Cover Story

Surviving the Y2K panic

It never hurts to be prepared for disruptions in the food supply and power brownouts, but experts worry that overreaction to the potential for Y 2K-induced problems could rival some of the biggest scare scenarios.

Issue: "Surviving the Y2K panic," April 3, 1999

While President Franklin D. Roosevelt's famous statement about the Great Depression, "We have nothing to fear but fear itself," doesn't fit as an analysis for the Y2K computer bug, it may be coming close. Disruptions from the bug undoubtedly will occur-even the National Basketball Association, citing Y2K fears, last week was considering calling off games scheduled for next New Year's Eve, New Year's Day, and Jan. 2, 2000-but public panic regarding Y2K could make the situation worse.

The Y2K bug is the problem of computers, programmed only to read the last two digits of each year, reading "00" to mean 1900 rather than 2000, and then failing. Some people are predicting chaos, with food distribution networks, utilities, banks, and governments ceasing to function. These folks, many of them Christians, are heading for the hills and stocking up on food and ammo.

But as far as technological disruptions go, experts say the bug will feast mostly on foreign cuisine. In testimony to the Senate last month, the Gartner Group's Lou Marcoccio said, "Our infrastructure and banks should be in very good shape, and our government is one of the very few that is very far ahead of all other governments in the world in addressing this problem."

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Other countries are starting to make progress. For example, Gartner, an information technology consulting firm, recently upgraded Japan's readiness status. But as Christian Financial Concepts president Larry Burkett, a leading voice on Y2K matters, points out, the new rating says that instead of 50 percent of Japanese systems being noncompliant, "only" a third are. Mr. Burkett believes that by the time the clock strikes midnight on Jan. 1, a fourth of Japanese systems will remain noncompliant.

This means that the bug's biggest effect on the U.S. economy could be indirect. Despite a current high-flying U.S. economy in the face of downturns all over the globe, Mr. Burkett argues that America can't remain forever immune from other countries' woes. If Y2K hurts Japan and other key trading partners, it will at some point harm the United States as well.

And the cost of Y2K repairs also is beginning to become a big issue. The latest report on Y2K from the White House Office of Management and Budget (OMB) increased the estimate for fixing the government's most important computers by $400 million, to $6.8 billion. Most analysts expect that to go up again.

The OMB report said that 80 percent of the government's 6,399 most important computers have been repaired or replaced, or never were vulnerable. But the Department of Transportation, the Department of Health and Human Services, and the Agency for International Development (AID) are still in bad shape. (A wag might point out that when work at some of these agencies halted briefly during the government shutdowns of 1995-1996, few people outside the agencies noticed.) Repair work at AID slowed after a computer failed while testing what officials believed had already been fixed.

While none of this is good, apocalyptic scenarios likely are overblown, says Mr. Burkett: "In large part, what's going to happen in the United States is not going to be life-threatening. It's going to be very discomforting, very irritating"-with power and telephone service becoming sporadic for a time, and air and train traffic reduced for a few months-"but nothing life-threatening."

The Gartner Group agrees. "Withdrawing funds from banks or liquidating investments is not warranted," the firm says in a Y2K report. Most enterprises "will address mission-critical systems so that 90 percent of the systems that do fail will be corrected within three days." Advising against a "bomb shelter" mentality, the report argues that "preparing for the new millennium should be much like preparing for a storm that will last less than a week."

But what happens if all of this storm preparation takes place at the same time all over the country? This is Mr. Burkett's biggest concern. He thinks people may strip grocery stores of all their food in late December, in anticipation of problems. Then, if shipments of food to the stores are delayed for a week or two because of the Y2K glitch, "things are going to be real lean for a period of time, but it's mostly caused by panic, not by a system breakdown."

Mr. Burkett sees the potential for similar problems at banks and the stock market. People might try to get some of their money out of banks and out of stocks in late December, creating logjams and perhaps even the need for bank holidays, in which banks close to keep people from withdrawing their money. But, again, this would be a problem caused by reaction to Y2K, not by the computer bug itself.


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