http://biz.yahoo.com/rf/991110/ha.html

FEATURE-Economists wonder what the Y2K fuss is about By Alan Wheatley

LONDON, Nov 10 (Reuters) - After dire warnings of the damage crashing computers could do to global business, the millennium now looks set to end not with an economic bang but a whimper.

To be sure, the looming Year-2000 date change is causing important shifts in economic activity as firms and consumers stockpile goods and information technology purchases are postponed in case of possible disruption.

But economists say both these trends appear so far to be relatively modest and should in any case be unwound in the first quarter of next year, producing a ``double bump'' the net effect of which would be broadly neutral for world output.

``The net of this in GDP terms is about zero,'' said Neal Soss, chief economist at Credit Suisse First Boston in New York.

The millennium bug, or Year 2000 (Y2K) problem, could lead older computers that have not been reprogrammed to read the year 2000 as 1900, causing them to produce corrupt data or shut down, halting myriad industrial processes and distribution chains.

But preparations in most industrial countries have been so exhaustive that officials are confident of avoiding chaos -- as long as consumers and businesses don't panic.

``If we avoid fear-induced, significant economic responses in the months ahead, the Century Date Change will hopefully replicate the saga of 'the dog that did not bark,''' Federal Reserve Chairman Alan Greenspan said on October 15.

SOME STOCKPILING BUT NO MOUNTAINS

The dog might not bark, but he is stirring.

In Japan, the government has advised everybody to stockpile several days' worth of food and water as a precaution.

Power producers across Asia appear to be building up an extra week's supply of coal, which provides about a third of the region's electricity, according to Australian coal suppliers.

In the United States, despite Greenspan's plea not to panic, one sign of pre-millennium caution is that people on regular medication are renewing their prescriptions early.

``It's not a bad idea to have an extra stock of those pills handy on December 31,'' Soss said.

By and large, however, U.S. and European economists are surprised how little inventory building there has been so far.

The International Energy Agency said in its latest monthly oil market report that there was scant evidence in heating oil futures markets of any concern about supply disruptions.

Bernhard Speyer at Deutsche Bank in Frankfurt said it was puzzling that freight companies were not reporting much of an increase in firm bookings and that inventory data were not reflecting Y2K stockpiling.

``It makes you wonder what is going on,'' he said.

Speyer speculated that firms will eventually get round to ordering more spare parts and supplies. But he also said the spread of ``just-in-time'' supply chains, which deliver components when they are needed during the manufacturing process and not before, meant some companies could not build big stockpiles.

Michael Niemira, an economist with Bank of Tokyo-Mitsubishi (BOTM) in New York, estimates that inventory-building will boost fourth-quarter U.S. growth by no more than one third of a percentage point at an annualised rate.

BOTM conducts trade surveys of transport firms and New York-area purchasing managers, and Niemira said the message from them was broadly the same: about a third of those polled expect to increase their inventories, but many of them by very little.

``There's a modest increase in bookings, but it's almost indistinguishable from what else is going on in the economy,'' Niemira said. ``I suspect there'll be more (statistical) noise from Y2K than anything else. The economic fundamentals will be far more important and will wash out any other concerns.''

In Britain, the Bank of England expects Y2K to boost economic growth by around 0.1 to 0.2 percentage point of gross domestic product (GDP) this year and subtract a similar amount in 2000.

``We see the effect of the millennium as being quite pervasive...but mostly one that just shifts output and consumption from one quarter to another rather than providing a major one-off boost,'' Bank of England Monetary Policy Committee member DeAnne Julius told Reuters recently.

Y2K GIVES IT BUYERS COLD FEET

Many economists suspect the biggest economic impact from Y2K will come not via inventories but via fixed direct investment as IT managers freeze new spending to concentrate on ironing out any last-minute wrinkles in their systems.

Computer giant International Business Machines Corp and business information provider Reuters Group Plc are among firms whose business has been hit by a Y2K slowdown.

``There are increasing indications that companies may be holding back on capital expenditure this year -- on software or on hardware -- and delaying it into next year. More and more corporates that we talk to give us that sense,'' said Martin Brookes, an economist at Goldman Sachs in London.

As a result, there could be a pick-up in capital expenditure in some parts of the economy to help offset a drawdown in inventories, Brookes said.

Overall, he said the century date change was shaping up like the switchover in Europe last January 1 to economic and monetary union. The potential for chaos in payments systems, with the risk of knock-on effects on the real economy, was huge. But in the end, the hiccups were minor.

``My suspicion is that it will be a bit like EMU, which was thought of a big threat to various markets. But it was incredibly smooth and I think that this will be as well,'' Brookes said.

[This article is provided for information purposes only and does not necessarily reflect the opinions of the poster.]

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999

Answers

Great article Mr. Decker. Thank you for posting it. I liked the comparison to the "EMU" non event. Also, the comments about JIT supply chains made me think.

I have long suspected that there will be a huge transfer of wealth from those holding ownership (i.e. stocks) of companies who pick up the business that Y2K un-ready companies lose. Thinking that stocks are valued at several times earnings, and prices are determined mostly on future expectations, and most reactions are over reactions one way or another, I suspect a LOT of money will be made and lost early next year as business...and the resulting earnings...and the resulting market valuations...transfer from those that are not able to function in 2000 to those businesses that are able to function fine.

BTW, I've always enjoyed your thoughtful and informative post. Your statement "Capitalism is redundant" always comes to mind whenever I read the tired old "dominos falling" or "IF..IF...IF" arguments. This statement illustrated the fallacies of those thinking that if ONE company goes belly up, then that economic/societal function will no longer be performed quite nicely. Thank you!

Best wishes, Mr. Decker.

-- Genius (codeslinger@work.now), November 10, 1999.

Genius (teehee), why don't you use the same handle on all of your troll posts?

-- (BWAHAHA@yourself.com), November 10, 1999.

Ken:

But gibberish from "economists" who are obviously brain-dead on this issue doesn't even qualify as information. Unless you mean that the "information" here is just another reminder that we're essentially surrounded by the walking dead. In that case, it is informative, so I stand corrected.

So, thanks for the "information", Ken.

-- eve (123@4567.com), November 10, 1999.

Interesting:

``We see the effect of the millennium as being quite pervasive...but mostly one that just shifts output and consumption from one quarter to another rather than providing a major one-off boost,'' Bank of England Monetary Policy Committee member DeAnne Julius told Reuters recently.

I have a question. If 4 of the 12 Federal Reserve Banks went under, even temporarily, would the remaining 8 be able to absorb their functions?

Is there that much redundancy in the system? I've always wondered about this.

-- lisa (lisa@work.now), November 10, 1999.

"Economists wonder what the Y2K fuss is about"

If that statement doesn't convince you that economists are by and large clueless, nothing will.

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

Yes, Mr. Decker, but when have economists (let's say one third of them at the same time) ever predicted something out of the ordinary? Do you have any example of such a thing? I just don't think it's their cup of tea. Economists seem to be mostly driven by herd instinct. They may rehash traditional arguments of economics, capatilism vs socialism, etc, but they overall don't seem to handle anything new. When I say "new" I don't mean "A new technology" like the digital watch and it's effects on the swiss watch cottage industry. That's just something for the "Cheaper, Better service/product" column. I mean new like, oh, Y2K. I didn't want to use that as an example, but I can't think of anything like it happening in the past. Are we in to reletivly new territory with computers? Could we support our population without the things that they help provide? What would happen to our economy without the liquidity that computers provide? You know, that "velocity of money" thing.

In the case of Y2K we would need an economist who also knew a good deal about Big Iron and/or IT operations AND IT management. Can you think of any? Please note that IT operations and IT management are two different things. IT operations is what happens to make things work despite IT management decisions. When IT operations fail at this, they call someone like me in. I have no lack of employment.

Please be advised that I'm not picking on economists. I have said all along that no one is an expert on the system of systems that is our society.

Thanks for bringing the articles to our attention.

Watch six and keep your...

-- eyes_open (best@wishes.not), November 10, 1999.

Eve,

I take it you have reached this conclusion because of YOUR qualifications as an economist? Or is it simply:

AGREE WITH ME = GENIUS DOES NOT AGREE WITH ME = BRAINDEAD

Frankly, I do not agree with a majority of economists on the Y2K issue, but I do have the common sense and common courtesy not to insult their collective intelligence.

You may not think much of economists... however, the profession has contributed to the understanding of "how the world works."

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

Dear BWAHAHA,

"Dear", to me, one's "handle" is simply a way to add flavor or commentary to one's post. It shouldn't bother anyone what the "handle" is or who the poster is IF !! they are focused on the MESSAGE AND IT'S VALUE instead of who the messanger is.

It strikes me as curious you would go to the effort to determine what "handles" I post under. Why does it matter to you? Why do you spend your time and energies doing so? You really like me, don't you?

Basically, lots of folks, INCLUDING YOU !! (tee hee) post using different handles. As others have pointed out in the past, the only people concerned or irritated by those having different "handles" would be totalitarian despotic types who wish to "police" and "approve" the post here. There is no TB2000 seal of approval. Free speech IS ALLOWED. This is a public forumn in the U.S. of A. Again, focus on the message...take what you like and leave the rest...and focus on who the messenger is only if you want to feed your troll (yes, troll...you are a troll!) neurosis or dysfunctional/totalitarian despotic fantasies and delusions.

Have a nice day. I suggest you work out your issues with a qualified mental health practicioner. A life is a terrible thing to waste...worrying if someone you will never know is using the same handle on all their post...tell your therapist what the point of your question asking me why I don't use the same handle on all my post is...that should start your therapy off productively.

Best wishes, you poor soul...ta ta...

-- Genius (codeslinger@work.now), November 10, 1999.

A rational explanation for making Y2K preparations

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001R UO

Sincerely,
Stan Faryna

Got 14 days of preps? If not, get started now. Click here.

Click here and check out the TB2000 preparation forum.

-- Stan Faryna (faryna@groupmail.com), November 10, 1999.

I've wondered about the redundancy of the Federal Reserve, also.

-- Who (couldtell@us.hmmmmm), November 10, 1999.

Interesting information. Now, let us see if these economists can really predict the future:

How many of them, in 1993, in 1994 (before the elections), in 1995 (after the elections), and in 1996 predicted the (supposed) budget surplusses in 1998, 1999, and the (predicted) surplusses in 2000?

Hmmn. None.

Hmmmn. Why not?

If these economists cannot predict a simple event such as federal tax receipts and spending - one of which are published and voted on publically, the other which should be a "simple" matter of evaluating the tax code and the national economy based on their predicted growth, WHY should we believe their ability to predict an uncertain future facing uncertain troubles from potentially many thousand/million/tens of millions NON-POLITCAL, NON-CONTROLLABLE automated process failures?

And who has decided these supposed economists are any more non-political or unbiased than any other administration official? Who picked the group to interview and survey?

And who cares what this group "predicts"? What they predict will have no effect on what actually happens......

Hmmmmmn. Why should we believe

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), November 10, 1999.

Red,

Economics is a science of sorts, and as such, it is an interesting way of looking at things that provides some important insights. But the fact is that economists have taken little interest in Y2K. I can name two: Edward Yardeni of Deutsche Bank and Don Mitchell of World Bank. It appears that all other economists (when commenting on Y2K) either parrot one or both (even if only slightly) or they discount Y2K completely. In other words, they haven't done the foot work. And I will contend that neither Yardeni nor Mitchell have time in their days or adequate resources to dig into Y2K. Yardeni was not joking when he said that he was only talking/thinking about the tip of the iceberg.

So, yes, I'm really not interested in what economists (in general) have said about Y2K, because they don't really know what they are talking about. And it's not really their fault. It's mostly a research problem. And I think I am qualified to discuss research problems: I was formerly a Director of Research for the New Coalition for Economic and Social Change, a Research Associate with the David Institute, Research Assitant for Templeton Prize winner Michael Novak (American Enterprise Institute for Public Policy Research), etcetera. Beyond my vitae, I have had recent opportunity to discuss, evaluate, and access research methods and databases used in developing economic statements.

The most apparent and signficant problem in developing forward looking statements in regard to Y2K is the same general problem that "we" have encountered: companies, organizations, and associations are reluctant to fully disclose their own vulnerabilities, remediation efforts, and contingency plans-- even when offered protection of confidentiality. Few want to talk. Fewer are willing to talk. And fewer are willing to undertake the kind of effort to enable those willing to talk to talk. And the latter is a significant problem: even if you get interesting information, you can't share that information with others due to the confidentiality agreements. So everyone has to do their own leg work.

Very few chief and senior economists have the staff, resources, and motivation to do such leg work. For the most part, they interpret numbers they get from the various databases to which they are subscribed. A think thank like the Rand Corporation is better equipped to gather information, but there doesn't seem to be anything out there that economists can readily use when developing a year 2000 outlook. Nor is it really worth the while of economists to think too hard about Y2K. It's not going to help your career-- if you get your predictions wrong. It is not going to get you air time or significant coverage-- even if you have some very interesting discoveries to share with us.

Sincerely, Stan Faryna

-- Stan Faryna (faryna@groupmail.com), November 10, 1999.

P.S. I have reposted my reply as it's own thread, just in case you missed it here. BTW, why the sudden urgency in your postings, Red?

-- Stan Faryna (faryna@groupmail.com), November 10, 1999.

Mr. Cook,

Shall we judge physicists by their inability to fully explain some rather "simple" phenomena?

Or shall we put engineers to the forecasting test? As an engineer, tell me exactly when my hard drive will fail. Or when a given bridge will fall. Or when my car's engine will die? Why not?

A very small part of economics is forecasting. Do you want engineers judged by their inability to predict (with accuracy) the exact moment of failure of a mechanical device? Of course not. It is unfair to criticize engineers (or economists) for their inability to soothsay the future.

And how about giving economists credit for their contributions? The modern engineering firm depends as much on ideas generated by economists as engineers.

To your original argument, economists are much more accurate in short- term forecasts. The mathematical tools of Newtonian calculus, however, are ill-suited for complex systems. The sheer number of variables in the global economy makes precise long-term forecasting nearly impossible.

This said, let's not throw out the baby with bathwater. Economists make valuable contributions to our understandng of the economic world, and deserve better than a "brush off" over forecasting records.

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

Ken,

Learn how not to become overly enamored with titles. Make some distinctions. That someone is an "economist" means nothing to me unless I know who and exactly what ideas are behind the title.

So you would lump Marx, Engels and Hegel together with Smith, Ricardo, Friedman and Von Mises?

Also, please read my posts more carefully. I did not state that they were brain-dead. I said that they were brain-dead on this issue, which was so starkly evident it was like being slapped on the face with a wet fish.

If you're not able to discern this and would like to know why, please let me know and I'll take you through it step by step.

-- eve (123@4567.com), November 10, 1999.

Well... now I know why Adam took the apple.

As for titles... I reserve "Dr." for physcians... not economists or historians. Of course, given your position, you would need to interview a physician before acknowledging their expertise.

I do lump Marx with Smith... and I am in rather good company. Every text covering the history of economics does the same. You might try "The Wordly Philosophers" for a breezy overview.

If you contend economists are "brain dead" on Y2K... make your case. Provide the factual arguments supporting your projected GDP losses. If you want to provide econometric model runs, I'll accept any large data sets via my email address. I've read some of your other posts, Eve, and remain unimpressed. I promise to give your factual argument my full attention... or are you just blowing smoke?

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

Ken

Obviously all the economists gather their information from qualified information sources like Yahoo.

""" But preparations in most industrial countries have been so exhaustive that officials are confident of avoiding chaos -- as long as consumers and businesses don't panic. """

This is crap, panic is a problem but the industrial countries like Germany, Italy, and Japan were just a bit late on the draw. It isn't the pace they are at now, but when they started that is important.

Shit for brain folks just never consider that the average folks in society have to prepare there own Y2K remediation. At there job, home, education, debt consolodation, future plans, and on and on. Has there been a serious look at this in the press???

Ken of all people you know debt is out of control in society yet it is encouraged. Is this right?? You have said that it is foolish to go beyond responsible prudent economic balance. Now we are going to have a situation where Debt is going to possibly swamp the system, if Y2K is anything over a BITR it is this problem over any others that the economist should be mentioning. Coming toward XMass and the blinders are still on. HHHHMMMMMMMMMM

-- Brian (imager@home.com), November 10, 1999.

Ken,

I wholeheartedly accept. Except no private e-mail. I'd love for everyone to see this. If you feel you can't win the argument without your "large data sets", and cannot adequately present them in a public forum, or cannot sufficiently summarize them, or cannot otherwise do without them, then I cannot help you.

My only concern is that this could get quite OT. It might be more appropriate in a philosophy or economics forum. But any way is fine with me, as long as it's public.

About your equating Smith and Marx: I'm quite familiar with what you state. Your comment just shows that you avoided my overall point here and grabbed for a straw man. And again here, you seem to weigh what others say about this rather heavily.

And are you implying that you have no interest about the background of your physician? Only that they have "Dr." in front of their name? You're kidding on this one, right? Please tell me that I misread you here.

Finally, I couldn't care less about whether you or anyone else is impressed with me. What did you hope to achieve by bringing up the fact that you were unimpressed by my posts?

-- eve (123@4567.com), November 10, 1999.

Carry on... just post your argument, and I will respond. If you read my post, you'll see I simply offered a venue for you to provide me with actual data. If you want to debate philosophy or economics, you are right... it is off topic for this forum. Why don't you simply explain (in economic terms) what you think will happen due to Y2K problems and why. Pick your indicators... GDP, unemployment, CPI, PPI, etc.

Again, please read carefully... I do not "equate" Marx and Smith. I simply acknowledge they are both considered economists. Having read both, I can say that I've drawn my own conclusions... though I doubt I have a truly "original" take.

Oh, finally, I made the "unimpressed" comment as a response to the "bitchy" tone of your posts. You are spending a great deal of time nitpicking. Make your argument, stay civil, and I will respond in kind.

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

Ken,

Oh yes, for your economics cramming, I would suggest putting less emphasis on mass market trade paperbacks, such as your "The Worldly Philosophers," and start with something with a little more substance, like "Capitalism," by George Reisman. Or "Human Action" by Ludwig Von Mises. Or if you need to keep it simpler, I would suggest "Economics in One Lesson," by Henry Hazlitt. Or if you want to get more Keynesian, go get a Samuelson text. It really doesn't matter to me.

Of course I'll give you time to review them first.

-- eve (123@4567.com), November 10, 1999.

Ken,

We must have cross-posted. First, I sincerely apologize to you and anyone else I might have offended by any "bitchy" posts. I really don't intend to come across that way, but sometimes my anger gets the best of me.

I cannot write more now, but I will get back to you soon on this.

Thanks for your patience, Ken.

-- eve (123@4567.com), November 10, 1999.

Yes, Eve, on reflection, "bitchy" was exactly the right word.

I think you are too unkind to Heilbroner, he's been a staple for undergrads for years. Personally, I like the chatty style of Todd Buchholz in "New Ideas..." I'm the first to admit these are more "mass consumption" books, but economists have done a poor job of communicating ideas to the general public. Let's just do this... footnote your argument with the appropriate citations. Anything I haven't read... I'll brush up on. Until I hear from, I'll keep brushing up on Veblen... it seems his caustic style will be of some use.

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

http://www.capitolalert.com/news/old/capalert01_19990927.html

[snip]

A report last week by the Senate's special Year 2000 committee warned that unpreparedness in such countries as China, Russia and Italy, along with a handful of oil-supplying nations, could plunge the United States, and even the world, into recession.

"Severe long- and short-term disruptions to supply chains are likely to occur," the report said.

[snip]

Also see this classic article on the interconnectedness of our economic system, "I, Pencil":

http://www.fee.org/about/ipencil.html

-- Linkmeister (link@librarian.edu), November 10, 1999.

I love that essay, Linkmeister (I, Pencil)...it was misplaced on the site for awhile...thanks for finding it for me again.

-- Donna (moment@pacbell.net), November 10, 1999.

I think we cross-posted again. Perhaps "bitchy" is too strong, but I rather have you not give me a freshman reading list in economics. For all I know, you are Nobel prize winning economist... I'm willing to consider your writing on their merit, not your curriculum vitae. Perhaps you will be willing to do the same.

-- Ken Decker (kcdecker@worldnet.att.net), November 10, 1999.

Sir Ken,

Thank you for the comments: yes, we (engineering and reliability) can make very accurate, very specific predictions about failure rates of mechanical, structural, or even electronic devices; such as the hard drive you mentioned.

From your reply: < A very small part of economics is forecasting. Do you want engineers judged by their inability to predict (with accuracy) the exact moment of failure of a mechanical device? Of course not. It is unfair to criticize engineers (or economists) for their inability to soothsay the future.>>

Yep - engineers regularly do forecasting (on mechanical things usually - much easier than people-decisions.

BUT - we (engineers) ARE held liable for our decisions. Economists ar eexcused by their political-paid-for-your-opininion and press conference sponsers.

No economist has ever been sued, jailed, or removed from their profession for failing to predict the future accurately; and, to date, I have seen no reason to trust their predictions.

---

Yes - engineering is regularly put through (always put through) a reliability test: will this bridge stay up? Will this door operate for 12 months, 24 months, or twenty years? Will this satellite power supply operate through 30,000 cycles of heating and cooling in a vacuum? Will it operate after the severe shock and vibration of the rocket launch? Will this building stay up after a magitude 6 earthquake? A magnitude 8 earthquake?

How long will this tire last? How long will the same tire last if used at racing speeds - and how can we make it last longer? Wha tis the tread life on a 747 tire?

Simple to predict the future of devices - using any of several reliablility models (I like the Weibull for many predictions, though others are more appropriate depending on the failure mode and type of data. Exponential, linear, etc are all appripriate at different times.

The predictions, like any statistical function, will become more accurate as more data is accumulated. The actual predictions, like any statistical function, are correct in general for a population, not to any single failure of any single piece. Accurate in general though: like life insurance table. They (the insurance industry) makes its money using general predictions, but cannot tell you when you will die.

Your hard drive, for example, can be predicted (as a electronic device, to have two dominate failure modes: immediate loss (electronics failure) during the burn-in phase, then - if that passes satisfactorily, a mechanical lifetime for through the routine lifetime of the hardware. (Assuming no sudden disruptions like a severe shock or your house/office buring down.)

---

Y2K? Economists have no data, no idea of what's actually going to happen. They CANNOT predict the future impact because they (and nobody else) have ANY data.

ALL they have are guesses - tainted completely by their prejudices, their environment - I'd bet those issuing these predictions have not been in any industrial environment, any fabrication, any computer shop, and test lab, nor in any distribution control center. They - by being surrounded by equally unqualified individuals - do college prof's live in the real world? - have no background in this environment of failure mode analysis, critical path scheduling and failure effects, software testing and corrections, software revision control, engineering control systems, engineering data collection and analysis, plant/assembly line control, product distribution, product shipping, automated product handling, etc.

I have. My conclusion is equally simple: They're wrong.

--

Now, I'll grant you I may be incorrect. If so, I have lost nothing, but have protected my family. These economists aren't even smart enough to add a "maybe" to their predictions.

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), November 10, 1999.

Duke University and its hospitals seem to know something the economists don't.

November 3, 1999

DUKE SAYS IT'S 99% COMPLIANT

Officials say the other 1% will be fixed; contingency plans intact

by Jennifer Chorpening, The Herald-Sun (Durham)

Duke officials announced Tuesday that both the university and health system are 99 percent Y2K compliant, and that in the next 59 days they expect to fix the last 1 percent.

But just in case, contingency plans involving diesel-fueled generators, stockpiled medications and bottled water are ready.

"We are confident we will not have a serious problem," said Tallman Trask III, Duke's executive vice president. But to keep aware of time passing, and to underscore how little time remains, Trask's own office contains a digital calendar counting down the seconds to New Year's Eve.

The glitch that may have some computers thinking Jan.1 really is the turn of the 19th century has tested Duke's manpower and resources. The university paid $75 million for Y2K fixes, most of which went to upgrade computers systems -- but that needed to be done anyway, Trask said. Specific Y2K problems cost the university $19 million, and of that $17 million was for the hospitals.

In the health system alone, more than 1,000 computer experts, technicians and engineers have worked for more thanh a year to ferret out lurking Y2K problems.

"We are essentially in as good as shape as we can be," said Michael Israel, vice president and chief of hospitals and clinical facilities for the Duke University Health System, which includes Duke Unversity Hospital, Durham Regional Hospital and Raleigh Community Hospital.

The hospitals will have a command center in place on Dec. 31, staffed by senior administrators, physicians and key staffers.

"We will treat it the same way that we treat a hurricane or ice storm," Israel said. In addition, the hospitals are, "hoarding" medications and supplies, to have 5 percent more on hand than normal, Israel said.

Duke University Medical Center has 32 generators in case of power failure, and Duke Hospital and Durham Regional Hospital have top priority for power restoration from Duke Power Co.

More than 20,000 patient-care devices at Duke Hospital have been tested and determined to be Y2K compliant, officials said. This equipment includes diagnostic equipment, intravenous (IV) infusion pumps, respirators, vital sign monitors, heart-lung machines, X-rays and other imaging equipment.

Durham Regional Hospital has been preparing for Y2K since 1994. The hospital has spent $1.2 million on medical equipment replacements and upgrades. In addition, if the power goes out, the hospital has four back-up diesel generators that can power the hospital for two weeks without refueling.

Trask noted that since the university is on semester break on Jan. 1, Duke administrators will have less to worry about. Students in campus housing will be urged to make alternate housing plans in the event of an emergency. Stufdents living in off-campus dormitories will not be allowed to stay late, beyond Dec. 19, or move in early, before Jan. 10. Fall semester ends Dec. 18 and classes for spring semester begin Jan. 12.

University services should not be interrupted, officials said. Dining services will stockpile a three-week supply of food in storerooms and freezers. In the event of prolonged power failure, the university will bring in freezer trucks. If water systems have problems, the university will bring in truckloads of bottled water.

The Duke Police Department will lead a university command center, opening at 6 p.m. Dec. 31 and staying open as long as necessary. In addition to normal staffing, Duke Police will add 12 police officers and 12 security officers, and another squad will be on standby.

Duke's telephone system, which works independently of outside networks, has been tested and proclaimed Y2K compliant.

Duke spent $42 million upgrading the central administrative computer systems that process student records, employee payroll and benefits, and university finance and purchasing.

Backup payroll checks for employees to be paid Jan. 7 will be printed in mid-December.

Students need not fear a Y2K glitch coming between them and their financial aid. Trask said he has authority from the Board of Trustees to float students temporary loans.

As for outside forces disrupting Duke, Trask said the important things, "water, power and money," have all been researched.

Hospital workers, at least, will have some fun that night. The university has arranged for a nonalcoholic party for on-duty staff.

(Ed's note - Duke purchased Durham Regional only this year.)

Those are pretty fancy contingency plans for a 3-day storm. Note that if necessary, elective surgery and routine clinical check-ups can be postponed almost indefinitely so that the food, water, fuel and medications will last much longer. The Hungarian, a VA Hospital nurse who is familiar with Duke's emergency plans, says that entire sections of the hospital can be shut down so as to conserve fuel and supplies.

As for security, from personal knowledge I can make an educated guess that the normal complement of police officers is around 12 on any given night. There will be 36 security personnel on duty NYE, with what sounds like another 12 on standby. Interesting.

-- Old Git (anon@spamproblems.com), November 10, 1999.

Ken

Ceteris paribus---

Has there been an introduction of an Economic Modeling Equation that includes the many complex variables that y2k may pose? I was under the impression that economic modeling equations are primarily based on somewhat tangibly known variables. Economic modeling/forecasting is derived from complex variables that take on as part of their aspect information we have gained by historical evaluation and analysis. What do we assign for the y2k variable in the model when there is no precedence?

Also, in the article you posted above I suspect therell be more statistical noise from y2k than anything else. The economic fundamentals will be far more important and will wash out any other concerns ???? What the hell does that mean? (rhetorical) That the fundamentals of economics meaning:

Land, Labor, Capital, Raw Materials, &, Entrepreneur

And/or the Allocation of Scarce Resources

I agree that they will always remain fundamental to any economy, but to imply that they will wash out any other concerns is IMHO a ridiculous statement, almost as ridiculous as saying the impact from y2k related problems will be chalked up to statistical noise.

-- justwondering? (karlacalif@aol.com), November 10, 1999.

I'm not surprised that they're wondering... That's all they really do about the "economy."

-- Patrick (pmchenry@gradall.com), November 10, 1999.

Ken,

Well, I've decided to not debate you, at least for a while. I'm already very frustrated and exhausted from the whole y2k thing as it is, and I think a protracted debate between us would be altogether too time consuming for me right now.

If you want to look at my withdrawal as a kind of moral victory for you, or the above as just a bunch of excuses, then that's ok.

I realize some of my posts have been condescending and somewhat sarcastic, and I'm sorry for coming down on you so hard. But In any case, I'm not going away, and we'll keep on mixing it up now and then.

See you in another discussion soon, Ken. And thanks for understanding.

-- eve (123@4567.com), November 10, 1999.

Eve...

I was looking forward to the debate myself; Mr. Decker has obviously been heavily indoctrinated by the "Keyensian way" of economics to the point that he will actually defend a debauched currency, which is indefensible. He suggested that I take up reading Adam Smith to "brush up" on economics, and those are the baby steps. I'd be highly surprised if he had even heard of Ludwig Von Mises.

-- Patrick (pmchenry@gradall.com), November 10, 1999.

Patrick:

Thanks for your interest. For a number of reasons I feel really drained, and to embark on a mission of persuading a dedicated Keynesian to embrace the Austrian school would require more patience and energy than I can muster right now.

-- eve (123@4567.com), November 11, 1999.

Eve,

When approached in a civil manner, I can be gracious. If you prefer, we can resume the discussion at your convenience. I can appreciate the demands of a busy schedule.

I am not a practicing economist... but it is my original field of study. Perhaps through "bad karma," I am now the CAO of a small government entity (laughter). I worked in applied microeconomics, primarily transportation demand modeling (including some intriguing multi-modal work). While I enjoy reading the "classics" and debating with "econotypes" over a cold beer... I find the application of economics far more interesting than the theoretical debate. I also think the field suffers from "physics envy." Honestly, I do not feel we have the mathematical tools to model complex systems effectively.

As for the ever-addled Patrick, yes, I have read von Mises and the work of the Austrian school. And despite the famous quote to the contrary, "we" are all not Keynsians now. (laughter) I also find it ironic to field the accusation of not knowing the work of von Mises and Hayek when I have confessed to libertarian leanings so often. Oh, and my original "Y2K and Risk" essay might essentially argued that the free market would resolve most Y2K problems. While we will not know for 50 days... I think my position will be justified.

Still, if you must have a critique of the Austrian school... I can oblige.

-- Ken Decker (kcdecker@worldnet.att.net), November 11, 1999.

Three significant problems with the "free market would have resolved it" issue:

It (the free market) would have certainly resolved the issue; and in fact, it could be argued that "a few/some/many/most/almost all" of the free market (commercial companies) have done a lot to fix the issue. The progress that has been doen will (probably) avoid catastrophic loss here in the US.

BUT: not enough warning was sent early enough - and that goes back to the complete ineptitude and coverups ?deliberately done by the Clinton administration. If they had made it a requirement for comapnies to be compliant by 10/1998 (FY 1999) to do business with the fed government in FY 1999, then there would be no problem. Everything (including infrastructure) would have been completed a year ago.

Then let the free market decide which will survive, if the companies fail do do a good job remediating and testing and re-installing.

TWO - There is NO free market for the government, and (now, after the Clinton years) no accountablity either. We are subject to their monoploy, their guns, and their "anti-terrorist" tactics.

With the compliant media failing to hold (Democrats only) accountable for lies, deceit and coverups, while falsing attacking Republicans (when they are publicized at all) with Democratic lies, there are even fewer "recall" opportunities to remove bad officials from office.

Regardless, the corrupt officials now in place cannot be removed. Again, earlier, decisive leadership (mandates ?) from the fed's could have drug state and local governments into compliance.

Instead - coverups, "predictions, and re-assurances from officials who knwo there is no penalty (in the national press) for lying or falsely attacking their "enemies."

THREE: Internationally, the situation (where true free markets are the exception in most nations), and where the international trade that does exist freely will be/might be hamstrung by incomplete or poor national remediation efforts, the failure of governments overseas - again - is not subject to the "free market."

---

Lastly, I would have no fears of the government if ANYBODY but the Clintons were in power - others might be inept, but not maliciously and deliberate corrupt in their quest for power; and would have less fear if the natinal press were not deliberately and systematically propping up the Clintons with their own prejudices and agenda.

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), November 11, 1999.

Ken,

My field is actually botany; in economics I'm essentially self-taught. I enjoy theoretical debate, myself. But I believe debating economic theory should be accompanied by concurrently attempting to envision the possible practical applications. Otherwise it can become hopelessly abstract.

Talk to you soon, Ken.

-- eve (123@4567.com), November 11, 1999.

Oh y2k events are like predicting botany and biology:

On an isolated island with two faults and a volcano, which species will survive if there are earthquakes, a tidal wave, and a volcanic eruption?

Except - I can't tell how big any of these three events will be, nor who the original species are now ..... or how healthy they are ... or how many of each species is on the island.

All I can tell you is WHEN the earthquake, tidal wave, and volcanic eruption are going to take place......

-- Robert A. Cook, PE (Marietta, GA) (cook.r@csaatl.com), November 11, 1999.

Three problems with Mr. Cooks arguments.

1. Government is not "smarter" than the private sector. Firms did not need a "warning" to start fixing Y2K problems. The private sector was aware of Y2K and approached remediation from a business decision standpoint. The well-managed firms have completed their Y2K work by now. Poorly managed firms may fail due to Y2K problems. Such is life (and death) in the capitalist economy.

There is no evidence the current administration "concealed" Y2K problems. A government mandate to remediate Y2K problems would have been a waste of resources. The action would have created endless red tape and sucked valuable IT resources away from real work into moving paper. No major federal contractor would have been barred from gov't procurement. Cook's "executive order" would have caused far more problems than it solved.

2. There is no profit motive for government, but bureaucracies do have survival instincts. If they do not function due to Y2K problems, we may discover that life will go on without them... a huge risk for a government agency. This means they have an incentive to fix Y2K problems... but some will not. Of course, this is only a problem if we really NEED the government agency in question.

As for a federal mandate, see above. State and local gov'ts have enough to worry about without ham-handed officials asking for useless reports.

3. The world is a free market (more or less). Competition is international. A multinational that remediates can steal market share from its less savvy competitors. Y2K will create great opportunities for U.S. firms to penetrate foreign markets.

-- Ken Decker (kcdecker@worldnet.att.net), November 11, 1999.