SYSTEMS THEORY AND CONSEQUENCES OF Y2K IMPACTS

One year of diligently investigating the Year 2000 Problem has presented sufficient evidence to show a clear trend towards global disruption and chaos in the year to come.

This is what I have learned:

1. The Y2K problem is systemic in nature and global in scope. 2. The Y2K problem causes systems to either be degraded or fail. 3. The consequences of systemic failure are cascading cross defaults, spreading the problem to the entire system of infrastructures supporting our global civilization. 4. Our leaders did not listen to experts while there was sufficient time to fix the computers. 5. Our governments did not recognize the problem for what it truly was until far too late to fix it. 6. Our governments apparently do not have the vision or willpower to fix the problem. 7. There are not enough programmers to fix the problem. 8. There is not enough time to fix the problem. 9. The people are not being properly advised or encouraged to prepare for realistic consequences of disruptions or systemic failures. 10. Governments around the world are preparing for widespread, severe, and prolonged disruptions. I have seen evidence of preparations for martial law. 11. Most crisis management response plans (consequence management) are new and untested. Nobody knows how well they will work against a crisis of unknown proportion.

*********

Systemic failures seem inevitable. Systemic degradation is a certainty. The problem is that you dont require outright failure of critical infrastructures (the iron triangle: electricity, communications, and banking) to precipitate Alan Greenspans cascading cross defaults. Degradation of the iron triangle infrastructures would certainly cause serious degradation to other infrastructures (systems) reliant upon them. Serious degradation of secondary systems would cause critical degradation or outright failure of tertiary systems.

If enough businesses fail because of this, there remains a real risk of upward-spreading failures. This is because primary and secondary systems require support from tertiary systems. If SMEs (small-medium sized enterprises) really are the driving force of the American economy, which directly affects many international economies, then taking out the cornerstone could cause secondary and primary system critical degradation or failure.

The key to any optimistic Y2K impact forecast, other than wishful thinking, must be the existence of a damage control mechanism to limit or stop cascading cross defaults between systems. I have yet to find public mention of our collective ability to contain systemic failures among reputable Y2K optimists. This concerns me greatly.

Maybe the damage control mechanism is designed into the system in a manner like what International Monitoring (UK) explained in their July 21, 1999 public release report. According to this report, redundancy and diversity of key system components play the chief role in system reliability in the face of system-internal failures or environmental changes. Will redundancy and diversity be sufficient to offset the damaging effects of Y2K impacts upon the system? Are there other options available to consequence managers to control systemic failures from outside the system?

Systems Theory: 1. Our global civilization may be seen as a massive super-systemconsisting of myriad interconnected subsystems in a three-dimensional latticework configuration. (interconnectedness) 2. Each subsystem was created independently, but has grown to depend upon neighbour systems for its own sustainability and growth. (interdependency) 3. Each subsystem may have been more or less critical to the civilization super-system in the past, but now this interconnectedness has produced mutual vulnerability. Individual systems have lost their individual importance in favour of mutual support of the super-system. 4. Each subsystem relies directly not only upon its own internal strengths (redundancy and diversity), but also upon neighbour (directly-connected) systems internal strengths and the strength of the connection (communications between systems) 5. Each subsystem relies indirectly upon the reliability of its secondary subsystems: the neighbour systems to its own neighbour systems. (again internal strengths and connection reliability) 6. Each system may or may not be Y2K compliant. 7. Each system may: remain stable, have degraded integrity, or fail altogether. 8. System failures will be passed between systems via the connection.

Analysis:

Connections between systems is the key. The strengthand vulnerabilityof the super-system is found in the connections between systems. Therefore any Y2K impact management program must be a containment exercise. Cut the connections between bad and good systems. Once isolated, individual systems may be fixed or dismantled without threat of cascading cross-default failures spreading the damage. I have heard multiple stories about how industry and government leaders have refused to test their systems end-to-end Y2K-reliability in real time.

Thats why nobody had claimed Y2K compliance!

Everybody is assuming a less-than-100% fix scenario, and building consequence management plans for continuity of operations. Thats Y2K ready! Whether these plans will work well enough to mitigate Y2K impacts is another question

Further analysis and extrapolation:

The Y2K problem is real and governments know that failures will occur. There remains another problem though, panic. Government and industry must cut the connectionscontain negative news about the problem or minimize the messageto prevent the problem of widespread panic, bringing about the very impacts they wish to minimize. This explains the governments policies of silence and ridicule of people who prepare or make Y2K details public.

Conclusion of high confidence: Jim Lord was right. The Pentagon Papers were real and, at the minimum, 26 million Americans are in danger. One step further: If failures do occur, as they are predicted by reputable sources, then governments must contain the problems to avoid the domino effect and all its horrific consequences. To contain the problems, one must cut the connections againisolate the problem areas for future actionto prevent a systemic failure and social collapse. The wildcard is not the predictable systems, it is the unpredictable people.

Conclusion of high confidence: Gary North is right. FEMA will go into damage control mode to mitigate the problem, control the spread of failures, and control the spread of panic. Martial law will (must) be imposed and terrorism will be the excuse. National governments will continue the liberal use of public relations lies and spinto offset the damaging effects of civil unrest.

One step further: This problem is global in scope. As no nation is completely ready and many nations have not seriously prepared for infrastructure degradation or failures, then scattered areas or entire regions around the globe may face severe disruptions and the possibility of social collapse. If disasters are even of moderate impact, there is a great likelihood that by autumn of 2000 the world will be in a state of chaos. Many of these countries and regions are either controlled or influenced by enemies of the Western Democracies. The United Nations was unsuccessful in creating stability in Iraq, Somalia, or Rwanda. Committee action will not be successful in managing the global disaster recovery effort. Some higher authority, not a committee, must be placed in charge of the global recovery effort.

Conclusions of moderate confidence:

1. If some higher authority is granted, or takes, control of the global disaster recovery effort, a one-world government cannot be far behind. 2. If neither the UN, nor some other authority, is capable of stabilizing flashpoints, the current global order could gradually fracture into the likeness of the Balkan States.

Any further extrapolation beyond this point brings moderate-to-low confidence conclusions. Nevertheless, the following questions beg consideration:

1. What happens if US global influence is severely restricted prior to and in the coming year? 2. What happens if local conflicts spread to local or regional wars? 3. What happens if, even in a few locations, martial law fails to adequately control the spread of panic? 4. What happens to citizen rights and freedoms if made subservient to a global government? 5. What happens if, even in one or two global regions, Y2K impacts are severe and consequence management fails to stop or slow the domino effect? 6. What plans can one make to address these issues before the end of the year?

-- (Kurt.Borzel@gems8.gov.bc.ca), December 27, 1999

Answers

Excellent post - just one question. As a fellow Canadian, my perception is that while we're roughly as 'remediated'(or not) as our friends south of the 49th parallel, our social/cultural situation will make it marginally better to be here than in the US. Small consolation, I know, but would you agree or disagree?

jonny b good

-- jonny (jonny.b@good.com), December 27, 1999.

Unfortunately, it is entirely too late in the game to address the many intense issues you raised. As much as I hate to admit it, I think the folks who have prepared must now go into a CYA mode and let the other chips fall where they may.

I can say this much with certainty and with high confidence that many others feel the same way...I will never be "taken" to a shelter or camp...Since I have spent substantial time, money and effort preparing for Y2K, I feel no responsibility towards those who did not or would not prepare...If TSHTF to the chaotic degree you envision (God forbid) then all bets are off and we will find out what some people are really made of.

Like the song said, "Gonna pick up my axe and fight like a farmer"... after the ammo runs out, that is.

-- Irving (irvingf@myremarq.com), December 27, 1999.

Kurt,

Excellent work.

My understanding is that if the US infrastructure is at risk of exporting chaos then the UN considers its right to be to send UN troops into the US to assume command of the US infrastructure. I'll look for a link on this....Also, I'm not certain if this applies to all uUN members, but would think so.

Finally, I would hope that the UN is too busy to worry about little ole us (US) but given we (Americans, not US government necessarily) stand dead center in the way of its one world government, who knows?

-- Hokie (nn@va.com), December 27, 1999.

We live in a world that depends on a high division of labor. In one gigantic collapse, the division of labor will implode. This implosion will begin in 2000 and thereafter. Those who work in highly specialized fields will find little or no demand for their skills, in the face of an enormous supply of desperate, low-wage competition. Any job classification that did not exist in 1945 will probably not have a lot of demand in 2001, with one exception: computer software programming.

The June 2 issue of Newsweek ran a front cover story on the looming computer crisis of the Year 2000 -- called y2k (Year 2 K, shorthand for a thousand). In the week it the article appeared (late May), the Dow Jones Industrial Average set a record new high. (It was beaten a week later.) If investors believed the information reported in the Newsweek article, the world's stock markets would have collapsed. Clearly, people don't believe it. That's why a small handful of people can get out now -- out of the stock market, the bond market, and any city over 25,000.

Not everyone can get out at the top of a bull market. This includes the "bull market" known as modern industrial society. Pull the plug on the local power utility for 30 days, and every city on earth becomes unlivable. What if the plug gets pulled for five years?

How do you rebuild the shattered economy if the computers go down, taking public utilities with them? Without electricity, you can't run the computers. Without computers, you can't fix computers. How can you assemble teams of programmers to fix the mess? More to the point, how do you pay them if the banks are empty?

Chase Manhattan Bank has 200 million lines of code to check and then repair. Citicorp has 400 million lines. All big banks are similarly afflicted. And even if this could be fixed, bank by bank, there is no universal repair standard. Thus, the computers, even if fixed (highly doubtful) will not work together after the individual repairs. A noncompliant bank's data will then make every compliant bank noncompliant. Thus, the world banking system will crash in 2000. When the public figures this out in 1999, the bank runs will begin.

You probably will not have your present job in 2001.

"It Just Can't Be True!"

You don't believe me, of course. Not yet. But I have published the evidence on this Web site. You can verify what I'm saying. But you still won't believe it. Why not? Because it's too painful. In their book, The Sovereign Individual, Davidson and Rees- Mogg make a very important observation:

A recent psychological study disguised as a public opinion poll showed that members of individual occupational groups were almost uniformly unwilling to accept any conclusion that implied a loss of income for them, no matter how airtight the logic supporting it. Given increased specialization, most of the interpretive information about most specialized occupational groups is designed to cater to the interests of the groups themselves. They have little interest in views that might be impolite, unprofitable, or politically incorrect (p. 339).

My views are all three: impolite, unprofitable, and politically incorrect. Impolite, because I am saying this: (1) those advising you are as blind as an eighth-century Israelite king; (2) they have given you information that will prove to be wildly unprofitable; (3) all the hype about your getting rich -- the world's getting rich -- is a clap-trap. We are heading for a disaster greater than anything the world has experienced since the bubonic plague of the mid-14th century.

Because the year 2000 begins on a Saturday, millions of victims will not be aware of their dilemma until the following Monday or Tuesday. They will pay no attention to advance warnings, such as this one, that they are at risk.

As you read this report, I want you to think to yourself: "How will this affect me? Is my business at risk? Is my income at risk? What should I do?" I also want you to visit my Web site, http://www.garynorth.com and examine the accumulating evidence, week by week.

The Origin of the Problem

Here is the problem. Over three decades ago, computer programmers who wrote mainframe computer software saved disk space -- in those days, very valuable space -- by designating year codes as two-digit entries: 67 instead of 1967, 78 instead of 1978, etc. Back then, saving this seemingly minuscule amount of disk space seemed like an economically wise decision. This may prove to be the most expensive forecasting error since Noah's flood.

What the programmers ignored for three decades is this: in the year 2000, the two digits will be 00. The computer will sit there, looking for a year. At midnight, January 1, 2000, every mainframe computer using unrevised software dies. If old acquaintances are in the computer, they will indeed be forgot.

Programmers who recognized the implications of this change did not care. They assumed that their software would be updated by year 2000. That assumption now threatens every piece of custom software sitting on every mainframe computer, unless the owner of the computer has had the code rewritten. In some cases, this involves coordinating half a billion million lines of code. (Example: AT&T) One error on one line can shut down the whole system, the way that America Online was shut down for a day in 1996 because of a one-digit error.

The handful of reporters who have investigated this problem have met a wall of indifference. "We're all using microcomputers now." "This is a problem only for a few companies that are still using mainframes." "Cheap solutions will appear as soon as there is demand." "The software will be updated soon, and I'll buy it then." "If this were a serious problem, we'd have heard about it." Yet this last response is given to someone -- a reporter -- who is trying to tell people about the problem.

I first read about this problem years ago in a book by the pseudonymous author, Robert X. Cringely: Accidental Empires. It is not as though the computer industry has been unaware of it. Only a few weeks ago, I read a Wall Street Journal column on computers that mentioned it. The writer wrote that his editor is getting tired of having him mention it. This is typical. The general public hasn't heard about it, yet editors are already tired of hearing about it. "It's old news." Well, it's new news for most people.

What does it matter, really? We use microcomputers. Microsoft has solved the Year 2000 problem, we assume. So have most software companies. Everyone uses desktop computers or, at the largest, minicomputers, right? Wrong.

Governments Rely on Aging Mainframes and Software

On September 24, 1996, Congressman Stephen Horn, who is Chairman of the Subcommittee on Government Management, Information, and Technology, submitted to the full committee a report on the Year 2000 problem. The Subcommittee held hearings on April 16. (Just one day of hearings. This indicates the degree of concern that the government has.) He said that these hearings revealed "a serious lack of awareness of the problem on the part of a great number of people in business and government. Even more alarming was the cost estimate reported to the Subcommittee to remedy the problem, which was said to be $30 billion for the Federal Government alone." Then he announced:

Without greater urgency, those agencies risk being unable to provide services or perform functions that they are charged by law with performing. Senior agency management officials must take aggressive action if these problems are to be avoided.

Yet despite Horn's valid warning, nothing visible is happening. He knows this. These agencies must shift hundreds of millions of dollars from their existing budgets to hire outside programmers to rewrite the code that runs these agencies. This isn't being done. More to the point, the longer they delay, the worse the problem gets. You can't just go out and hire programmers who are familiar with the code. As businesses find out what threatens them, the demand for these highly specialized services will soar. (If businessmen don't figure this out in time, payment will come due in January of 2000.)

The Subcommittee's report warns: "This issue may cause banks, securities firms and insurance companies to ascertain whether the companies they finance or insure are year 2000 compliant before making investment decisions." It also says that companies will start demanding contractual warranties guaranteeing against Year 2000 breakdowns.

A memorandum from the Library of Congress Research Service (CRS) has warned that "it may be too late to correct all of the nation's systems." So, the question arises: Which systems will survive and which ones won't? Here are some problem areas, according to CRS:

Miscalculation by the Social Security Administration of the ages of citizens, causing payments to be sent to people who are not eligible for benefits while ending or not beginning payments to those who are eligible;

Miscalculation by the Internal Revenue Service of the standard deduction on income tax returns for persons over age 65, causing incorrect records of revenues and payments due;

Malfunctioning of certain Defense Department weapon systems;

Erroneous flight schedules generated by the Federal Aviation Administration's air traffic controllers;

State and local computer systems becoming corrupted with false records, causing errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, utilities regulations, and a breakdown of some public transportation systems.

I don't think these are small issues. They will probably start receiving media attention when it is so late in the process that there will be massive foul-ups in coordinating the revisions.

Notice, the biggest one is missing: an international bank run, as depositors demand cash. From that day on, all exchanges will be local: the collapse of the division of labor.

When the computers' clocks think it's 1900, it soon will be.

I realize that there has been tremendous progress in microcomputer power, but does anyone really think that all of the Federal government's forms -- not an infinite number, but approaching infinity as a limit -- can be put on three dozen Compaq desktop computers and run with, say, Lotus Approach or Microsoft Access? And even if they could, how would you re- train all of the bureaucrats to use the new systems? How fast will they learn? How fast do bureaucracies adapt? The Subcommittee's report warns:

The clock is ticking and most Federal agencies have not inventoried their major systems in order to detect where the problem lies within and among each Federal department, field office and division. The date for completion of this project cannot slip.

By "cannot," the Subcommittee's report-writer meant "must not." The date can surely be allowed to slip. It almost certainly will be allowed to slip.

Additionally, the task may be more difficult for the public sector, where systems have been in use for decades, may lack software documentation and therefore increase the time it takes from the inventory phase to solution.

Did you get that? The software code's records are gone! Remember also that we're not just talking about the United States government. We're talking about every government -- national, state, and local -- anywhere on earth that has its data stored on an unrevised mainframe computer system or which relies on any third-party computer service that uses uncorrected software.

As the year 2000 approaches, word will slowly begin to spread: "After the three-day weekend that will inaugurate the year 2000, there is going to be a hangover the likes of which we have never seen before." For some, it will be a time of celebration. For others, it will be the end of their dreams. It depends on whether they are being squeezed by the government or dependent on it.

But it's not just government that is at risk. It's private industry.

Kiss Medicare Goodbye

Some 38 million people will receive Medicare payments in 1997. In 2000, an estimated one billion claims will be filed, totaling over $288 billion. This, according to a May 16, 1997 report of the General Accounting Office (GAO): "Medicare Transaction System."

Problem: the Medicare system won't make it through 2000. The same GAO report shows why. Medicare claims are not actually administered by Medicare. It's administered by 70 private agencies. These agencies have been informed that their contracts will not be renewed in 2000.

The agency that officially supervises Medicare has plans for one huge computer system that will bring the program in- house. It is the same dream that motivated the Internal Revenue Service for the past 11 years. The IRS announced earlier this year that after 11 years and $4 billion, the attempt had failed.

Medicare now knows that it has a problem with its computers. They are not Year 2000-compliant. So, to make sure that they will be compliant, Medicare has issued an appeal to the 70 newly canned companies: please fix the year 2000 problem for us before you leave. As the GAO report puts it, "contractors may not have a particularly high incentive to properly make these conversions. . . ."

What if the system fails? (What if? Are they kidding? When!) The report says that the Health Care Financing Administration (HCFA), which is responsible for running Medicare, has not made contingency plans. "HCFA officials are relying on the contractors to identify and complete the necessary work in time to avoid problems. Yet the ... contractors not only have not developed contingency plans, they have said that they do not intend to do so because they believe that this is HCFA's responsibility."

Kiss the IRS Goodbye

The IRS has 100 million lines of code. Their code is not year 2000-compliant. After the failure of the 11-year project to upgrade the system, Chief Information Officer Arthur Gross announced that getting the IRS year 2000-compliant is the "highest priority for the IRS." The IRS has nearly 50,000 code applications to coordinate and correct. This task will require the IRS to move 300 full-time computer programmers to the new project. (Reported in "TechWeb," April 21, 1997).

For comparison purposes, consider the fact that the Social Security Administration began working on its year 2000 repair in 1991. Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS isn't technically equipped to pursue tax evaders after December 31, 1999? What if the IRS computer system isn't fully integrated with all of its branch offices? What if the system's massive quantities of forms are not stored in a computer system that is Year 2000-compliant? More to the point, what if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return?

In 1999, the IRS may find a drop in compliance from self-employed people. If the IRS can't prosecute these people after 1999, there will be a defection of compliance by the self-employed. When word spreads to the general public, there will be a hue and cry -- maybe at first against the evaders, but then against employers who are sending in employees' money when self- employed people are escaping. Meanwhile, cash-only, self-employed businesses will begin to lure business away from tax-compliant businesses by offering big discounts.

This will start happening all over the world. Once it begins, it will not easily be reversed. The tax system rests on this faith: (1) the government will pay us what it owes us; (2) the government can get us if we stop paying. Both aspects of this faith will be called into question in the year 2000 if the governments' computers are not in compliance.

Big Brother is no more powerful than his software. On January 1, 2000, this strength may fall to zero. Actually, double zero.

If the IRS cannot collect taxes, and if all the other mainframe computer-dependent tax collection agencies on earth do not fix this, what will happen to the government debt markets worldwide? To interest rates? To the government-guaranteed mortgage market?

Kiss them all goodbye

"No Problem! Trust me!"

There are a few conservative financial newsletter writers who have heard about y2k. They deny its economic relevance. A shut-down of all mainframe computers would mean that newsletter writers will be out of business after 1999 -- a thought too terrifying for them. So, they brush y2k aside with some version of this rebuttal: "Of course, the government may not get its computers fixed." This is supposed to calm you. It should terrify you. Ask yourself:

What happens to T-bills and T-bonds if the IRS computer breaks down and a tax revolt spreads because taxpayers know the IRS will never find them, and that if they pay their taxes, they won't get their refunds?

What happens to money market funds and bond funds that invest heavily in government debt when investors realize that if the IRS can't collect taxes, the government will default on its debt?

What happens to the banks when depositors figure out that the FDIC is bankrupt and that nobody insures their accounts any more?

What happens to your job when the banks close because of bank runs, and no business can borrow money or even write a check to its employees?

What happens to the delivery of food into cities when money fails because the banks are busted?

What happens to the delivery of public utilities when money fails because the banks are busted?

What happens to your retirement fund when ERISA, the government pension guarantee program, goes bankrupt?

What happens to the 38 million people in the U.S. who are dependent on Medicare?

What happens to 42 million people on Social Security?

What happens to every state government?

What happens to crime rates when the state cannot imprison violent criminals and may have to release those who are locked up because they can't be fed?

What happens to the world economy when this scenario is multiplied across every government?

Kiss your job goodbye. Especially if you're a journalist. I know. I am one. I figure I'll be out of work -- forced retirement -- January 1, 2000. I'm making plans to be in small-scale agriculture. I'm out of debt.

What about you?

Psychological Deferral

Those in authority prefer to defer thinking about this. They are playing Scarlett O'Hara: "I'll think about it tomorrow," followed by, "Well, fiddle dee-dee." Deferral is a normal response to distant problems. The question is: What can we afford to defer? People defer making this assessment. The fact that you have not read much about this looming problem doesn't mean that it isn't a problem. If your employer has not actively sought solutions to this problem, your firm had better not use mainframe computers or be dependent on suppliers that rely on mainframe computers.

Everyone assumes that someone else is doing something to solve these problems. "It's being taken care of." The problem here is the passive voice. Who, exactly, is taking care of it? What, exactly, is this person doing? Is he on schedule? How do you know for sure? Are you taking his word for it? Anyone who takes the word of a computer programmer that he is on schedule is a person of very great faith. If the programmer says "Sorry, I didn't make it" on December 31, 1999, you're dead in the water. Meanwhile, he moves on.

What You Should Do, Beginning Today

First, you investigate whether what I'm saying is true.

Second, think through what happens to you if the local power company and the local water and sewage company shut down in your city for six months. "Who ya gonna call?" Especially if your phone is dead? And if you do get through, how ya gonna pay if your local bank is defunct?

Third, here is my personal strategy. I have adopted a question: "Can I prove on paper that he owes it to me?"

I want hard copy print-outs of everything I do with the government. If you are owed money from Social Security, and you're dependent on this income, contact the Social Security Administration every year and get a letter telling you what you're owed. This is true of every government pension system.

Do you have a copy of your birth certificate? If not, write to your place of birth and get it. Even if that community has not computerized the records, do it now. Even if it keeps the records in a desktop, do it. If word starts to spread, they may be buried in requests in 1999. You want your paperwork completed before word gets out.

Do you have a copy of your college transcripts? If not, get it. The same goes for your work record history. Assume that your records are in some company's mainframe computer. Assume also that the company has failed to update the software.

Do you have a print-out of all of your insurance records? Would they stand up in court? If not, get what you need, now.

Have you spoken with your local insurance agent? Is he fully aware of the problem? Ask him straight out if he has scheduled an update of his software if he relies on vendor- supplied software. He deserves to know what is coming. So do you. (If you want to photocopy this issue to send him, go ahead.)

Think through this problem in advance, before it gets out and creates a banking panic, all over the world. This story will get out eventually. In 1999, when reporters are running around looking for sensational Year 2000-third millennium stories, this one will at last surface. It already has: in Newsweek. At that point, every government bureaucrat whose agency is at risk will start playing the "No problem" game. "It's being taken care of." The bureaucrat's number-one rule is to evade responsibility. No one with any authority is going to admit that his malfeasance in office is going to create a disaster on January 1, 2000. The basic response will be this: "There's no problem here, and furthermore, I'm not responsible when everything collapses next year!"

-- Susie Q (susieq@aol.com), December 27, 1999.

We live in a world that depends on a high division of labor. In one gigantic collapse, the division of labor will implode. This implosion will begin in 2000 and thereafter. Those who work in highly specialized fields will find little or no demand for their skills, in the face of an enormous supply of desperate, low-wage competition. Any job classification that did not exist in 1945 will probably not have a lot of demand in 2001, with one exception: computer software programming.

The June 2 issue of Newsweek ran a front cover story on the looming computer crisis of the Year 2000 -- called y2k (Year 2 K, shorthand for a thousand). In the week it the article appeared (late May), the Dow Jones Industrial Average set a record new high. (It was beaten a week later.) If investors believed the information reported in the Newsweek article, the world's stock markets would have collapsed. Clearly, people don't believe it. That's why a small handful of people can get out now -- out of the stock market, the bond market, and any city over 25,000.

Not everyone can get out at the top of a bull market. This includes the "bull market" known as modern industrial society. Pull the plug on the local power utility for 30 days, and every city on earth becomes unlivable. What if the plug gets pulled for five years?

How do you rebuild the shattered economy if the computers go down, taking public utilities with them? Without electricity, you can't run the computers. Without computers, you can't fix computers. How can you assemble teams of programmers to fix the mess? More to the point, how do you pay them if the banks are empty?

Chase Manhattan Bank has 200 million lines of code to check and then repair. Citicorp has 400 million lines. All big banks are similarly afflicted. And even if this could be fixed, bank by bank, there is no universal repair standard. Thus, the computers, even if fixed (highly doubtful) will not work together after the individual repairs. A noncompliant bank's data will then make every compliant bank noncompliant. Thus, the world banking system will crash in 2000. When the public figures this out in 1999, the bank runs will begin.

You probably will not have your present job in 2001.

"It Just Can't Be True!"

You don't believe me, of course. Not yet. But I have published the evidence on this Web site. You can verify what I'm saying. But you still won't believe it. Why not? Because it's too painful. In their book, The Sovereign Individual, Davidson and Rees- Mogg make a very important observation:

A recent psychological study disguised as a public opinion poll showed that members of individual occupational groups were almost uniformly unwilling to accept any conclusion that implied a loss of income for them, no matter how airtight the logic supporting it. Given increased specialization, most of the interpretive information about most specialized occupational groups is designed to cater to the interests of the groups themselves. They have little interest in views that might be impolite, unprofitable, or politically incorrect (p. 339).

My views are all three: impolite, unprofitable, and politically incorrect. Impolite, because I am saying this: (1) those advising you are as blind as an eighth-century Israelite king; (2) they have given you information that will prove to be wildly unprofitable; (3) all the hype about your getting rich -- the world's getting rich -- is a clap-trap. We are heading for a disaster greater than anything the world has experienced since the bubonic plague of the mid-14th century.

Because the year 2000 begins on a Saturday, millions of victims will not be aware of their dilemma until the following Monday or Tuesday. They will pay no attention to advance warnings, such as this one, that they are at risk.

As you read this report, I want you to think to yourself: "How will this affect me? Is my business at risk? Is my income at risk? What should I do?" I also want you to visit my Web site, http://www.garynorth.com and examine the accumulating evidence, week by week.

The Origin of the Problem

Here is the problem. Over three decades ago, computer programmers who wrote mainframe computer software saved disk space -- in those days, very valuable space -- by designating year codes as two-digit entries: 67 instead of 1967, 78 instead of 1978, etc. Back then, saving this seemingly minuscule amount of disk space seemed like an economically wise decision. This may prove to be the most expensive forecasting error since Noah's flood.

What the programmers ignored for three decades is this: in the year 2000, the two digits will be 00. The computer will sit there, looking for a year. At midnight, January 1, 2000, every mainframe computer using unrevised software dies. If old acquaintances are in the computer, they will indeed be forgot.

Programmers who recognized the implications of this change did not care. They assumed that their software would be updated by year 2000. That assumption now threatens every piece of custom software sitting on every mainframe computer, unless the owner of the computer has had the code rewritten. In some cases, this involves coordinating half a billion million lines of code. (Example: AT&T) One error on one line can shut down the whole system, the way that America Online was shut down for a day in 1996 because of a one-digit error.

The handful of reporters who have investigated this problem have met a wall of indifference. "We're all using microcomputers now." "This is a problem only for a few companies that are still using mainframes." "Cheap solutions will appear as soon as there is demand." "The software will be updated soon, and I'll buy it then." "If this were a serious problem, we'd have heard about it." Yet this last response is given to someone -- a reporter -- who is trying to tell people about the problem.

I first read about this problem years ago in a book by the pseudonymous author, Robert X. Cringely: Accidental Empires. It is not as though the computer industry has been unaware of it. Only a few weeks ago, I read a Wall Street Journal column on computers that mentioned it. The writer wrote that his editor is getting tired of having him mention it. This is typical. The general public hasn't heard about it, yet editors are already tired of hearing about it. "It's old news." Well, it's new news for most people.

What does it matter, really? We use microcomputers. Microsoft has solved the Year 2000 problem, we assume. So have most software companies. Everyone uses desktop computers or, at the largest, minicomputers, right? Wrong.

Governments Rely on Aging Mainframes and Software

On September 24, 1996, Congressman Stephen Horn, who is Chairman of the Subcommittee on Government Management, Information, and Technology, submitted to the full committee a report on the Year 2000 problem. The Subcommittee held hearings on April 16. (Just one day of hearings. This indicates the degree of concern that the government has.) He said that these hearings revealed "a serious lack of awareness of the problem on the part of a great number of people in business and government. Even more alarming was the cost estimate reported to the Subcommittee to remedy the problem, which was said to be $30 billion for the Federal Government alone." Then he announced:

Without greater urgency, those agencies risk being unable to provide services or perform functions that they are charged by law with performing. Senior agency management officials must take aggressive action if these problems are to be avoided.

Yet despite Horn's valid warning, nothing visible is happening. He knows this. These agencies must shift hundreds of millions of dollars from their existing budgets to hire outside programmers to rewrite the code that runs these agencies. This isn't being done. More to the point, the longer they delay, the worse the problem gets. You can't just go out and hire programmers who are familiar with the code. As businesses find out what threatens them, the demand for these highly specialized services will soar. (If businessmen don't figure this out in time, payment will come due in January of 2000.)

The Subcommittee's report warns: "This issue may cause banks, securities firms and insurance companies to ascertain whether the companies they finance or insure are year 2000 compliant before making investment decisions." It also says that companies will start demanding contractual warranties guaranteeing against Year 2000 breakdowns.

A memorandum from the Library of Congress Research Service (CRS) has warned that "it may be too late to correct all of the nation's systems." So, the question arises: Which systems will survive and which ones won't? Here are some problem areas, according to CRS:

Miscalculation by the Social Security Administration of the ages of citizens, causing payments to be sent to people who are not eligible for benefits while ending or not beginning payments to those who are eligible;

Miscalculation by the Internal Revenue Service of the standard deduction on income tax returns for persons over age 65, causing incorrect records of revenues and payments due;

Malfunctioning of certain Defense Department weapon systems;

Erroneous flight schedules generated by the Federal Aviation Administration's air traffic controllers;

State and local computer systems becoming corrupted with false records, causing errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, utilities regulations, and a breakdown of some public transportation systems.

I don't think these are small issues. They will probably start receiving media attention when it is so late in the process that there will be massive foul-ups in coordinating the revisions.

Notice, the biggest one is missing: an international bank run, as depositors demand cash. From that day on, all exchanges will be local: the collapse of the division of labor.

When the computers' clocks think it's 1900, it soon will be.

I realize that there has been tremendous progress in microcomputer power, but does anyone really think that all of the Federal government's forms -- not an infinite number, but approaching infinity as a limit -- can be put on three dozen Compaq desktop computers and run with, say, Lotus Approach or Microsoft Access? And even if they could, how would you re- train all of the bureaucrats to use the new systems? How fast will they learn? How fast do bureaucracies adapt? The Subcommittee's report warns:

The clock is ticking and most Federal agencies have not inventoried their major systems in order to detect where the problem lies within and among each Federal department, field office and division. The date for completion of this project cannot slip.

By "cannot," the Subcommittee's report-writer meant "must not." The date can surely be allowed to slip. It almost certainly will be allowed to slip.

Additionally, the task may be more difficult for the public sector, where systems have been in use for decades, may lack software documentation and therefore increase the time it takes from the inventory phase to solution.

Did you get that? The software code's records are gone! Remember also that we're not just talking about the United States government. We're talking about every government -- national, state, and local -- anywhere on earth that has its data stored on an unrevised mainframe computer system or which relies on any third-party computer service that uses uncorrected software.

As the year 2000 approaches, word will slowly begin to spread: "After the three-day weekend that will inaugurate the year 2000, there is going to be a hangover the likes of which we have never seen before." For some, it will be a time of celebration. For others, it will be the end of their dreams. It depends on whether they are being squeezed by the government or dependent on it.

But it's not just government that is at risk. It's private industry.

Kiss Medicare Goodbye

Some 38 million people will receive Medicare payments in 1997. In 2000, an estimated one billion claims will be filed, totaling over $288 billion. This, according to a May 16, 1997 report of the General Accounting Office (GAO): "Medicare Transaction System."

Problem: the Medicare system won't make it through 2000. The same GAO report shows why. Medicare claims are not actually administered by Medicare. It's administered by 70 private agencies. These agencies have been informed that their contracts will not be renewed in 2000.

The agency that officially supervises Medicare has plans for one huge computer system that will bring the program in- house. It is the same dream that motivated the Internal Revenue Service for the past 11 years. The IRS announced earlier this year that after 11 years and $4 billion, the attempt had failed.

Medicare now knows that it has a problem with its computers. They are not Year 2000-compliant. So, to make sure that they will be compliant, Medicare has issued an appeal to the 70 newly canned companies: please fix the year 2000 problem for us before you leave. As the GAO report puts it, "contractors may not have a particularly high incentive to properly make these conversions. . . ."

What if the system fails? (What if? Are they kidding? When!) The report says that the Health Care Financing Administration (HCFA), which is responsible for running Medicare, has not made contingency plans. "HCFA officials are relying on the contractors to identify and complete the necessary work in time to avoid problems. Yet the ... contractors not only have not developed contingency plans, they have said that they do not intend to do so because they believe that this is HCFA's responsibility."

Kiss the IRS Goodbye

The IRS has 100 million lines of code. Their code is not year 2000-compliant. After the failure of the 11-year project to upgrade the system, Chief Information Officer Arthur Gross announced that getting the IRS year 2000-compliant is the "highest priority for the IRS." The IRS has nearly 50,000 code applications to coordinate and correct. This task will require the IRS to move 300 full-time computer programmers to the new project. (Reported in "TechWeb," April 21, 1997).

For comparison purposes, consider the fact that the Social Security Administration began working on its year 2000 repair in 1991. Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS isn't technically equipped to pursue tax evaders after December 31, 1999? What if the IRS computer system isn't fully integrated with all of its branch offices? What if the system's massive quantities of forms are not stored in a computer system that is Year 2000-compliant? More to the point, what if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return?

In 1999, the IRS may find a drop in compliance from self-employed people. If the IRS can't prosecute these people after 1999, there will be a defection of compliance by the self-employed. When word spreads to the general public, there will be a hue and cry -- maybe at first against the evaders, but then against employers who are sending in employees' money when self- employed people are escaping. Meanwhile, cash-only, self-employed businesses will begin to lure business away from tax-compliant businesses by offering big discounts.

This will start happening all over the world. Once it begins, it will not easily be reversed. The tax system rests on this faith: (1) the government will pay us what it owes us; (2) the government can get us if we stop paying. Both aspects of this faith will be called into question in the year 2000 if the governments' computers are not in compliance.

Big Brother is no more powerful than his software. On January 1, 2000, this strength may fall to zero. Actually, double zero.

If the IRS cannot collect taxes, and if all the other mainframe computer-dependent tax collection agencies on earth do not fix this, what will happen to the government debt markets worldwide? To interest rates? To the government-guaranteed mortgage market?

Kiss them all goodbye

"No Problem! Trust me!"

There are a few conservative financial newsletter writers who have heard about y2k. They deny its economic relevance. A shut-down of all mainframe computers would mean that newsletter writers will be out of business after 1999 -- a thought too terrifying for them. So, they brush y2k aside with some version of this rebuttal: "Of course, the government may not get its computers fixed." This is supposed to calm you. It should terrify you. Ask yourself:

What happens to T-bills and T-bonds if the IRS computer breaks down and a tax revolt spreads because taxpayers know the IRS will never find them, and that if they pay their taxes, they won't get their refunds?

What happens to money market funds and bond funds that invest heavily in government debt when investors realize that if the IRS can't collect taxes, the government will default on its debt?

What happens to the banks when depositors figure out that the FDIC is bankrupt and that nobody insures their accounts any more?

What happens to your job when the banks close because of bank runs, and no business can borrow money or even write a check to its employees?

What happens to the delivery of food into cities when money fails because the banks are busted?

What happens to the delivery of public utilities when money fails because the banks are busted?

What happens to your retirement fund when ERISA, the government pension guarantee program, goes bankrupt?

What happens to the 38 million people in the U.S. who are dependent on Medicare?

What happens to 42 million people on Social Security?

What happens to every state government?

What happens to crime rates when the state cannot imprison violent criminals and may have to release those who are locked up because they can't be fed?

What happens to the world economy when this scenario is multiplied across every government?

Kiss your job goodbye. Especially if you're a journalist. I know. I am one. I figure I'll be out of work -- forced retirement -- January 1, 2000. I'm making plans to be in small-scale agriculture. I'm out of debt.

What about you?

Psychological Deferral

Those in authority prefer to defer thinking about this. They are playing Scarlett O'Hara: "I'll think about it tomorrow," followed by, "Well, fiddle dee-dee." Deferral is a normal response to distant problems. The question is: What can we afford to defer? People defer making this assessment. The fact that you have not read much about this looming problem doesn't mean that it isn't a problem. If your employer has not actively sought solutions to this problem, your firm had better not use mainframe computers or be dependent on suppliers that rely on mainframe computers.

Everyone assumes that someone else is doing something to solve these problems. "It's being taken care of." The problem here is the passive voice. Who, exactly, is taking care of it? What, exactly, is this person doing? Is he on schedule? How do you know for sure? Are you taking his word for it? Anyone who takes the word of a computer programmer that he is on schedule is a person of very great faith. If the programmer says "Sorry, I didn't make it" on December 31, 1999, you're dead in the water. Meanwhile, he moves on.

What You Should Do, Beginning Today

First, you investigate whether what I'm saying is true.

Second, think through what happens to you if the local power company and the local water and sewage company shut down in your city for six months. "Who ya gonna call?" Especially if your phone is dead? And if you do get through, how ya gonna pay if your local bank is defunct?

Third, here is my personal strategy. I have adopted a question: "Can I prove on paper that he owes it to me?"

I want hard copy print-outs of everything I do with the government. If you are owed money from Social Security, and you're dependent on this income, contact the Social Security Administration every year and get a letter telling you what you're owed. This is true of every government pension system.

Do you have a copy of your birth certificate? If not, write to your place of birth and get it. Even if that community has not computerized the records, do it now. Even if it keeps the records in a desktop, do it. If word starts to spread, they may be buried in requests in 1999. You want your paperwork completed before word gets out.

Do you have a copy of your college transcripts? If not, get it. The same goes for your work record history. Assume that your records are in some company's mainframe computer. Assume also that the company has failed to update the software.

Do you have a print-out of all of your insurance records? Would they stand up in court? If not, get what you need, now.

Have you spoken with your local insurance agent? Is he fully aware of the problem? Ask him straight out if he has scheduled an update of his software if he relies on vendor- supplied software. He deserves to know what is coming. So do you. (If you want to photocopy this issue to send him, go ahead.)

Think through this problem in advance, before it gets out and creates a banking panic, all over the world. This story will get out eventually. In 1999, when reporters are running around looking for sensational Year 2000-third millennium stories, this one will at last surface. It already has: in Newsweek. At that point, every government bureaucrat whose agency is at risk will start playing the "No problem" game. "It's being taken care of." The bureaucrat's number-one rule is to evade responsibility. No one with any authority is going to admit that his malfeasance in office is going to create a disaster on January 1, 2000. The basic response will be this: "There's no problem here, and furthermore, I'm not responsible when everything collapses next year!"

-- Susie Q. (susieq@aol.com), December 27, 1999.

We live in a world that depends on a high division of labor. In one gigantic collapse, the division of labor will implode. This implosion will begin in 2000 and thereafter. Those who work in highly specialized fields will find little or no demand for their skills, in the face of an enormous supply of desperate, low-wage competition. Any job classification that did not exist in 1945 will probably not have a lot of demand in 2001, with one exception: computer software programming.

The June 2 issue of Newsweek ran a front cover story on the looming computer crisis of the Year 2000 -- called y2k (Year 2 K, shorthand for a thousand). In the week it the article appeared (late May), the Dow Jones Industrial Average set a record new high. (It was beaten a week later.) If investors believed the information reported in the Newsweek article, the world's stock markets would have collapsed. Clearly, people don't believe it. That's why a small handful of people can get out now -- out of the stock market, the bond market, and any city over 25,000.

Not everyone can get out at the top of a bull market. This includes the "bull market" known as modern industrial society. Pull the plug on the local power utility for 30 days, and every city on earth becomes unlivable. What if the plug gets pulled for five years?

How do you rebuild the shattered economy if the computers go down, taking public utilities with them? Without electricity, you can't run the computers. Without computers, you can't fix computers. How can you assemble teams of programmers to fix the mess? More to the point, how do you pay them if the banks are empty?

Chase Manhattan Bank has 200 million lines of code to check and then repair. Citicorp has 400 million lines. All big banks are similarly afflicted. And even if this could be fixed, bank by bank, there is no universal repair standard. Thus, the computers, even if fixed (highly doubtful) will not work together after the individual repairs. A noncompliant bank's data will then make every compliant bank noncompliant. Thus, the world banking system will crash in 2000. When the public figures this out in 1999, the bank runs will begin.

You probably will not have your present job in 2001.

"It Just Can't Be True!"

You don't believe me, of course. Not yet. But I have published the evidence on this Web site. You can verify what I'm saying. But you still won't believe it. Why not? Because it's too painful. In their book, The Sovereign Individual, Davidson and Rees- Mogg make a very important observation:

A recent psychological study disguised as a public opinion poll showed that members of individual occupational groups were almost uniformly unwilling to accept any conclusion that implied a loss of income for them, no matter how airtight the logic supporting it. Given increased specialization, most of the interpretive information about most specialized occupational groups is designed to cater to the interests of the groups themselves. They have little interest in views that might be impolite, unprofitable, or politically incorrect (p. 339).

My views are all three: impolite, unprofitable, and politically incorrect. Impolite, because I am saying this: (1) those advising you are as blind as an eighth-century Israelite king; (2) they have given you information that will prove to be wildly unprofitable; (3) all the hype about your getting rich -- the world's getting rich -- is a clap-trap. We are heading for a disaster greater than anything the world has experienced since the bubonic plague of the mid-14th century.

Because the year 2000 begins on a Saturday, millions of victims will not be aware of their dilemma until the following Monday or Tuesday. They will pay no attention to advance warnings, such as this one, that they are at risk.

As you read this report, I want you to think to yourself: "How will this affect me? Is my business at risk? Is my income at risk? What should I do?" I also want you to visit my Web site, http://www.garynorth.com and examine the accumulating evidence, week by week.

The Origin of the Problem

Here is the problem. Over three decades ago, computer programmers who wrote mainframe computer software saved disk space -- in those days, very valuable space -- by designating year codes as two-digit entries: 67 instead of 1967, 78 instead of 1978, etc. Back then, saving this seemingly minuscule amount of disk space seemed like an economically wise decision. This may prove to be the most expensive forecasting error since Noah's flood.

What the programmers ignored for three decades is this: in the year 2000, the two digits will be 00. The computer will sit there, looking for a year. At midnight, January 1, 2000, every mainframe computer using unrevised software dies. If old acquaintances are in the computer, they will indeed be forgot.

Programmers who recognized the implications of this change did not care. They assumed that their software would be updated by year 2000. That assumption now threatens every piece of custom software sitting on every mainframe computer, unless the owner of the computer has had the code rewritten. In some cases, this involves coordinating half a billion million lines of code. (Example: AT&T) One error on one line can shut down the whole system, the way that America Online was shut down for a day in 1996 because of a one-digit error.

The handful of reporters who have investigated this problem have met a wall of indifference. "We're all using microcomputers now." "This is a problem only for a few companies that are still using mainframes." "Cheap solutions will appear as soon as there is demand." "The software will be updated soon, and I'll buy it then." "If this were a serious problem, we'd have heard about it." Yet this last response is given to someone -- a reporter -- who is trying to tell people about the problem.

I first read about this problem years ago in a book by the pseudonymous author, Robert X. Cringely: Accidental Empires. It is not as though the computer industry has been unaware of it. Only a few weeks ago, I read a Wall Street Journal column on computers that mentioned it. The writer wrote that his editor is getting tired of having him mention it. This is typical. The general public hasn't heard about it, yet editors are already tired of hearing about it. "It's old news." Well, it's new news for most people.

What does it matter, really? We use microcomputers. Microsoft has solved the Year 2000 problem, we assume. So have most software companies. Everyone uses desktop computers or, at the largest, minicomputers, right? Wrong.

Governments Rely on Aging Mainframes and Software

On September 24, 1996, Congressman Stephen Horn, who is Chairman of the Subcommittee on Government Management, Information, and Technology, submitted to the full committee a report on the Year 2000 problem. The Subcommittee held hearings on April 16. (Just one day of hearings. This indicates the degree of concern that the government has.) He said that these hearings revealed "a serious lack of awareness of the problem on the part of a great number of people in business and government. Even more alarming was the cost estimate reported to the Subcommittee to remedy the problem, which was said to be $30 billion for the Federal Government alone." Then he announced:

Without greater urgency, those agencies risk being unable to provide services or perform functions that they are charged by law with performing. Senior agency management officials must take aggressive action if these problems are to be avoided.

Yet despite Horn's valid warning, nothing visible is happening. He knows this. These agencies must shift hundreds of millions of dollars from their existing budgets to hire outside programmers to rewrite the code that runs these agencies. This isn't being done. More to the point, the longer they delay, the worse the problem gets. You can't just go out and hire programmers who are familiar with the code. As businesses find out what threatens them, the demand for these highly specialized services will soar. (If businessmen don't figure this out in time, payment will come due in January of 2000.)

The Subcommittee's report warns: "This issue may cause banks, securities firms and insurance companies to ascertain whether the companies they finance or insure are year 2000 compliant before making investment decisions." It also says that companies will start demanding contractual warranties guaranteeing against Year 2000 breakdowns.

A memorandum from the Library of Congress Research Service (CRS) has warned that "it may be too late to correct all of the nation's systems." So, the question arises: Which systems will survive and which ones won't? Here are some problem areas, according to CRS:

Miscalculation by the Social Security Administration of the ages of citizens, causing payments to be sent to people who are not eligible for benefits while ending or not beginning payments to those who are eligible;

Miscalculation by the Internal Revenue Service of the standard deduction on income tax returns for persons over age 65, causing incorrect records of revenues and payments due;

Malfunctioning of certain Defense Department weapon systems;

Erroneous flight schedules generated by the Federal Aviation Administration's air traffic controllers;

State and local computer systems becoming corrupted with false records, causing errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, utilities regulations, and a breakdown of some public transportation systems.

I don't think these are small issues. They will probably start receiving media attention when it is so late in the process that there will be massive foul-ups in coordinating the revisions.

Notice, the biggest one is missing: an international bank run, as depositors demand cash. From that day on, all exchanges will be local: the collapse of the division of labor.

When the computers' clocks think it's 1900, it soon will be.

I realize that there has been tremendous progress in microcomputer power, but does anyone really think that all of the Federal government's forms -- not an infinite number, but approaching infinity as a limit -- can be put on three dozen Compaq desktop computers and run with, say, Lotus Approach or Microsoft Access? And even if they could, how would you re- train all of the bureaucrats to use the new systems? How fast will they learn? How fast do bureaucracies adapt? The Subcommittee's report warns:

The clock is ticking and most Federal agencies have not inventoried their major systems in order to detect where the problem lies within and among each Federal department, field office and division. The date for completion of this project cannot slip.

By "cannot," the Subcommittee's report-writer meant "must not." The date can surely be allowed to slip. It almost certainly will be allowed to slip.

Additionally, the task may be more difficult for the public sector, where systems have been in use for decades, may lack software documentation and therefore increase the time it takes from the inventory phase to solution.

Did you get that? The software code's records are gone! Remember also that we're not just talking about the United States government. We're talking about every government -- national, state, and local -- anywhere on earth that has its data stored on an unrevised mainframe computer system or which relies on any third-party computer service that uses uncorrected software.

As the year 2000 approaches, word will slowly begin to spread: "After the three-day weekend that will inaugurate the year 2000, there is going to be a hangover the likes of which we have never seen before." For some, it will be a time of celebration. For others, it will be the end of their dreams. It depends on whether they are being squeezed by the government or dependent on it.

But it's not just government that is at risk. It's private industry.

Kiss Medicare Goodbye

Some 38 million people will receive Medicare payments in 1997. In 2000, an estimated one billion claims will be filed, totaling over $288 billion. This, according to a May 16, 1997 report of the General Accounting Office (GAO): "Medicare Transaction System."

Problem: the Medicare system won't make it through 2000. The same GAO report shows why. Medicare claims are not actually administered by Medicare. It's administered by 70 private agencies. These agencies have been informed that their contracts will not be renewed in 2000.

The agency that officially supervises Medicare has plans for one huge computer system that will bring the program in- house. It is the same dream that motivated the Internal Revenue Service for the past 11 years. The IRS announced earlier this year that after 11 years and $4 billion, the attempt had failed.

Medicare now knows that it has a problem with its computers. They are not Year 2000-compliant. So, to make sure that they will be compliant, Medicare has issued an appeal to the 70 newly canned companies: please fix the year 2000 problem for us before you leave. As the GAO report puts it, "contractors may not have a particularly high incentive to properly make these conversions. . . ."

What if the system fails? (What if? Are they kidding? When!) The report says that the Health Care Financing Administration (HCFA), which is responsible for running Medicare, has not made contingency plans. "HCFA officials are relying on the contractors to identify and complete the necessary work in time to avoid problems. Yet the ... contractors not only have not developed contingency plans, they have said that they do not intend to do so because they believe that this is HCFA's responsibility."

Kiss the IRS Goodbye

The IRS has 100 million lines of code. Their code is not year 2000-compliant. After the failure of the 11-year project to upgrade the system, Chief Information Officer Arthur Gross announced that getting the IRS year 2000-compliant is the "highest priority for the IRS." The IRS has nearly 50,000 code applications to coordinate and correct. This task will require the IRS to move 300 full-time computer programmers to the new project. (Reported in "TechWeb," April 21, 1997).

For comparison purposes, consider the fact that the Social Security Administration began working on its year 2000 repair in 1991. Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS isn't technically equipped to pursue tax evaders after December 31, 1999? What if the IRS computer system isn't fully integrated with all of its branch offices? What if the system's massive quantities of forms are not stored in a computer system that is Year 2000-compliant? More to the point, what if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return?

In 1999, the IRS may find a drop in compliance from self-employed people. If the IRS can't prosecute these people after 1999, there will be a defection of compliance by the self-employed. When word spreads to the general public, there will be a hue and cry -- maybe at first against the evaders, but then against employers who are sending in employees' money when self- employed people are escaping. Meanwhile, cash-only, self-employed businesses will begin to lure business away from tax-compliant businesses by offering big discounts.

This will start happening all over the world. Once it begins, it will not easily be reversed. The tax system rests on this faith: (1) the government will pay us what it owes us; (2) the government can get us if we stop paying. Both aspects of this faith will be called into question in the year 2000 if the governments' computers are not in compliance.

Big Brother is no more powerful than his software. On January 1, 2000, this strength may fall to zero. Actually, double zero.

If the IRS cannot collect taxes, and if all the other mainframe computer-dependent tax collection agencies on earth do not fix this, what will happen to the government debt markets worldwide? To interest rates? To the government-guaranteed mortgage market?

Kiss them all goodbye

"No Problem! Trust me!"

There are a few conservative financial newsletter writers who have heard about y2k. They deny its economic relevance. A shut-down of all mainframe computers would mean that newsletter writers will be out of business after 1999 -- a thought too terrifying for them. So, they brush y2k aside with some version of this rebuttal: "Of course, the government may not get its computers fixed." This is supposed to calm you. It should terrify you. Ask yourself:

What happens to T-bills and T-bonds if the IRS computer breaks down and a tax revolt spreads because taxpayers know the IRS will never find them, and that if they pay their taxes, they won't get their refunds?

What happens to money market funds and bond funds that invest heavily in government debt when investors realize that if the IRS can't collect taxes, the government will default on its debt?

What happens to the banks when depositors figure out that the FDIC is bankrupt and that nobody insures their accounts any more?

What happens to your job when the banks close because of bank runs, and no business can borrow money or even write a check to its employees?

What happens to the delivery of food into cities when money fails because the banks are busted?

What happens to the delivery of public utilities when money fails because the banks are busted?

What happens to your retirement fund when ERISA, the government pension guarantee program, goes bankrupt?

What happens to the 38 million people in the U.S. who are dependent on Medicare?

What happens to 42 million people on Social Security?

What happens to every state government?

What happens to crime rates when the state cannot imprison violent criminals and may have to release those who are locked up because they can't be fed?

What happens to the world economy when this scenario is multiplied across every government?

Kiss your job goodbye. Especially if you're a journalist. I know. I am one. I figure I'll be out of work -- forced retirement -- January 1, 2000. I'm making plans to be in small-scale agriculture. I'm out of debt.

What about you?

Psychological Deferral

Those in authority prefer to defer thinking about this. They are playing Scarlett O'Hara: "I'll think about it tomorrow," followed by, "Well, fiddle dee-dee." Deferral is a normal response to distant problems. The question is: What can we afford to defer? People defer making this assessment. The fact that you have not read much about this looming problem doesn't mean that it isn't a problem. If your employer has not actively sought solutions to this problem, your firm had better not use mainframe computers or be dependent on suppliers that rely on mainframe computers.

Everyone assumes that someone else is doing something to solve these problems. "It's being taken care of." The problem here is the passive voice. Who, exactly, is taking care of it? What, exactly, is this person doing? Is he on schedule? How do you know for sure? Are you taking his word for it? Anyone who takes the word of a computer programmer that he is on schedule is a person of very great faith. If the programmer says "Sorry, I didn't make it" on December 31, 1999, you're dead in the water. Meanwhile, he moves on.

What You Should Do, Beginning Today

First, you investigate whether what I'm saying is true.

Second, think through what happens to you if the local power company and the local water and sewage company shut down in your city for six months. "Who ya gonna call?" Especially if your phone is dead? And if you do get through, how ya gonna pay if your local bank is defunct?

Third, here is my personal strategy. I have adopted a question: "Can I prove on paper that he owes it to me?"

I want hard copy print-outs of everything I do with the government. If you are owed money from Social Security, and you're dependent on this income, contact the Social Security Administration every year and get a letter telling you what you're owed. This is true of every government pension system.

Do you have a copy of your birth certificate? If not, write to your place of birth and get it. Even if that community has not computerized the records, do it now. Even if it keeps the records in a desktop, do it. If word starts to spread, they may be buried in requests in 1999. You want your paperwork completed before word gets out.

Do you have a copy of your college transcripts? If not, get it. The same goes for your work record history. Assume that your records are in some company's mainframe computer. Assume also that the company has failed to update the software.

Do you have a print-out of all of your insurance records? Would they stand up in court? If not, get what you need, now.

Have you spoken with your local insurance agent? Is he fully aware of the problem? Ask him straight out if he has scheduled an update of his software if he relies on vendor- supplied software. He deserves to know what is coming. So do you. (If you want to photocopy this issue to send him, go ahead.)

Think through this problem in advance, before it gets out and creates a banking panic, all over the world. This story will get out eventually. In 1999, when reporters are running around looking for sensational Year 2000-third millennium stories, this one will at last surface. It already has: in Newsweek. At that point, every government bureaucrat whose agency is at risk will start playing the "No problem" game. "It's being taken care of." The bureaucrat's number-one rule is to evade responsibility. No one with any authority is going to admit that his malfeasance in office is going to create a disaster on January 1, 2000. The basic response will be this: "There's no problem here, and furthermore, I'm not responsible when everything collapses next year!"

-- Susie Q (susieq@aol.com), December 27, 1999.

We live in a world that depends on a high division of labor. In one gigantic collapse, the division of labor will implode. This implosion will begin in 2000 and thereafter. Those who work in highly specialized fields will find little or no demand for their skills, in the face of an enormous supply of desperate, low-wage competition. Any job classification that did not exist in 1945 will probably not have a lot of demand in 2001, with one exception: computer software programming.

The June 2 issue of Newsweek ran a front cover story on the looming computer crisis of the Year 2000 -- called y2k (Year 2 K, shorthand for a thousand). In the week it the article appeared (late May), the Dow Jones Industrial Average set a record new high. (It was beaten a week later.) If investors believed the information reported in the Newsweek article, the world's stock markets would have collapsed. Clearly, people don't believe it. That's why a small handful of people can get out now -- out of the stock market, the bond market, and any city over 25,000.

Not everyone can get out at the top of a bull market. This includes the "bull market" known as modern industrial society. Pull the plug on the local power utility for 30 days, and every city on earth becomes unlivable. What if the plug gets pulled for five years?

How do you rebuild the shattered economy if the computers go down, taking public utilities with them? Without electricity, you can't run the computers. Without computers, you can't fix computers. How can you assemble teams of programmers to fix the mess? More to the point, how do you pay them if the banks are empty?

Chase Manhattan Bank has 200 million lines of code to check and then repair. Citicorp has 400 million lines. All big banks are similarly afflicted. And even if this could be fixed, bank by bank, there is no universal repair standard. Thus, the computers, even if fixed (highly doubtful) will not work together after the individual repairs. A noncompliant bank's data will then make every compliant bank noncompliant. Thus, the world banking system will crash in 2000. When the public figures this out in 1999, the bank runs will begin.

You probably will not have your present job in 2001.

"It Just Can't Be True!"

You don't believe me, of course. Not yet. But I have published the evidence on this Web site. You can verify what I'm saying. But you still won't believe it. Why not? Because it's too painful. In their book, The Sovereign Individual, Davidson and Rees- Mogg make a very important observation:

A recent psychological study disguised as a public opinion poll showed that members of individual occupational groups were almost uniformly unwilling to accept any conclusion that implied a loss of income for them, no matter how airtight the logic supporting it. Given increased specialization, most of the interpretive information about most specialized occupational groups is designed to cater to the interests of the groups themselves. They have little interest in views that might be impolite, unprofitable, or politically incorrect (p. 339).

My views are all three: impolite, unprofitable, and politically incorrect. Impolite, because I am saying this: (1) those advising you are as blind as an eighth-century Israelite king; (2) they have given you information that will prove to be wildly unprofitable; (3) all the hype about your getting rich -- the world's getting rich -- is a clap-trap. We are heading for a disaster greater than anything the world has experienced since the bubonic plague of the mid-14th century.

Because the year 2000 begins on a Saturday, millions of victims will not be aware of their dilemma until the following Monday or Tuesday. They will pay no attention to advance warnings, such as this one, that they are at risk.

As you read this report, I want you to think to yourself: "How will this affect me? Is my business at risk? Is my income at risk? What should I do?" I also want you to visit my Web site, http://www.garynorth.com and examine the accumulating evidence, week by week.

The Origin of the Problem

Here is the problem. Over three decades ago, computer programmers who wrote mainframe computer software saved disk space -- in those days, very valuable space -- by designating year codes as two-digit entries: 67 instead of 1967, 78 instead of 1978, etc. Back then, saving this seemingly minuscule amount of disk space seemed like an economically wise decision. This may prove to be the most expensive forecasting error since Noah's flood.

What the programmers ignored for three decades is this: in the year 2000, the two digits will be 00. The computer will sit there, looking for a year. At midnight, January 1, 2000, every mainframe computer using unrevised software dies. If old acquaintances are in the computer, they will indeed be forgot.

Programmers who recognized the implications of this change did not care. They assumed that their software would be updated by year 2000. That assumption now threatens every piece of custom software sitting on every mainframe computer, unless the owner of the computer has had the code rewritten. In some cases, this involves coordinating half a billion million lines of code. (Example: AT&T) One error on one line can shut down the whole system, the way that America Online was shut down for a day in 1996 because of a one-digit error.

The handful of reporters who have investigated this problem have met a wall of indifference. "We're all using microcomputers now." "This is a problem only for a few companies that are still using mainframes." "Cheap solutions will appear as soon as there is demand." "The software will be updated soon, and I'll buy it then." "If this were a serious problem, we'd have heard about it." Yet this last response is given to someone -- a reporter -- who is trying to tell people about the problem.

I first read about this problem years ago in a book by the pseudonymous author, Robert X. Cringely: Accidental Empires. It is not as though the computer industry has been unaware of it. Only a few weeks ago, I read a Wall Street Journal column on computers that mentioned it. The writer wrote that his editor is getting tired of having him mention it. This is typical. The general public hasn't heard about it, yet editors are already tired of hearing about it. "It's old news." Well, it's new news for most people.

What does it matter, really? We use microcomputers. Microsoft has solved the Year 2000 problem, we assume. So have most software companies. Everyone uses desktop computers or, at the largest, minicomputers, right? Wrong.

Governments Rely on Aging Mainframes and Software

On September 24, 1996, Congressman Stephen Horn, who is Chairman of the Subcommittee on Government Management, Information, and Technology, submitted to the full committee a report on the Year 2000 problem. The Subcommittee held hearings on April 16. (Just one day of hearings. This indicates the degree of concern that the government has.) He said that these hearings revealed "a serious lack of awareness of the problem on the part of a great number of people in business and government. Even more alarming was the cost estimate reported to the Subcommittee to remedy the problem, which was said to be $30 billion for the Federal Government alone." Then he announced:

Without greater urgency, those agencies risk being unable to provide services or perform functions that they are charged by law with performing. Senior agency management officials must take aggressive action if these problems are to be avoided.

Yet despite Horn's valid warning, nothing visible is happening. He knows this. These agencies must shift hundreds of millions of dollars from their existing budgets to hire outside programmers to rewrite the code that runs these agencies. This isn't being done. More to the point, the longer they delay, the worse the problem gets. You can't just go out and hire programmers who are familiar with the code. As businesses find out what threatens them, the demand for these highly specialized services will soar. (If businessmen don't figure this out in time, payment will come due in January of 2000.)

The Subcommittee's report warns: "This issue may cause banks, securities firms and insurance companies to ascertain whether the companies they finance or insure are year 2000 compliant before making investment decisions." It also says that companies will start demanding contractual warranties guaranteeing against Year 2000 breakdowns.

A memorandum from the Library of Congress Research Service (CRS) has warned that "it may be too late to correct all of the nation's systems." So, the question arises: Which systems will survive and which ones won't? Here are some problem areas, according to CRS:

Miscalculation by the Social Security Administration of the ages of citizens, causing payments to be sent to people who are not eligible for benefits while ending or not beginning payments to those who are eligible;

Miscalculation by the Internal Revenue Service of the standard deduction on income tax returns for persons over age 65, causing incorrect records of revenues and payments due;

Malfunctioning of certain Defense Department weapon systems;

Erroneous flight schedules generated by the Federal Aviation Administration's air traffic controllers;

State and local computer systems becoming corrupted with false records, causing errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, utilities regulations, and a breakdown of some public transportation systems.

I don't think these are small issues. They will probably start receiving media attention when it is so late in the process that there will be massive foul-ups in coordinating the revisions.

Notice, the biggest one is missing: an international bank run, as depositors demand cash. From that day on, all exchanges will be local: the collapse of the division of labor.

When the computers' clocks think it's 1900, it soon will be.

I realize that there has been tremendous progress in microcomputer power, but does anyone really think that all of the Federal government's forms -- not an infinite number, but approaching infinity as a limit -- can be put on three dozen Compaq desktop computers and run with, say, Lotus Approach or Microsoft Access? And even if they could, how would you re- train all of the bureaucrats to use the new systems? How fast will they learn? How fast do bureaucracies adapt? The Subcommittee's report warns:

The clock is ticking and most Federal agencies have not inventoried their major systems in order to detect where the problem lies within and among each Federal department, field office and division. The date for completion of this project cannot slip.

By "cannot," the Subcommittee's report-writer meant "must not." The date can surely be allowed to slip. It almost certainly will be allowed to slip.

Additionally, the task may be more difficult for the public sector, where systems have been in use for decades, may lack software documentation and therefore increase the time it takes from the inventory phase to solution.

Did you get that? The software code's records are gone! Remember also that we're not just talking about the United States government. We're talking about every government -- national, state, and local -- anywhere on earth that has its data stored on an unrevised mainframe computer system or which relies on any third-party computer service that uses uncorrected software.

As the year 2000 approaches, word will slowly begin to spread: "After the three-day weekend that will inaugurate the year 2000, there is going to be a hangover the likes of which we have never seen before." For some, it will be a time of celebration. For others, it will be the end of their dreams. It depends on whether they are being squeezed by the government or dependent on it.

But it's not just government that is at risk. It's private industry.

Kiss Medicare Goodbye

Some 38 million people will receive Medicare payments in 1997. In 2000, an estimated one billion claims will be filed, totaling over $288 billion. This, according to a May 16, 1997 report of the General Accounting Office (GAO): "Medicare Transaction System."

Problem: the Medicare system won't make it through 2000. The same GAO report shows why. Medicare claims are not actually administered by Medicare. It's administered by 70 private agencies. These agencies have been informed that their contracts will not be renewed in 2000.

The agency that officially supervises Medicare has plans for one huge computer system that will bring the program in- house. It is the same dream that motivated the Internal Revenue Service for the past 11 years. The IRS announced earlier this year that after 11 years and $4 billion, the attempt had failed.

Medicare now knows that it has a problem with its computers. They are not Year 2000-compliant. So, to make sure that they will be compliant, Medicare has issued an appeal to the 70 newly canned companies: please fix the year 2000 problem for us before you leave. As the GAO report puts it, "contractors may not have a particularly high incentive to properly make these conversions. . . ."

What if the system fails? (What if? Are they kidding? When!) The report says that the Health Care Financing Administration (HCFA), which is responsible for running Medicare, has not made contingency plans. "HCFA officials are relying on the contractors to identify and complete the necessary work in time to avoid problems. Yet the ... contractors not only have not developed contingency plans, they have said that they do not intend to do so because they believe that this is HCFA's responsibility."

Kiss the IRS Goodbye

The IRS has 100 million lines of code. Their code is not year 2000-compliant. After the failure of the 11-year project to upgrade the system, Chief Information Officer Arthur Gross announced that getting the IRS year 2000-compliant is the "highest priority for the IRS." The IRS has nearly 50,000 code applications to coordinate and correct. This task will require the IRS to move 300 full-time computer programmers to the new project. (Reported in "TechWeb," April 21, 1997).

For comparison purposes, consider the fact that the Social Security Administration began working on its year 2000 repair in 1991. Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS isn't technically equipped to pursue tax evaders after December 31, 1999? What if the IRS computer system isn't fully integrated with all of its branch offices? What if the system's massive quantities of forms are not stored in a computer system that is Year 2000-compliant? More to the point, what if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return?

In 1999, the IRS may find a drop in compliance from self-employed people. If the IRS can't prosecute these people after 1999, there will be a defection of compliance by the self-employed. When word spreads to the general public, there will be a hue and cry -- maybe at first against the evaders, but then against employers who are sending in employees' money when self- employed people are escaping. Meanwhile, cash-only, self-employed businesses will begin to lure business away from tax-compliant businesses by offering big discounts.

This will start happening all over the world. Once it begins, it will not easily be reversed. The tax system rests on this faith: (1) the government will pay us what it owes us; (2) the government can get us if we stop paying. Both aspects of this faith will be called into question in the year 2000 if the governments' computers are not in compliance.

Big Brother is no more powerful than his software. On January 1, 2000, this strength may fall to zero. Actually, double zero.

If the IRS cannot collect taxes, and if all the other mainframe computer-dependent tax collection agencies on earth do not fix this, what will happen to the government debt markets worldwide? To interest rates? To the government-guaranteed mortgage market?

Kiss them all goodbye

"No Problem! Trust me!"

There are a few conservative financial newsletter writers who have heard about y2k. They deny its economic relevance. A shut-down of all mainframe computers would mean that newsletter writers will be out of business after 1999 -- a thought too terrifying for them. So, they brush y2k aside with some version of this rebuttal: "Of course, the government may not get its computers fixed." This is supposed to calm you. It should terrify you. Ask yourself:

What happens to T-bills and T-bonds if the IRS computer breaks down and a tax revolt spreads because taxpayers know the IRS will never find them, and that if they pay their taxes, they won't get their refunds?

What happens to money market funds and bond funds that invest heavily in government debt when investors realize that if the IRS can't collect taxes, the government will default on its debt?

What happens to the banks when depositors figure out that the FDIC is bankrupt and that nobody insures their accounts any more?

What happens to your job when the banks close because of bank runs, and no business can borrow money or even write a check to its employees?

What happens to the delivery of food into cities when money fails because the banks are busted?

What happens to the delivery of public utilities when money fails because the banks are busted?

What happens to your retirement fund when ERISA, the government pension guarantee program, goes bankrupt?

What happens to the 38 million people in the U.S. who are dependent on Medicare?

What happens to 42 million people on Social Security?

What happens to every state government?

What happens to crime rates when the state cannot imprison violent criminals and may have to release those who are locked up because they can't be fed?

What happens to the world economy when this scenario is multiplied across every government?

Kiss your job goodbye. Especially if you're a journalist. I know. I am one. I figure I'll be out of work -- forced retirement -- January 1, 2000. I'm making plans to be in small-scale agriculture. I'm out of debt.

What about you?

Psychological Deferral

Those in authority prefer to defer thinking about this. They are playing Scarlett O'Hara: "I'll think about it tomorrow," followed by, "Well, fiddle dee-dee." Deferral is a normal response to distant problems. The question is: What can we afford to defer? People defer making this assessment. The fact that you have not read much about this looming problem doesn't mean that it isn't a problem. If your employer has not actively sought solutions to this problem, your firm had better not use mainframe computers or be dependent on suppliers that rely on mainframe computers.

Everyone assumes that someone else is doing something to solve these problems. "It's being taken care of." The problem here is the passive voice. Who, exactly, is taking care of it? What, exactly, is this person doing? Is he on schedule? How do you know for sure? Are you taking his word for it? Anyone who takes the word of a computer programmer that he is on schedule is a person of very great faith. If the programmer says "Sorry, I didn't make it" on December 31, 1999, you're dead in the water. Meanwhile, he moves on.

What You Should Do, Beginning Today

First, you investigate whether what I'm saying is true.

Second, think through what happens to you if the local power company and the local water and sewage company shut down in your city for six months. "Who ya gonna call?" Especially if your phone is dead? And if you do get through, how ya gonna pay if your local bank is defunct?

Third, here is my personal strategy. I have adopted a question: "Can I prove on paper that he owes it to me?"

I want hard copy print-outs of everything I do with the government. If you are owed money from Social Security, and you're dependent on this income, contact the Social Security Administration every year and get a letter telling you what you're owed. This is true of every government pension system.

Do you have a copy of your birth certificate? If not, write to your place of birth and get it. Even if that community has not computerized the records, do it now. Even if it keeps the records in a desktop, do it. If word starts to spread, they may be buried in requests in 1999. You want your paperwork completed before word gets out.

Do you have a copy of your college transcripts? If not, get it. The same goes for your work record history. Assume that your records are in some company's mainframe computer. Assume also that the company has failed to update the software.

Do you have a print-out of all of your insurance records? Would they stand up in court? If not, get what you need, now.

Have you spoken with your local insurance agent? Is he fully aware of the problem? Ask him straight out if he has scheduled an update of his software if he relies on vendor- supplied software. He deserves to know what is coming. So do you. (If you want to photocopy this issue to send him, go ahead.)

Think through this problem in advance, before it gets out and creates a banking panic, all over the world. This story will get out eventually. In 1999, when reporters are running around looking for sensational Year 2000-third millennium stories, this one will at last surface. It already has: in Newsweek. At that point, every government bureaucrat whose agency is at risk will start playing the "No problem" game. "It's being taken care of." The bureaucrat's number-one rule is to evade responsibility. No one with any authority is going to admit that his malfeasance in office is going to create a disaster on January 1, 2000. The basic response will be this: "There's no problem here, and furthermore, I'm not responsible when everything collapses next year!"

-- Alias Lady Logic (susieq@aol.com), December 27, 1999.

Date: Sun Dec 26 1999 14:37 gwyz (@strat\Re: White House Nervous about Y2k) ID#44161: Copyright ) 1999 gwyz/Kitco Inc. All rights reserved My father in law is a Big Shot ( CEO ) of a very large and well known Brokerage Firm.

He just spent $13,000 dollars for a Generator, which he has thus far claimed that he had it installed *only* for the local blackouts they get sometimes.

However, there is a big hole in that story. He is a Big Man on Wall Street and part of his job is keeping his mouth shut. He doesnt give his own family "stock tips!" That is why I was suspicious about the reason he gave me for installing the generator. He only gets blackouts in the *Summer!*

My ( unspoken ) suspicions about the true reason for the generator were confirmed this past week when he "Flipped Out" over the fact that the Propane Companies are all telling him they cannot get a Propane Backup Tank for him until the *third week* of January. He is *VERY* upset about it. He has *MONEY* and cannot get a Propane Tank.

Why does he want a Propane Backup when he claims he installed it for local electrical failures in which the Natural Gas still flows? That was his "Stand" on the reason for installing it. QUOTE: "I will have electricity to power my gas furnace. The gas is on when the powe goes out." ( He is very aware of the fact that there is NO GAS during a "regional" outtage ) .

Then why is a BIG MAN ON WALL STREET Sh_tting his pants because he waited until the last minute, and now cannot get a Propane backup for his *$13,000 dollar* Generator. ( $13,000 before installation cost! ) .

Man, anyone who is still laughing at Y2k is so "effed" that I feel very sorry for them.

-- Andy (2000EOD@prodigy.net), December 27, 1999.

Very thought out post,Kurt.I'm particularly drawn to your "Conclusions of moderate confidence"There will be a 1WG.We've already got the World Court and when the American monetary system collapses we will have a World monetary system established.1WG will follow almost instantaneously.All transactions will be digital.(and before I get flamed,The newest computers capable of monitoring and recording digital transactions are not highly exposed to Y2K.The time frame for the above is beyond what will be required to stabilize and/or repair the electrical grid)Patents have been secured for said digital transactions via an implanted chip As to your second statement in this catagory,1WG will not be sustainable and will lead to WW III.

-- Dragnet (just@the.facts), December 27, 1999.

Anti-UN hate propaganda:

http://www.crossroad.to/text/articles/RR8-99.html

The International Plan for a UN Police Force Stationed Around the World by Berit Kjos Towards a Rapid Reaction Capability for the UN

"As professional volunteers develop into a cohesive UN force, they can assume responsibility for some of the riskier operations mandated by the Council but for which troop contributors have been hesitant to contribute. Without the need to consult national authorities, the UN could cut response time significantly. . . . As the 1995 Commission on Global Governance noted, 'It is high time that this idea - a United nations Volunteer Force - was made a reality.'"1

Towards a Rapid Reaction Capability for the UN

"Governments are understandably reluctant to commit troops rapidly for UN action, particularly in civil wars and internal conflicts."2

Our Global Neighborhood, The Report of the Commission on Global Governance

_______________________________________

In the near future, could the United Nations actually place its own police force in our communities to quell local conflicts? Worse yet, would it have authority to deal with the mere risk of such a conflict? Would this intrusive militia bypass U.S. authorities in order to fulfill any UN Security Council command?

The answer to all three questions is an alarming "Yes." Consider the evidence:

1. In 1998, the Clinton administration quietly gave the UN $200,000 as seed money to establish the a UN military operation called the Rapidly Deployable Mission Headquarters. A UN Secretariat official who prefers to remain anonymous explained the need for such "backdoor support." It was "because of the political sensitivity over creating an army under UN command and political authority." 3

According to George Archibald, who reported this incident in his Washington Times article, "White House backs standby U.N. army," the UN official indicated that Canada and the Netherlands are primary backers of this UN force. Thats true, but the USA has been actively pursuing this goal together with Canada.

2. In 1995, a detailed report titled Towards A Rapid Reaction Capability for the United Nations was prepared by an International Consultative Group co-chaired by Sir Brian Urquhart of the Ford Foundation and Dr. John C. Polanyi, Nobel Laureate of the University of Toronto. This Group consisted of "experts drawn from governments, academic institutions and non-governmental organizations" and included U.S. leaders such as Dr. Jessica Mathews, Senior Fellow, Council on Foreign Relations. Published by the Canadian government, it called for UN management of satellite surveillance, information systems, databanks, and every other technological tool for managing people. It concluded that -

"As long sovereign states retain the right to decide on the deployment of their national units, there will never be complete assurance that a UN force can meet an urgent situation on time . . . ." 4

"Command, Control, Communications, Computer and Intelligence systems (C41) would incorporate the full range of strategic and tactical communications networks, together with data processing capabilities and real-time information transfer.

" A number of UN Member States are bound to be wary of systems and equipment designed for advance surveillance, intrusion detection, early warning and enhanced analytical capabilities, even if similar systems are already part of the national inventories of neighbors or adversaries. Some of these systems might be considered too "intrusive" for use by an inter-governmental organizations. Even if these political hurdles can be overcome, acquisitions of these capabilities face enormous financial obstacles . . . .

"A prudent, long-terms approach would focus initially on the acquisition of advanced communication/information management systems for UN headquarters and the field. These would be "secure" systems which could readily be linked electronically to a variety of national systems provided to the UN under memoranda of understanding. The UN could then build upon this base. "5

3. What if this plan conflicts with U.S. laws, American values, and our national sovereignty? It doesnt matter, according to Sir Brian Urquhart and Erstine Childers. Political obstacles may slow, but not block, the move toward an international police force under UN Command. Their 1993 statement was quoted in the above report, Towards A Rapid Reaction Capability for the United Nations:

"The fact that the theoretically best solution is not at present politically feasible does not mean that the system must simply muddle on indefinitely in its present condition. A great deal can be achieved without constitutional change, by changes in such salient features as geography, legal mandates and behavior."6

Does that statement sound familiar? A mere Constitutional objection cannot stop these visionaries. Nor can national laws or public opinion. After all, laws can be reinterpreted and public opinion manipulated. As long as the mainstream media can win either the consent or the silence of the masses, Clinton and his team of change agents can continue to write life-changing rules and regulations that bypass Congress.

Its happening in education, health, environmental programs, and every other area of life. The global management system Al Gore points to in his 1992 book, Earth in the Balance, refers primarily to sustainable development, 7 but the transformation he envisions involves every part of the all-inclusive global system. As you read the following statement, dont forget that "voluntary" has become a buzzword for a system with built-in controls that reward compliance and shows zero tolerance for non-compliance. To these social engineers, their ends justifies any deceptive means:

"Adopting a central organizing principle  one agreed to voluntarily  means embarking on an all-out effort to use every policy and program, every law and institution, every treaty and alliance, every tactic and strategy, every plan and course of action  to use, in short, every means to halt the destruction of the environment . . . . Minor shifts in policy, moderate improvement in laws and regulations, rhetoric offered in lieu of genuine changethese are all forms of appeasement, designed to satisfy the publics desire to believe that sacrifice, struggle and a wrenching transformation of society will not be necessary." 8

4. Behind UN Secretary-General Kofi Annan stands the powerful Canadian multi-billionaire Maurice Strong. The founder of both the World Economic Council and Planetary Citizens, he has served as director of the World Future Society, trustee of the Rockefeller Foundation and Aspen Institute, and a member of the Club of Rome. As head of the Earth Council, he began to prepare an Earth Chartera global code of conduct based on global values and radical environmental guidelines.

Strong led the 1992 "Earth Summit" in Rio de Janeiro (United Nations Conference on Environment and Development). It produced the controversial Biodiversity Treaty and Agenda 21  the monstrous plan for reorganizing the world along environmental guidelines. One of his offices is only two blocks away from the White House.

Officially, Strong was "hired" by Annan to "reform" the massive, inefficient, and corrupt UN bureaucracy so that the US Congress would pay its dues. But his leadership brings little comfort to those who remember Strongs occult and environmental ties, globalist ambitions, and corrupt business practices.

His true plan for UN reform is documented in Our Global Neighborhood, the report of the UN Commission on Global Governance, which Strong helped write. Like Towards a Rapid Reaction Capability for the United Nations, this report calls for a volunteer UN army under UN command, with UN police stationed in every region of the world:

"In many of todays crises, it is clear than an early intervention could have prevented later negative developments. This underlines the need for a highly trained UN Volunteer Force that is willing, if necessary, to take combat risks.This would be particularly useful in low-level but dangerous conflicts. Such an international Volunteer Force would be under the exclusive authority of the Security Council." 9

What if the U.S. Congress disagrees with UN decisions. Could it simply press for a U.S. veto on the Security Council? Not if Strong implements his vision of reform. The United States, which is billed 25% of the huge UN budget, would be dismissed from the Security Council:

"We recommend that a new class of standing members be established. Of these new members, two should be drawn from industrial countries and three from among the larger developing countries. Of the two from industrial countries, presumably one will be from Asia and one from Europe. Of the three from developing countries, we would expect one each to be drawn from Asia, Africa, and Latin America. . . . The new standing members will not possess a veto, and we believe the aim should be for the power of the veto to be phased out. 10

5. Most of the incremental steps toward UN control over its own local police happen in secret, behind closed doors. But some are made public, such as the following UN Press Release (#6397) issued on July 14, 1997:

"Noting the increasing role and special functions of civilian police in United Nations' peace-keeping operations, the Security Council this morning encouraged States to make appropriate trained police available to the Organization at short notice. . . . The council encouraged States to provide appropriate training of civilian police for international service. [C]ivilian police performed indispensable functions in monitoring and training national police forces. They could play a major role, through assistance to local police forces, in restoring civil order, supporting the rule of law, and fostering civil reconciliation."

6. On September 14, 1998, U.S. Secretary of Defense William Cohen addressed the Council on Foreign Relations. In the euphemistically veiled language so typical of the Clinton administration, he described the current crisis and offered a government solution:

"To deal effectively with these challenges, we must have a national security policy based on four pillars:

Bi-partisan support for Defense Policy Budgets adequate to maintain the worlds best military today and in the future International cooperation Interagency cooperation within our government"

Keep in mind that "international cooperation" means working with NATO and the UN. Three of the four points above were covered in the report mentioned earlier, Towards A Rapid Reaction Capability for the United Nations. The list of excerpts at the end of this report broaden our view of the vast bureaucracies, monstrous power, and arrogant ambitions that drive the UN agenda and its worldwide network of disciples every closer to Maurice Strongs vision of "global governance". To speed the process, the United States is expected to contribute troops as well as its enviable expertise in surveillance and reconnaissance technology. American taxes would fund and arm a global management system that aims to crush Christianity, Western culture, capitalism, and the US Constitution.

7. Controlling the flow of information is vital to the envisioned global management system. To this end, each nation must fund and implement its part of the massive global information and monitoring system. In the following section of Towards A Rapid Reaction Capability for the United Nations, notice the reference to Information Management.

"The types of technologies which could play a greater role in peacekeeping operations are: surveillance technologies, communications equipment and enhanced information management systems.

"An attractive technology for a variety of peace operations is aerial reconnaissance of ground activity. Access to satellite capability may have great strategic potential.

"The ability to locate, identify and monitor virtually all vehicular movement has obvious applicability to monitoring, surveillance and control missions.

".surveillance technologies and information management systems could be integrated into an organization-wide system to enhance contingency planning." (pages 56-57)

Such an integrated UN-U.S. information management system is needed for other global programs as well. At the 1995 UN Conference for Women in Beijing, 11 our U.S. delegation committed our nation to participate in an international monitoring system controlled by the UN Economic and Social Council. This system would monitor compliance with politically correct gender roles in schools, workplaces, and homes (parents could no longer model traditional gender roles in the home). Fulfilling his part of the UN plan, President Clinton signed Executive Order 13011, establishing a massive interagency bureaucracy with power to -

manage "Federal Information Technology" disseminate politically correct information build massive data banks share the data with international bodies such as the United Nations.

8. A crisis need not erupt before the UN militia begins its work. In fact, one of its major responsibilities would be to monitor human rights violations around the world. If that doesnt concern you, please read our reports on Executive Order 13107: Human Rights Implementation and The UN Plan for Your Mental Health.

The 1998 International IDNDR Conference on Early Warning Systems for the Reduction of Natural Disasters chose as its theme, "Building a Culture of Prevention." For our globalist leaders who promote "systems thinking," the theme of prevention includes all conceivable areas of potential conflict and non-compliance. Whats more, this theme provides a catchy rationale for continual and pervasive surveillance of beliefs, attitudes, and actions. In light of the UNs overall quest for global "peace" and "solidarity," ponder the following quote from The Declaration of the Potsdam Early Warning Conference:

"Successful early warning requires unrestricted access to data that is freely available for exchange. Ultimately, all resulting information must be credible, and emanate from a single officially designated authority.

"Participants emphasized that early warning is effective only to the extent that policy makers at national levels of authority have the will, and make a sustained commitment of resources that will establish protective measures. It is crucial that these measures support the development of early warning capabilities at the community level and that they be based on local vulnerability and risk assessments." 12

In other words, the U.S. must provide the UN with all the data needed to assess potential conflict of any sort anywhere. Among the conflicts the UN police are being trained to resolve are human rights violations. In the eyes of UN leaders, any group that violates the UN standard for politically correct beliefs and values could be "at risk" of creating conflict.13 Would non-compliant people be among the risk factors that could trigger the "early warning systems"?

9. Finally, see how the pieces fit together. Ponder the following quotes from Towards A Rapid Reaction Capability for the United Nations:

" This studys central objective is to recommend changes at all levels of the UN system which would give the UN an enhanced capability to respond rapidly to crisis situations." (p. iv)

"there are several generic components of rapid reaction which must be included in an UN capability if it is to be effective:

7 an early warning mechanism to alert the system to an impending conflict or crisis; 7 an effective decision-making process 7 adequate finance. 7 well-trained personnel." (p. iv)

"Current early-warning systems could be substantially strengthened by working towards an element of 'automaticity' in early-warning arrangements. Ideally, as Jessica Tuchman Mathews, of the Council of Foreign Relations, New York has suggested, "The UN should develop an automatic system of responses . . . . The key is that a certain set of findings would trigger a set of predetermined responses for rapid reaction.. . . .

"Nothing can tie the hands of the Security Council in making decisions." (p.44)

"To enhance rapid reaction, the UN and Member States need to address the nature of training to be conducted and the management systems which should be put into place to ensure that national training programs are responsive to the UNs requirements." (p. 54)

"The UN  would not have to await the lengthy domestic processes of each Member State before a critical mass of police forces is assembled.... a permanent force could be trained to the high standards which the UN should demand. . . .

The Vanguard Concept  is based on standby arrangements for nationally-based units linked to a UN operational headquarters.  The presence of regional headquarters would provide for greater flexibility and reduce the time required for deployment. . . . Governments are sometimes reluctant to release their forces for duty. Even when Governments are disposed to concur the process of seeking authorization is often slow. (p. 60)

"As they would remain under national command, national authorities would retain primary responsibility for their administration, pay and benefits." (p. 61)

The United Nations may well position its "highly trained" Volunteer Force armed with Americas latest surveillance and reconnaissance technology in our midst. Such an action would fit the vision of many US leaders who, for political reasons, prefer to let the UN make such unpolular choices for them. If this happens, and if this Force must carry out Security Council orders that our Congress would forbid, there will be no earthly place to hide from tyrannical leaders.

While we must do all we can to stop this intrusion upon American sovereignty and freedom, we need to remember that the forces arrayed against us are far greater than our mere human efforts. Only God can bring victory. I suggest that we turn to Him, listen to His instructions, and follow His plan. Jehoshophat, a godly king in Old Testament days, said it well:

"O our God, will You not judge them? For we have no power against this great multitude that is coming against us; nor do we know what to do, but our eyes are upon You." (2 Chronicles 20:12)

Together, the people prayed, followed God's instructions, and won the war in a mighty demonstration of the power and faithfulness of our God.

_________________________________________________

Endnotes: 1.Towards a Rapid Reaction Capability for the UN (The Government of Canada, 1992), p. 62. 2. Our Global Neighborhood, The Commission on Global Governance (Oxford University Press, 1995), 110-111. 3. George Archibald, "White House backs standby UN army," Washington Times, April 23, 1998. 4. Towards a Rapid Reaction Capability for the UN , page 63. 5. Ibid., page 56-57. 6. Ibid., page 55. 7. See Local Agenda 21. 8. Al Gore, Earth in the Balance; Ecology and the Human Spirit (Houghton Mifflin, 1992), p. 274. 9. Our Global Neighborhood, The Commission on Global Governance (Oxford University Press, 1995), 110-111. 10. Ibid., 240, 241. 11. You can read about this UN conference, and the global sisterhood that led it, in chapter 9 of A Twist of Faith. 12. http://www.gfz-potsdam.de/ewc98/finaldec.html 13.See the UN Plan for Your Mental Health

-- Hokie (nn@va.com), December 27, 1999.

shame that one of the most substanitive threads will be clicked over due to length of content.

Excellent work!! IMHO

-- d----- (dciinc@aol.com), December 27, 1999.

Many INTERESTING posts.

Jonny B.--you are correct.

-- RJ (LtPita@aol.com), December 27, 1999.

Kurt,

Thank you for the outstanding post. It's awfully hard to believe that on Dec. 27th the world is still chugging along in its usual way.

A word to Laura: Gary North kindly made his work available to all by waiving copyright considerations. Scholarly integrity demands that he receive acknowledgement as author alongside any exceprts from his work. Ripping off his prose as you are doing is reprehensible, particularly since you consider yourself a smart person. Only the lowest scum plagiarize.

-- silver ion (howsthem@pof posters.comingalong), December 27, 1999.