Greenspan-risk of bottlenecks in economy from Y2K

Updated 8:52 AM ET September 17, 1999

WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan said Friday there was a risk of bottlenecks in the U.S. economy resulting from the fear of end-of-century computer problems, but widespread disruption was unlikely.

Speaking before the President's Council on Year 2000 Conversion, the U.S. central banker said he was confident that the risk of any widespread breakdown to critical business infrastructure from the computer bug was "negligible."

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Ray

-- Ray (ray@totacc.com), September 17, 1999

Answers

bottlenecks in the U.S. economy resulting from the FEAR of end-of-century computer problem

Just in case you where wondering who to blame for any problems in January...

-- Greg (balzer@lanset.com), September 17, 1999.

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FOCUS-Y2K may bring economic bottlenecks-Greenspan

(Updates with more details from speech, background) By Caren Bohan

WASHINGTON, Sept 17 (Reuters) - Federal Reserve Chairman Alan Greenspan said on Friday there was a risk of bottlenecks in the U.S. economy resulting from the fear of end-of-century computer problems, but widespread disruption was unlikely.

Speaking before the President's Council on Year 2000 Conversion, the U.S. central banker said he was confident that the risk of any widespread breakdown to critical business infrastructure from the computer bug was "negligible."

Greenspan said the major challenge for policymakers was how businesses and households respond to their fears of the Y2K computer bug, which prevents some computers from distinguishing 2000 from 1900 because of an old programming shortcut.

Economists are unsure how the public response to the computer bug will affect economic activity in the booming U.S. economy. Inventory building by businesses could add to economic growth and inflation risks while a widespread technical breakdown and public panic may undermine the economy.

"If only a small percentage of businesses choose to add to their inventories as a hedge, the effect on production will be insignificant," Greenspan said.

"However, should a large number of companies want to hold even a few extra days of inventories, the necessary, albeit temporary, increase in production (or imports) to accommodate such stock building could be quite large. Bottlenecks could develop, and market pressure could ensue," he said.

Financial markets have speculated that the Fed, which has raised interest rates twice this year to ward off inflation, may put monetary policy on hold due to these uncertainties. Fed officials have said monetary policy will proceed as normal.

Greenspan noted that the U.S. public was more sanguine about the coming event, which should ease fears of major disruption, though "we are not as yet home free."

"If we avoid fear-induced, significant economic responses in the months ahead, the Century Date Change will hopefully replicate the saga of the 'dog that did not bark'," he said.

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Ray

-- Ray (ray@totacc.com), September 17, 1999.

I've been set up. Here it is. This guy wanted us to be responsible a year ago, as he said 99% isn't enough. I get responsible. I put by a little bit of food and some other stuff. NOW he says that people doing what I'm doing are gonna cause a HUGE downturn. WAAAAAAAAAAAH!!!! MAAAAAA, HEEELLLLP!!

HHHHHAAAAAAAALLLLLPP MR. WIZARD !!! I DON'T WANNA BE A DEPRESSION CAUSER!!!

Night Train AIEEE-YIEEE-YIEEE-YIEEEE!!

-- Jes an ol footballer lookin for TRUE daylight (nighttr@in.lane), September 17, 1999.

Text of his speech at:

http://www.federalreserve.gov/BoardDocs/speeches/1999/19990917 .HTM

Jerry

-- Jerry B (skeptic76@erols.com), September 17, 1999.

Let's see if this works:

link

-- Jerry B (skeptic76@erols.com), September 17, 1999.

If anyone is to blame for the FUTURE hoarding, it will be those that waited until the very last minute to stock up. Greenspan should be happy that we have kept the economy rolling along at a nice pace. Businesses are happy and have profitted nicely because of us. However, after the race is over and the dust settles, we'll be consuming our stash and staying out of the stores. So prepare to get blamed for not spending any money and businesses will fail.

-- As I see it (asIseeit@asIseeittt.com), September 17, 1999.