becomes realistic, banks may tighten up their credit card policies and make it more difficult for people to spend money that they don't have.

-- bardou (bardou@baloney.com), August 28, 1999.

P.S. Anyone know what the shelf-life of fruitcake is?

-- bardou (bardou@baloney.com), August 28, 1999.

Fruit cake will last longer than any of us. And who says there will be a x-mass shopping season?

-- FLAME AWAY (BLehman202@aol.com), August 28, 1999.