One of the basic assuptions we are making is that we all need to get our preperations done before (pick your date) April or June or August 1999. We need to be ready before it is obvious to all of the impending disaster, when all the store shelves will be stripped bare.

I have been thinking about different possibilities. What if there is no massive wave of awareness? What if there are disrptions to the banking/credit systems before there is public awareness?

One possibility is that "credit" in the form of loans or the use of credit cards may be stopped until early 2000, and cash and checking use is tightly restricted. This could lead to a situation where the shelves of stores are loaded with goods, but people cannot buy them because there are problems obtaining credit or money?

In other words, it may be more useful to take a loan against your house now and slowly turn it into cash now in early 1999, and wait until late 1999 to do your shopping.

While I admit this is an off-the wall scenerio, I just want people to appreciate that we need to examine our assumptions, and to realize how unstable the situation is. There is no predicting which element will "blow" first.

I think we need to work out all the different possible obstacles to each form of payment for goods there can be in late 1999 and the consequences for each one.

Cash -- we know that in a bank run, cash withdrawels will be limited. It has also been noted that these restrictions have lots of loopholes (i.e. cash skimmed from cash businesses, businesses demanding cash for payrolls, etc.)

Credit Cards -- Gary North has pointed out that credit cards exist because Master Card and Visa stand behind and guarentee the transactions for merchants. If the credit cards do not have faith in their member banks, then the system stops.

Checks -- the use of checks may be restricted in a bank run situation. People may not accept checks when lots of banks are failing.

Business purchase orders -- these might not be accepted around the 1999/2000 turnover.

Any comments?

On

-- David Holladay (davidh@brailleplanet.org), January 10, 1999

Answers

David, I have been thinking in a similar way. What I keep thinking is about getting credit to say relocate. We are maybe going to do some home in the country in the spring but what if our incomes drops before then and we have taken our investments out of the market and we have no assets on the record. How do you qualify for a mortgage if your income is low and there are no investments to show anyone? I keep thinking maybe we should refinance our house now and get some cash while the interest rates are low and start building with that cash. It is so late...

-- Lisa (logold@kdsi.net), January 10, 1999.

Thing is, some stuff you'd want just won't be on the shelf at all if you wait. Case in point, Aladdin lamp-oil lamps are just about unavailable right now. There'll be more cases like that soon.

-- Blue Himalayan (bh@k2.y), January 10, 1999.

I encourage everyone to begin shopping immediately, if not sooner. We need to maximize the amount of goods that will be bought by 2000 by ramping up the distribution pipeline.

The big problem with people I have talked to that "GI" is they think that 50 lb sack of rice will be in the FoodLion when they are finally ready to buy it.

BIG mistake.

-- a (a@a.a), January 10, 1999.

David,

I couldn't agree more. Since New Year's Day I've been feeling like we are walking on eggshells. Although the media doesn't want to be responsible for starting panic, I think a major disruptive event could hit the mass public at any moment. It could surface when some companies go to new fiscal year Feb. 1, or Japanese Banks have to shut down in April, or maybe even something sooner. I'm getting very nervous.

-- (infoman@web.com), January 10, 1999.

I'm with you Infoman. I'm nervous as well. The problem I'm having is the shelf life of some of the goods; I've been putting off buying some things for a) lack of space (we are currently moving into a new house with lots more space), and b) the shelf life, for instance, of bleach or canned goods, is limited. I'm preparing for one year on as much as possible, while beefing up the garden with a two year's supply of seeds. It's hard to know when is the right time to start really going whole-hog.

Jeannie

-- jeannie (hollander@ij.net), January 10, 1999.

Buying on credit. Cutting off credit.

I have already heard of "policies" by banks that no loans are supposed to be granted to companies without Y2K compliance. The way I heard it was Jan 1, 1999. But I haven't actually heard anything in the press about this.

Just a 3rd hand account from a book store clerk who is close friends with a bank officer.

Problem is, a credit crunch will cause a depression in this day and age.

Let's take a poll here. How many have credit cards? (My guess would be almost all, since most Internet companies work from credit card for access.) How many have their balance paid off? (My guess would be that 1/4 would have their card paid at this time of year, and the number probably goes up to close to half by September.)

I'll offer info first. We have cards, the balance was recently paid off, but wasn't for a quite a long time prior (over a year).

Right now, our economy is almost completely running on consumer credit. With the weakening of many foriegn economies, we're certainly not growing the economy by exports.

A credit crunch where credit is no longer extended will cause a contraction in the economy as severe as what is occuring in Japan right now. While such a crunch might be a good thing from a "moral" perspective (to wake people up to the evil of borrowing money, see Proverbs 22:7 "The rich rules over the poor, and the borrower becomes the lender's slave."), the impact to the economy is devastating as probably 1/2 of the retail companies (JCPenney, Sears, Wards, Best Buy, Dillards, Foleys ) would probably go bankrupt. Many of these companies are already hurting, even in a healthy economy. (In fact, Wards is already in Chapter 11 and will likely liquidate before the year is out.) In fact, all of the "department store" middle ground would be wiped out. (I've been forecasting this in the stock market for some time.)

As the economy contracts, people get laid off, consumer confidence is shaken.

That's just for stopping the extension of credit.

Stopping of check payments, requiring cash, would further damage the banking system.

By the time you got down to it, you might be better off taking silver, gold or barter items.

Glen Austin

-- Glen Austin (gdaustin@aol.com), January 10, 1999.

David,

I pay close attention to fiscal year roll-over issues as a barometer, but I also know this is more of an internal bookkeeping problem than it is something that might impact a company's ability to sell goods or services. I still have never heard a factual discussion on whether a company's roll-over into fiscal year 2000 would cause failures that the public would notice.

Anyone?

So I'm stuck with paying attention to key dates (Jan. 1, Feb. 1, Apr. 1, the GPS in August, etc.), but not necessarily expecting anything to happen that will be covered by the mainstream press. It could be that nothing noticeable happens until October (the last quarter of the year).

On the other hand, something specific could trigger awareness early, such as IRS problems in April, an attempt to shut down non-compliant nuclear reactors in July, or GPS receiver problems in August.

The most important thing, though, is to prepare now. We can guess, but we don't know when a significant minority of the public will "get it". It could be in February or it could be in October. Who knows? But, is is NOT safe to assume that you'll be able to buy winter clothing or kerosene heaters this fall.

Prepare now, even if it's just a few items each week.

-- Kevin (mixesmusic@worldnet.att.net), January 10, 1999.

Kevin and group,

I watch the standard and expected Y2K trigger points too. And yet, unexpected things happen all the time. Who knows?

While we have no problems with the power supply in 1999, things can get restocked, transportation runs, the farmers have another growing season with everything working normally etc. What keeps the economy going, despite the ridiculous indebtedness, and lack of savings, is people consuming. Im starting to think that barring big events that cannot be shuffled aside or downplayed, we may actually continue to see the illusion of a booming economy. Maybe even until October. Go figure.

My question now is what are people consuming? And how can we tell when their buying patterns shift significantly? Perhaps that is one indicator of growing awareness. Most well-managed companies dont want to miss a market opportunity for increased sales. So, at least through 1999, those that show strong growth will likely get money from banks and investors.

Also, Id be curious to know if companies like the Aladdin lamp and other preparedness product manufacturers ARE gearing up production lines to meet what we think is increased demand based on items missing from the Wal-Mart and Costco shelves, etc.

Ideas for tracking?

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), January 11, 1999.

Could some of this speculation be based on a fear that we are all wrong to begin with? Are we looking for the rest of society -- or any significant part of it -- to reassure us that we are not crazy for doing all of this? Much of the impetus for our preparations is premised on the fact that no one can say what will happen on and after 1-1-2K. The extent of any pre- 1-1-2K manifestations is equally uncertain. Why should we expect any greater certainty as to the reactions of the general public -- or base our preparations on anticipating certain reactions at certain times? The first rule is to be prepared -- as EARLY and as COMPLETELY as possible. The watchword is "prepare for the worst, hope for the best." I have often thought that the timing for the release of the movie "TITANIC" was perfect. It is a metaphor for our time.

-- Lloyd A. Schmid jr. (lschmidj@bellatlantic.net), April 07, 1999.

One good thing about what I said on this thread in January...what I said about the fiscal year roll-over issue then is the same thing I'm saying now.

-- Kevin (mixesmusic@worldnet.att.net), April 09, 1999.

I've been saying for some time that I believe there will be NO panic until the very last minute, the only get out for this would be a catastrophic public major failure of an entity that cannot be spun out of - or war.

-- Andy (2000EOD@prodigy.net), April 09, 1999.