From today's Financial Times, Times, Telegraph, Guardian:

Michael Foot, managing director of financial supervision at the Financial Services Authority: "Only a handful of firms are still considered to be within the high-risk category. If they do not take action to improve, we will shut them down later this year to preserve the integrity of the markets and the position of investors."

Anne Lambert, director of operations at Oftel (the telephone regulators): "We will achieve 90 per cent tested compliance by June, having spent more than #500m, and confidently expect to reach 100 per cent by the third quarter of 1999."

Peter Carter, deputy director-general of electricity supply, said that the power and distribution industry - oil and gas included - are "in a high state of readiness." Ofwat, the water regulators, said it was "highly satisfied" with progress towards compliance but has instructed several water companies to bring testing times forward to early this year in order to make possible cross-company testing.

How seriously should one take these protestations of happiness? According to Milne and thes rest of the "bring it on" crowd, not at all. However, you might wish to consider that, in Britain, regulators have extensive powers of compulsion and expulsion. Ofwat, for instance, can simply relieve a water company of its license to operate and hand the plant over to an new management company. Oftel tells BT what its prices are going to be. The Financial Services Authority has powers over its sector that make the SEC look, well, about as poodle-like as it is actually... My experience is that when these guys say something's true, it's because they have already threatened, bullied and tortured the industry into making sure it's true. But judge for yourselves...

-- Michael McCormack Editor, Insider Technology

-- Flint (flintc@mindspring.com), January 23, 1999

Answers

"Michael Foot, managing director of financial supervision at the Financial Services Authority"

Sounds like the Alan Greenspan of UK. Did you really expect anything other than a happy face?

-- a (a@a.a), January 23, 1999.

The British authorities have no credibility either. Remember how they freaked when their y2k czar recommended in mid-December that everyone needs to stock up on essentials? The czar promplty went public the next day and said she didn't mean what she said earlier. Unfortunately, there is a certain logic to the position of the industrial-government complex: No public concern = unquantifiable chance of teotwawki; public panic = 100% chance of teotwawki; anything is preferable to 100%, so keep the public concern as low as possible.

-- Puddintame (dit@dot.com), January 23, 1999.

Puddintame, I agree with that logic, but I can't agree that it's unfortunate. Do you really believe that public panic will improve anything? I prefer catastrophes to be as orderly as possible under the circumstances, it minimizes both the severity and the duration.

While I also doubt the credibility of these sources, I continue to believe that confining my doubts *only* to the good news produces an unbalanced and unrealistic big picture. Some genuine reason for optimism was included here. Ignoring that part and plucking the least credible part out of context seems a bit, uh, Milnish?

-- Flint (flintc@mindspring.com), January 23, 1999.

Remember, the British government was caught with its military pants down, so to speak, when it was forced to admit that it really did have plans to put troops on the streets (if necessary) if there was an infrastructure breakdown. This admission only came after someone leaked a memo showing that such plans did indeed exist, and it came out that there had been meetings involving the military on such actions. Consequently, one must take government pronouncements of "of all is jes' SWELL! :)" with a grain, or a lick (ie, a block) of salt.

That said, even if all the above reports are true (and some utilities in Britain have openly admitted they don't know if they'll make it), you still have their economic issues to deal with, ie, preparedness (or lack thereof) of their businesses. We had the recent news that up to (I repeat: up to) 20% of Britain's top 1000 firms could go bankrupt because of they are trailing on their remediation work. A few months back, British Telecom floated a plan to pre-bill customers for service for early 2000, because they openly said they thought customers' billing systems wouldn't work (or at least a significant percent of them), thereby hurting BT's cash flow. One BT spokesperson said, "The economy will crumble," (verbatim quote) because the company considered 29 percent of British GDP at risk.

Furthermore, assume that Britain is like every other nation in the world, where SMEs (small & medium sized enterprises) reportedly trail the big boys. If the top 1000 firms are in that kind of shape in Britain (where up to 20% could go under), then what is the status of their smaller firms? And how many of them are key suppliers of larger businesses?

Just assume that all the good news is true. Take all the worst case scenarios laid out above & cut them in half, or by two-thirds. Assume the bankruptcy of "only" 5% of top British firms, the failure of something like 5-10% of Brit SMEs, critical infrastructure breakdowns of just a percentage of important utilities, and that key government agencies overwhelmingly- but not completely- "make it." With all this "positive" outlook, you still face some pretty significant economic problems in that country.

And then remember that Britain is a "world leader" in Y2K compliance, so the situation looks worse almost everyplace else.

-- Drew Parkhill/CBN News (y2k@cbn.org), January 23, 1999.

Drew, this are good points, and very important if we experience more- or-less marginal problems. In that scenario, the costs of patching the holes, lost business, delays in production, etc. will push numerous firms' costs up to a noncompetitive level. Unable to compete effective, they'll wither and die, losing their employees to their better-prepareed competitors. Structural unemployment leads to recession while the economy finds a new equilibrium.

If the problems instead mean that numerous firms, agencies, utilities etc. can't function *at all*, the picture changes considerably. In that case, profitability decreases in importance, and anyone who can do anything is better than nothing, as we dig out from under the rubble and see what's left of the scenery.

It's this second possibility that I'm preparing for.

-- Flint (flintc@mindspring.com), January 23, 1999.

Flint, I believe that there is a middle ground between panic- inducement and the patronizing "don't worry, be happy" attitude of the British government and the US Executive branch. I can't really speak for England, but America is without a leader. I'm not a big fan of the New Deal, but FDR was a leader. If FDR were to come back to life and give a fireside chat stating that the risk is unknown and that he urged everyone to diligently prepare, bit by bit over the next 10 months for a month or two of a difficult transition, then I think the public would be calm and appreciative and this country would be infinitely better off. But there is a price to be paid for electing candy-@@@ career politicians and we might be paying that price shortly.

-- Puddintame (dit@dot.com), January 23, 1999.

Puddintame (sigh), I believe that it's too late now. A year ago, that would have been a great idea. Of course, a year ago the awareness wasn't there, but good leadership could have provided that too.

Now, what you're suggesting is that somehow our economy should generate 12 months worth of consumables in the next 10 months -- and very few have even begun to gear up for this already. I don't think it can be done. But that's not my area of expertise.

When I talk to my neighbors, they say "Come on, are you serious, look around. Do you see any problems? I don't see any problems. Those guys are too smart and have too much at stake to let anything like that happen. But if you're right, at least we know where to go."

Do you think FDR himself could get through?

-- Flint (flintc@mindspring.com), January 23, 1999.

Flint, I have the same problem when trying to talk to friends. I only talk to close friends about it, and they pretty much laugh it off in precisely the same manner you described. I think I have convinced my father to stock up a little food, probably ten days worth. I mentioned to him the possibility of buying some put options as a little insurance on his retirement income, but he thought that was ridiculous. I'm trying to organize a neighborhood discussion group in an effort to an least get the elderly people in my neighborhood a little bit concerned about their own welfare come Jan 1. I don't have high hopes for success, but it would not be right to make no effort at all.

I definitely think that a presidential address devoted solely to y2k would waken this nation. Clinton has at least one admirable trait and that is self-preservation in the face of overwhelming odds. People might trust him enough to take action if they see the he is truly concerned. If Clinton were to prepare the nation for y2k, I would consider him at least partially redeemed. Y2k is the biggest issue we've faced since Saddam moved into Kuwait; only the outcome of y2k is not nearly as easy to predict.

You bring up an interesting point about compressing 12 months of production into 10. No doubt, some things would fall by the wayside, but I think it could be done in areas which are vital to survival. The world is flooded with commodities right now. As one example, here in North Carolina we feel the effect of pork prices at their lowest levels in 60 years. North Carolina is producing way more pork than it can sell right now. The big packing houses like IBP say they are operating at capacity, but even if IBP is telling the truth (and many think they are lying just to keep wholesale prices lower) big deal. We don't need processed Oscar Meyer hot dogs to survive. A salt cured ham is about as low tech as you can get. (Through whole ham in bucket, cover with salt, wait.) There's nothing pork growers would love more than for someone to take an extra two months supply of pork off their hands right now. Wheat and other vital food exports? Eliminate exports only to the extent necessary to ensure that we are able to feed *this* nation. (Although I might be persuaded to keep very well-fed the Russian soldiers who man the missile controls.) Not only that, I'll extend it by saying that we should import now the items we feel we need to get through a transition period. The world is drowning in crude oil. Are all of our storage facilities going to be filled in December? There are vast amounts of unused tanker capacity on the seas. Are we going to have them filled and in or near the US shore in late 1999 where they could be tugged in by a very low tech harbor tug, or are they going to be bobbing up and down empty in the Persian Gulf or Indian Ocean waiting for some "just in time" inventory order.

It looks like most of small business and a good bit of big business is going to be operating on a "fix on failure" basis in January and February, but we know right now that during that time period we're not going to grow any food, and we may have trouble even getting 58% of our petroleum onto our shores, so let's do as much as we can now to make sure that the programmers and everybody else is fed, sheltered and working instead of huddling around a smut pot with their family.

y2k is much more like a hurrican than a tornado. We have our share of hurricanes around here. If you prepare for them, they are a nuisance. Ignoring them can bring about wringing of the hands and gnashing of teeth . . . or worse.

-- Puddintame (dit@dot.com), January 23, 1999.

Flint, Thanks for the article. I will simply second the points raised by Drew. At this juncture it is very difficult to see any other 'Best Case' than a Depression.

-- RD. ->H (drherr@erols.com), January 23, 1999.

No matter what flint-boy posts it is ALWAYS on the Pollyanna side. An industry or government PR Fak says it's not so bad and flint salivates like the pavlovian pollyanna that he is.

But when independent NON government people point out how bad it is, flint ignores it.

The truth is otherwise.

-- Paul Milne (fedinfo@halifax.com), January 23, 1999.

Uh, didn't I post the Enterprise Systems report? I coulda sworn I did. Didn't I emphasize that it was worth reading? It seems to say that, yes, there it is.

I guess my always posting good news is another Milne 'fact'. He says so, and he says he's honest.

-- Flint (flintc@mindspring.com), January 23, 1999.

I for one am pretty damn sick of reading Milne's demeaning insults to individuals on these posts.

Thanks Flint, and ignore the assinine cretinism of Milne's so-called thought processes.

-- Rey (rey@token.com), January 23, 1999.

Rey-

Hear, Hear. Milne is only here because the Usenet folks are tired of being baited by him.

Flint, Puddintame- Thank you very much for this thoughtul exchange.

-- Lewis (aslanshow@yahoo.com), January 25, 1999.