[I consider Yardeni a credible source on Y2K (and not just because we agree on Y2K impacts).]

http://www.yardeni.com/public/y_19991011.pdf

Objectivism. I am no longer an alarmist about Y2K. I am just a skeptic now. There is no point in sounding the alarm any more with less than 90 days left to the century date change. Ive attempted to provide an objective assessment of the likely economic consequences of Y2K. At firstover two years agoI was alarmed by the lack of awareness of the problem. Thats not an issue any more.

Everyone on the planet Earth is certainly aware of Y2K. I believe that Y2K alarmists contributed to this development, without triggering any panic. In fact, there is no panic. Instead, complacency has increased and is widespread.

There has been a great deal of progress in fixing our computers to recognize that 01/01/00 will be the first day of 2000, not 1900. I expected there would be. But I am skeptical that it will be a nonevent as is widely believed now. I am concerned by the increasing complacency. Instead of preparing for still plausible worst-case scenarios, government and business leaders have convinced the public to expect the best possible outcome.

Hard data remain hard to find on the true readiness of vitally important public and commercial computer systems around the world. Almost all of the progress reports are not independently validated and verified. Given the lack of good information, I am hopeful that the upbeat progress reports provided by some organizations are accurate and reflect the universal readiness of key systems. But, I have my doubts. I am amazed that the optimists have virtually no doubts at all. Few of them will even concede that there is any risk at all of major disruptions. Indeed, I seem to be the only economist and investment strategist in the world who still expects a recession and a bear market in stocks. As a result, Ive been called a doomsayer by some reporters. I say, Since when has a recession been doomsday?

Relativism.

Ive said it before, and I say it again: This is one forecast I would like to be wrong about. I hoped that by now the weight of the evidence would allow me to moderate my views. I think there is enough to rule out doomsday scenarios, but not enough to join the dont-worry-be-happy crowd. I am much less concerned about critical infrastructure systems, particularly electricity and phone service in the major industrial countries than I was 12 to 24 months ago. The providers have found that date fields and embedded chip systems are less important than was feared. On the other hand, I am more concerned about the weak links in global supply chains, especially as they might disrupt global just-in-time manufacturing and petroleum production and distribution. When I first began to study Y2K, I concluded that a useful analogy was the 1973 oil shock, which triggered a significant global recession. Information, like oil, is a vital factor of production. If information technology systems malfunction or fail, a recession could be the major economic consequence. I still believe it is a useful analogy. Indeed, one of the consequences of Y2K might be disruptions in the energy sector.1 But I no longer think that the Y2K scenario is likely to be as bad as the 1973-74 economic downturn and bear market.

-- Ken Decker (kcdecker@worldnet.att.net), November 09, 1999

Answers

One would like to share your cautious optimism. I hope you are right.

-- Lars (lars@indy.net), November 09, 1999.

I'm posting an answear Mr. Decker so that mainly you know that some one still reads your posts. But you're "pie in the shy" polly like manner has robbed you of late; of some of the credibility you once had (well may be had).

I sure hope you remember that short time of real work out on the old ranch in your youth. The time and demand is running short for polly economists. Late next year you'll be putting "docking sheep" on your resume...LOL

~~~~~~~~~~~~~~~~~~~~~~~~Shakey~~~~~~~~~~~~~

-- Shakey (in_a_bunker@fort.feet), November 09, 1999.

I don't get it? Thought Mr. Decker was posting "Yardeni's" analysis. Not his own.

Why the flames?

don't shoot the messenger ---- GEESH!

-- solomon (balances@dot.com), November 09, 1999.

Like my other recent posts, this is "news" or "commentary" written by other authors. As a forum, I think this exchange of information is in the common interest. As for Mr. Yardeni, he is a respected economist with a solid track record. He's also been an astute Y2K observer, oft quoted by the forum pessimists... at least until lately. It strikes me as opportunist to quote Mr. Yardeni when you agree with him... and ignore him the rest of the time.

By the way, I've never worked with sheep. And I'll wager you a buffalo nickel I will not be working on a ranch next year.

-- Ken Decker (kcdecker@worldnet.att.net), November 09, 1999.

You're right, Kenny boy. You may not be working at all next year.

-- cody (cody@y2ksurvive.com), November 09, 1999.

Re: sheep. Don't knock it if you havn't tried it.

-- (afternoon@sheep.delight), November 09, 1999.

This sort of tells a story by itself:

"Instead of preparing for still plausible worst-case scenarios, government and business leaders have convinced the public to expect the best possible outcome."

-- snooze button (alarmclock_2000@yahoo.com), November 09, 1999.

Ok, I'm confused. Did anybody actually read these comments? Yardeni hasn't moderated his position at all. He's a skeptic - and he backs up his assessment with various relevant news items.

He has never said Y2K will be TEOTWAWKI. He has always said "recession". Sorry if that's not apocalyptic enough for you.

Jolly

-- Jollyprez (jolly@prez.com), November 09, 1999.

I always thought that Yardeni posited the most rational scenarios...

I still think he's more or less correct, although I don't know if he's (publically) considered the social ramifications of metropolitan New Years Eve parties falling flat--where thousands of serverely inebriated celebrants might be coughing on tear gas and throwing bricks and molotovs at NatGuard and police for kicks. Also I think terrorism and enemy attack are likely since it is believed to be a time of US and Western vulnerability in both a strategic and tactical sense.

-- coprolith (coprolith@rocketship.com), November 09, 1999.

Hmmm ... Dr. Yardeni, Ken Decker, and I all basically agree. Absolute truth has been achieved! :)

My only reservation, but it's an important one: I do think there are still enough lingering questions (re type testing, etc.) about some embedded systems in the oil, natural gas, and even power industries to suggest that things *might* be considerably worse. I have no way of really quantifying or assessing that risk, and perhaps it's just a case of my nerves or latent paranoia (or distrust of the establishment!) acting up. But oh, how I wish I had a very reliable, inside contact at, say, TAVA/Beck--and the technical background to understand whatever I was told!

Oh yes: if the international scene gets hit even more than expected (especially in the banking systems), then I'd also have to revise my prognosis downward significantly.

Damn, where is that Prozac? ;)

-- Don Florence (dflorence@zianet.com), November 09, 1999.