It's hard to find anything new to say on this tortured topic. The Y2K discussion founders in a sea of redundant speculation as journalists struggle to find any evidence at all of Y2K bug symptoms that might make Y2K tangible and the discussion more animated than an RMV clerk. Alas, "significant" Y2K dates come and go and... nothing happens.
What the heck's gonna go down after Dec. 31, 1999? Do we at iTulip.com envision a world in chaos ruled by tribal warlords marauding the strife torn land in ox drawn Rolls Royces, plundering suburban America for precious caches of bottled water and canned tuna fish? Time to invest in a bomb silo apartment? Nah. After the clocks roll over into 2000, a lot of crappy software that doesn't work very well and breaks all the time will continue to be crappy and not work very well and break all the time.
A big secret known to few except hundreds of thousands of software developers worldwide who write software and hundreds of millions of sorry saps who use it is this: most software programs have lots of bugs.
No piece of code escapes human error. At some point in the life of a program, a variable gets set to an unexpected value or the execution heads off on an errant code branch. The program hangs or crashes. Generally speaking, the larger the program the greater the chances of it going haywire. Your Windows98 crashes all the time because an operating system, as an old computer science professor used to say, is a really big program full of bugs. The world runs on such big application programs written by corporate software developers who are mostly occupied with fixing bugs. They do it all day long. They do it quickly, too, so you hardly notice, otherwise you might be tempted to go to another bank or online trading company or whatever. This is unlike the bugs in Windows98 that you have to wait for months to see fixed because, what are you going to do, get another operating system? (Janet Reno's working on that one.)
If the software that runs the world is so buggy anyway, what's the big deal with Y2K bugs? The doomsayer's argument is that there are so many Y2K bugs that programmers can't fix them all. Yet Y2K remediation experts are running out bugs to fix a lot sooner than they'rerunning out of time to fix them. Why is that?
Y2K bugs have been around for decades and they've been getting fixed for decades. A program running in 1989 that calculated the 20th year principle payment on a 30 year mortgage had to do the math based on a 2009 date way back then, ten years ago. As time goes on, programs run into Y2K bugs. Not all at once on January 1, 2000 but at various times. So Y2K bugs make applications break the same way programmers are used to seeing them break -- all the time. Constantly. Thus, they get fixed constantly. The only programs that will have a problem are those that never have to deal with a 2XXX date until they are running in the year 2000. Those are the ones that are getting fixed in a hurry. Even if the bugs aren't fixed before Y2K, most bugs will get fixed as they show up, as usual.
If the world isn't going to come to an end January 1, 2000 then is there nothing at all to worry about? There are exactly four real problems. Evidence of these are just starting to show up now.
Four Real Y2K Problems
1. Bank Custodians
2. Search for Liquidity
Starting with corporations now and peaking with individuals toward the end of December, market uncertainties will increase the demand for cash and cash equivalents. At least some bank runs will occur -- and some folks think that's a good thing. Even though the treasury has printed an extra $200 billion in cash, the fractional reserve banking system will nonetheless come under significant pressure. At least some banks will adopt defensive policies in the coming months. For example, one bank in the Boston area will close your account and give you a cashier's check if you attempt to withdraw significant funds from your account for cash. This is just about the only way to avoid meeting excessive cash demands.
3. Lame attempts to calm people down may rile them up instead
government agencies do not have the best record of calming down a panicky
crowd. Both have done a fairly good job so far by sending out a steady
stream of positive Y2K progress reports mixed with less rosy news to increase
their credibility. But the opportunity is ripe for bungled PR effort,
since no one wants to say everything will be just fine, just in case everything
just isn't. Two examples of the kind of ham fisted tactics I'm afraid
4. Capital Spending on Computer Hardware and Software will cease
By the end of October, most large US corporations will stop buying and installing new computer equipment and software. I was unable to find any good articles documenting this but in the circles I run in, this is a 100% given. If you're a sales guy hoping to close a deal to make your quarter in December, fuggedaboudit. What impact on the economy and stock market? Who knows. But it's fair to expect the Q4 revenue and earnings hit to the big computer hardware and software companies to get priced in starting in September.
The popular wisom is that the US is way ahead and that other countries are far behind. In reality, there's a contest over for which country is the least prepared. Logically, the more a nation relies on computers, the bigger the risk. Conversely, the poorer a nation, the less it can afford to fix the relatively small number of computers it does use.
Countries are the Biggest Y2K Risk in the World Today
No, Britain is the Biggest Y2K Risk in the World Today
No, Japan is the Biggest Y2K Risk in the World Today
No, USA is the Biggest Y2K Risk in the World Today
So if you're planning investment decisions based on the market's perception of where the Y2K risk is least, forget it. I had a theory six months ago that the US markets may, perversely, go up before Y2K as foreign investors put money in to the US due to the perception of better US preparation. But my sense now is that any money that is motivated to move anywhere due to Y2K will move into cash, although there may be a bias for dollars.
What to do?
1) You may decide to liquidate stocks and other securities, mutual funds, etc., depending on the level of risk you are comfortable with. It's probably wise to take your cue from the fund managers on this. Watch their cash positions.
2) Start withdrawing cash and putting it aside now. How much? As much as you can afford to save. You can always re-deposit what you don't need later and you probably won't miss the lousy 2% interest given the value of the cash as a hedge. Where to put it? In a safe deposit box or equivalent safe place. Don't keep it in your house. The probability that banks will not give you access to your safe deposit box is lower than the chance that you'll get robbed for the cash if you keep it at home.
3) Other than that, we here at iTulip.com plan to follow the American Red Cross Y2K preparedness guidelines. Probably a good idea to have a few extra rolls ot TP around the house anyway.
American Red Cross - Y2K Preparedness-EJ