SUMMARY - "PIG":
The Contrarian's View is published 11 times per year on a mostly-irregular schedule, and the views expressed are those of the author and editor, Nick Chase. Because nobody can predict the future, results of past suggestions or recommendations are no guarantee of future results. Material in this publication may be freely quoted provided proper attribution is given to its source. Subscription rate: Free on the Internet through the World-Wide Web service at Assumption College. Using your favorite Web-browsing program, Open URL http://nick.assumption.edu. Mailed paper subscriptions, one year for $39 to The Contrarian's View, 132 Moreland Street, Worcester, Massachusetts 01609. There is a limit of 50 paid subscribers at one time; please check for availability before sending any money. Sorry, Visa and Mastercard are not available. Overseas subscription rate, U.S. $54. Unsolicited material sent to us by UPS or by courier other than the postal service is refused and returned to sender! Phone: (508) 757-2881
Actually, I don't personally dislike Bill Clinton, since I've never met him. I'm sure that if I did meet him, he would charm the pants off me.... er, that's just a figure of speech. It's just that, based on the evidence I see, I don't think ethically-challenged people should be President. It damages the country and sets precedents that can take generations to overcome. I apply this same assessment to Warren Harding and (to a lesser extent) Richard Nixon; it took the Great Depression and its problems to erase Harding's legacy, and we are still paying for Nixon's Watergate mistake (in that the Clintons have improved their stonewalling techniques by learning from Nixon's missteps).
There are two reasons for the Clinton-related quotes: First, for historical accuracy - there is so much "spin control" coming out of the White House, and so much second- and third-hand reporting about what people are supposed to have said about Bill, that I feel I should put on paper (and on CRT screen) what was actually said so you, the reader, can be accurately informed and can compare it with what is (mis)reported to you in the press and on TV.
But the main reason for all of the Clinton-connected quotes is because they are part and parcel of the current "feel-good" national mania of which the stock-market bubble is a part. They are a reflection of the psychology of the public that allows them (assisted by the incompetence of the mainstream media) to ignore the warning signs of three impending disasters: A stock-market meltdown, which is virtually assured from current grotesque levels of overvaluation and whose aftereffects may very possibly rival those of the Great Depression of the 1930s or the Dutch depression of the 1630s following the Tulipmania; the threat to our economic infrastructure posed by Y2K failures; and a disgraced President.
These three disasters are converging, and it's difficult to assess which will arrive first, though for sure "feel good", if still extant, will not persist for more than a few days into January of 2000 when the computer failures become all too evident. I'd say the most likely to occur first will be the stock-market crash; a public whose retirement hopes are dashed in the flameout of the mirage of stock-market riches are much more likely to be willing to see Bill Clinton's warts, and may even become more cognizant of the Y2K threat as they look around, with newly-found awareness, for anything else that might go wrong.
But it could be that the first disaster to occur will be the meltdown of respect (whatever's left of it) for Bill Clinton, courtesy of Ken Starr.... who will, someday, I am sure.... well, I hope.... make his report to Congress and the people. I've said many times that I felt the "pin" for popping the stock-market bubble could be political, rather than economic (though traditionally, this is not the case). All that needs to happen is for the herd to, suddenly, realize it has been grotesquely wrong in one area for the psychology to massively shift and for all falsely-inflated areas to tank.
At any rate, while we wait for the "pin", whatever it is, to deflate stocks, the quotes have "taken over" The
Contrarian's View. This issue is no exception, as I continue to document the silliness of the times. As I
pointed out to my wife: The subscribers don't seem to mind.
As more and more bulls supposedly are becoming converted, and the entire investment community is taking on the personality of those pod-people in "Invasion of the Body Snatchers," the tired mantras of "It's a NEW era," and "I'm in it for the Long Haul," seem to be acquiring a hollow and metallic drone. Perhaps the remaining skeptics among us are the freaks and outcasts, and we will be the ones to weep, wail, and otherwise gnash our teeth when we find the pearly gates closed in our faces at Dow 100,000 (with no correction).... Spiritually [big-cap stocks] are "mutual funds" masquerading as stocks if you ask us. The mutual hopes and dreams of the millions of new share buyers spawned by this bull are certainly invested in them, not to mention their money. - Mike Sheller
It isn't enough that the bulls have made an enormous amount of money, especially relative to their skill level. They have to gloat, they have to rub it in, they have to find somebody to pillory. Since bulls are so widespread and ubiquitous, it actually takes a good deal of effort to search out the few remaining bears, as if the bears are an infection needing to be destroyed.... I have heard prominent bears referred to publicly as "idiots and losers", and have heard commentators make statements such as "the shorts got squeezed out in that stock, serves them right, they get what they deserve". It is as if bullishness is a religion, and any who disagree or are even skeptical are heretics to be brought before the Inquisition.... It is fascinating to watch, but I fear it suggests the tone of the social mood when things finally explode. - Andrew McGrath
As the Bulls prance around and sing along with all the New Paradigm Theories that show why it's different this time, it is time for Resolute Bears to pledge not to become victims of the hubris that now engulfs the bulls. 1. Refrain from using "I told you so"; 2. Try to commiserate with the downtrodden - you can empathize - just remember how you feel now talking about absurd valuations; 3. As the market collapses don't offer "new era" explanations for the bear market - remember, to everything there is a season; 4. Most important of all, don't try to pick a bottom. - Neal Healy
Although I don't really discuss it much, to avoid being an alarmist, I really see things being a lot bleaker for both Bulls and Bears in the new millennium. I have the nagging suspicion that even the Bears will long for the days of the Great Bull market once the bubble finally bursts. - Marc Sexton [Nick's comment: That's for sure! What's to love about a severe recession or depression? It's like a patient having to swallow bad-tasting but essential medicine to regain health. Ask any Asian.]
I worked for big oil. It was no secret that the retirement accounts were being used to bolster the stock price, that futures were being manipulated, and that corporate would sell every holding the company had and lay off all the employees if it would raise this quarter's profit (or bring the stock price up to the point where the CEO could cash in his options at a profit). My conversations with people in other industries indicate it is the same everywhere. This sounds like a house of cards to me. - "Holly" [Internet post]
Last week a handyman was putting a screen door up for me.... and started talking to me about his investments. He works days at an assembly line and told me about how he and his co-workers all rush to the phone during break to call the 800 numbers to see how much money they've made. As the conversation went on, though, he started asking me questions like: "What exactly is a stock?" and What makes them go up and down?" He is only a few years from retirement and in that moment it struck me just how awful a crash could be. I really didn't know what to say. - "JW" [Internet post]
Now I think we are in the home stretch of the Bull Market. I kid you not; I received a stock tip from the janitor at work today. Also, over the last two weeks I have received numerous unsolicited hot tips on penny stocks from clients. Today during lunch I overheard a man placing an order with his broker via his cell phone while he was gobbling a sandwich. Quite a feat that was. I realize this is all anecdotal but, I can just feel it: the social mood is best described as ..."if you don't own stock you are a loser" or "if you don't own mutual funds you belong in a rubber room." - "SK" [Internet post]
Even my wife is a burned-out shopper after a 25-year shopping spree. We are buried under clothes and shoes and stuffed closets. New shopping malls going up, huge grocery stores, hundreds of catalogs, telemarketers calling every day, Asians getting ready to dump their inventory on us, credit card debt through the roof, bankruptcies skyrocketing, and now here comes internet shopping... The [stock] market anticipates ridiculous future sales based on enormous market multiples. Where are these sales going to come from? Something has got to give. Everyone who could possibly be in the market is already in, so they are buying and selling to each other. If there were a mindset to "go to cash", there would be no buyers. My scenario is for.... a titanic drop that will ruin Americans' appetites for equities. The technical term is depression.... Retirement funds will be destroyed. - "Old Atlanta" [Internet post]
I wrote a rather bearish book a couple of years ago called Surviving the Coming Mutual Fund Crisis. Despite the fact that nearly all the predictions in the book have come true (except for a few final elements in the scenario), there's nearly no one speaking to me anymore except my wife. (I guess she took that "better or worse" part seriously.) You realize, of course, that as our bearish predictions might come true that the next stage for those who made them will be to be blamed for causing the problems. Oh, well. - Don Christensen
I think Greenspan will go down.... as the most incompetent Fed chairman in history.... He has simply poured money into the market.... Greenspan and the Fed just don't get it. They don't realize they have fomented a financial bubble. The same thing happened in 1929, although officials then recognized they had a financial bubble and tried to do something about it. Greenspan is so far behind the curve he doesn't even realize it.... If you look at Greenspan's entire career, he has never made a tough decision. All he tends to do is go with the flow. He is the completely wrong guy to be Fed chairman, but who am I to say? He is the chairman and I'm not. - Bill Fleckenstein
Huge contracts for derivatives link financial institutions all over the world into one massive and amorphous network. These 'linkages'.... are far more complex, intense and massive than ever before in history.... Problem: Most of these transactions are based on legal contracts between buyers and sellers with no formal exchange, scant government oversight, and no institution to fall back on if either side reneges on the deal. These contracts cover trillions of dollars.... far more than those covered by the world's largest exchanges. Yet, they are only as good as the promise they are based on - which, in turn, is only as good as the finances of the parties.... Among [the eight largest U.S.] banks, the potential exposure to losses is close to three times their equity. - Martin D. Weiss
Unlike the high tech sector, which makes and sells actual things, the banking business is virtually all smoke and mirrors. When the world awakens to the fact that their main business is crapshooting with derivatives, banking shares will fall with stunning speed. - Rick Ackerman
Since the 8th century, every fiat monetary system has ultimately collapsed. - James Stack
The State is the kind of organization which, though it does big things badly, does small things badly too. - John Kenneth Galbraith
We blithely file our income tax every year, putting down all kinds of details about where our money comes from and telling people in the government what our income is. Has it occurred to us to ask in the course of doing that, what right at all do they have to know this? ....Suppose that tomorrow the government were to levy a tax on sexual activity, and were to require that, at the end of a certain time, maybe on a monthly basis, every citizen had to report all sexual activity so that the tax could be accurately assessed. Would we accept that as a legitimate requirement? Or would it occur to us to stand up and tell the government that such matters are none of its business? - Alan Keyes
How many multiples of skinflint Gore's charitable donations did YOU give away? Hell, I donate more by accident than "Mr. Snug"! I hit a factor of ten. I earn less and actually pay a mortgage, for food, travel, cars, etc. Where does the DFL get these frauds? Doesn't it just piss you off when millionaire limousine liberal hypocrites, who are all too quick to spend someone else's money, are THAT damned cheap? After deducting Tipper's book royalties, he gave a whopping $350 last year. What a piece of work. - D. Scott Secor
Boy, do I hate to defend a Democrat, but... It is none of anyone's damn business what Al Gore does or does not do for charity. In relation to charity, the Bible says "Do not let your right hand know what your left hand is doing". That means that your charity ought not be advertised, because most advertised charity is for the purposes of 'being seen by other men' to receive the reward of public approval, instead of being rewarded by God for their generosity in secret. You have no idea what Al Gore may have done out of your eyesight that he may not have 'claimed' on a tax form. The bottom line is that it is none of your business, or mine. - Paul Milne
The tactical purpose of political correctness is to silence the truth in order to protect the lie.... Let's deal in stone-cold, naked facts. The progress of the human race is entirely the result of Asian, Mediterranean and European people. Period. When the Europeans landed in North America, Central America, South America, Australia, New Zealand and sub-Sahara Africa, it was as if they had embarked in a time machine and landed in the New Stone Age. There is not one intellectual advance that can be found in any of those pre-European civilizations that was not already millennia old in Europe, the Mediterranean and Asian civilizations. - Charley Reese
The people about us are unaware of what is really happening to them: They gaze fascinated at one or two familiar superficialities, such as possession and income and rank and other outworn conceptions. As long as these are kept intact, they are quite satisfied. But in the meantime they have entered a new relation: a powerful social force has caught them up. They themselves are changed. What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings. - Adolf Hitler
Certainly one of the chief guarantees of freedom under any government, no matter how popular and respected, is the right of the citizens to keep and bear arms. This is not to say that firearms should not be carefully used and that definite safety rules of precaution should not be taught and enforced. But the right of the citizens to bear arms is just one guarantee against a tyranny which now appears remote in America, but which historically has proved to be always possible. - Hubert H. Humphrey
If the personal freedoms guaranteed by the Constitution inhibit the government's ability to govern the people, we should look to limit those guarantees. - Bill Clinton, August 12, 1993
A major reason Clinton retains such high popularity is because, when it comes to Clinton and his friends, much of the media is soft on crime. Seldom in the history of law enforcement have prosecutors faced such media opposition to their efforts. - Sam Smith
Americans tell pollsters they don't care about Clinton's whoring. Fine. They elected a known tail chaser and he's kept up his end of the bargain. But every American should care that the President of the United States is a pathological liar who has been caught -- time and again -- in lies that obstruct justice. If we don't care, then the problems facing this country run far deeper than having a known sexual predator in the White House. - Doug Thompson
His name was Jack Palladino. Under Betsey Wright's supervision in the 1992 Clinton campaign, there was an entire operation funded with over $100,000 of campaign money, which included federal funds, to hire private detectives to go into the personal lives of women who were alleged to have had sex with Bill Clinton, to develop compromising material, blackmail information, basically, to coerce them into signing affidavits saying that they did not have sex with Bill Clinton. In some cases.... the women may have had sex with him, in some cases they may not have had sex, but all of them.... thought it was a good idea.... to do these affidavits.... I have personal knowledge that this happened. Betsey Wright, who coordinated it, told me that it happened. And once when I told her that she needed to take the materials home with her after the Clinton campaign was over, I said, "Keep 'em in a safe deposit box." And she said, and I'm quoting her, "I think a warehouse would be more appropriate". - Dick Morris
In all, Starr has more than 24 hours of testimony from the First Lady. That's more than one whole day. A source who has read most of that testimony and reviewed a lot of other information gathered by the special prosecutor says Starr has enough to indict a normal person six times over. But Hillary ain't a normal person. She's the wife of the President of the United States. Like the rich, she's different from you and me.Which means that while she most certainly should be indicted for her crimes, the odds are strong that she won't be....When the scorecard is finally tallied on all the years and money poured into Whitewater, the victory will belong to the propaganda machine at 1600 Pennsylvania Avenue. By stalling, lying, obstructing, revising history in real time and covering up, the Clintons have managed to convince a gullible public that it's all right to be crooks as long as the economy is good. - Doug Thompson
I have seen politics in many administrations, and I have never seen corruption at the level it is in the Clinton Administration. However, it is clear that in all administrations government officials have bent the rules, and they have frequently done it for people who give large sums of money to a political interest. - Larry Klayman [founder, Judicial Watch]
Trying to get a taste of the Clinton scandals is like trying to drink water from a wide-open fire hydrant. - Martin Anderson
After six years of national exposure, his character has been so fully disclosed that it's silly to pretend he is anything but a crook. - Joseph Sobran
Trying to find something worthwhile to watch on TV concerning the Clinton scandals is like trying to find moisture on Mars. The three major networks have helped mightily to mislead the public as to what the story is about by repeated non-coverage of major developments. CNN has been rightfully nicknamed the Clinton News Network. C-SPAN is still trying to pretend there isn't anything happening at all and PBS is trying to keep a stiff upper lip. - Sam Smith
The iceberg that is about to hit Clinton is personified by Kenneth Starr. He is everything that Clinton is not: honest, principled, and utterly inept at spin. But the facts in Starr's report will pop the rivets in Clinton's fragile ship. And as the ship starts sinking, Democrats in Congress will run for the lifeboats. - Stuart Taylor, Jr.
The three most fundamental things that we all depend upon to maintain some semblance of civilized life are utilities -- gas, electric, and so on -- telecommunications.... and banking. We're dealing with 9,000 electric utility plants in this country, of which zero are ready for the Year 2000 rollover at this point, 11 thousand banks, zero of which are ready at this point. Unfortunately, the track record of the software industry over the last 30 years is such that we can expect that 15 or 20 percent of all computer projects to be behind schedule, not just by a day or two, but by six months to a year. So I think we face the prospect of some degree of chaos -- blackouts, brownouts, possibly some degree of phone outages, possibly some bank failures. The.... Government Accounting Office said that there was a danger of as many as 700 banks failing just because of this Year 2000 problem. So I think there's going to be a period of chaos, if we're lucky, maybe only a couple of days, but I'm more inclined to think it may be more like a couple of weeks, maybe a couple of months, before things stabilize, after which, I think we're going to face a very, very severe recession. The economic impact of this is going to be very, very serious. - Ed Yourdon
Economic calamity in 2000 seems a low-probability event. - [Canadian economist] Rick Egelton
Let's be realistic. We collect, store, process, analyze and report so much information with our information technology systems that in most cases there are simply no viable low-tech alternatives. Going back to 'manual' systems means going back in time to when our output and productivity were much lower than today. - Ed Yardeni
Using the most pessimistic assumptions available, the [Y2K] programming expenses will not impact growth in the economy's overall costs by more than 0.3 percentage points between 1996 and 1999 .- Tim O'Neill [chief economist for Harris Bank]
GM spent 40 million in 1997 and on January 1, 1998, the horn-hairs woke up and said Yow-za! We're hosed. Maybe we can keep this quiet so the stock won't fall... but, mean Senator Bob Bennett (R-Utah) and his lackey Arthur Levitt (SEC) wrote legislation that stipulated that corporations must disclose their Y2K budgets. So GM and all the other public corporations are painfully revealing the numbers.... And the numbers are horrific. 40 million in 1997, 500 million in 1998. Where are the geeks? And everyone else is revealing their numbers too. The issue isn't is it well spent; the issue is, why didn't it happen in 1996 or 1997? Can denial be so strong? Is the IT management that out of it? ....the dollars are a metaphor for the fear, the panic, the burning need for qualified geeks. The dollars say, the demand is insatiable, it indicates that there is not enough time left to fix the systems. This is not a time to be calm, this is the time to run in circles, scream and shout.... We're hosed.... it's too late now, look around you, you can smell the fear on executive row. - Cory Hamasaki
I'm screaming in fear because the work didn't start a year ago. It's 1998 now. I talk to lots of geeks, code crankers, software engineers, programmers, and most of them are still underemployed. This is nutz. Listen up HR, management, your only hope is to crank up the coders to 80-hour weeks now, and you'll have to pay top dollar. If you think you can run some ads about what a great organization you are, contract with 3 headhunters instead of just 2, whatever... Forget it. You're in crisis mode, you've been in crisis mode for the last year and a half but have been too stupid to recognize it.... I'll say it once more, there are 10-15 years of work for every real programmer. It can't be done. Flat can't be done. We have enough time to fix and test the most essential 10-20% of the systems. If your organization has 100 mission-critical systems, pick the 20 most important, you have enough time to just fix those. - Cory Hamasaki
We are facing an inelastic supply curve: more money will not bring forth significant new supplies of programmers. We are about to see two dreams come true: Cory Hamasaki's (big bucks for mainframe programmers) followed by mine (a bankrupt, paralyzed Federal government). There is now unconfirmed talk of the government drafting programmers. I love it! Can you imagine what a few thousand ticked-off mainframe programmers could do to every one of the Federal government's computer systems? How could the paper-pushing, responsibility-avoiding, clueless bureaucrats prevent the ultimate sabotaging of the New Deal, Fair Deal, Square Deal, Raw Deal known as the welfare state? It's all over but the shouting. And the gnashing of teeth. - Gary North
Meanwhile back in the real world, companies are handling the conversion quickly and efficiently. If you have any doubts, just read the trade publications.... in which data processing managers provide case histories of companies cleaning up their computer systems at a fraction of the supposed cost, in a fraction of the supposed time required, and using one or more of the dozens of new computer programs the market has provided to help make the conversion.... Government agencies are the only entities that aren't likely to be ready by 2000.... So the worst possible scenario probably is that the IRS won't be able to accept your tax payment in 2000 and since your credit card and your bank will still be fully functional, you'll be forced to spend your tax money on yourself instead. - Harry Browne
The most compelling thing by far is fixing the computers so they don't stop working on Jan. 1, 2000. . . . If we don't fix [them], there will be 90 million people 21 months from now who won't get refunds. The whole financial system of the United States will come to a halt. It's very serious. It not only could happen, it will happen if we don't fix it right. - [Internal Revenue Service Commissioner] Charles Rossotti
I personally think that most states won't get it done in time. The Internal Revenue Service doesn't stand a chance of getting it done. - Mike Cohn [a Y2K consultant with MDY Inc.]
Word now from several private Y2K companies is that IRS computer programmers are exiting in droves and applying for high-paying private sector jobs. These companies report two revelations from the ex-IRS applicants. First, many have such poor computer skills that they cannot be hired. Two, those whose skills are acceptable unanimously agree the IRS hasn't a ghost of a chance to fix its computer systems by Millennial Midnight. By tax time next year, tens of millions of taxpayers will know of the impending demise of the IRS. - Strategic Investment newsletter
Many segments of the Federal government are sitting on their hands waiting for funds to be appropriated - since most of the work has to be done by outside consultants. The largest consulting firm in the D.C. area currently has approximately 1600 openings in this area which it cannot fill. And the fed is used to putting off projects in order to use funds elsewhere - they are not really keen on fixed deadlines such as Y2K. Yes, it is too late for many - and OMB admits it. - Shirley Shorter
Another time last week I had driven in (to take my four year old to the White House Easter egg roll) and was taking two riders home. I told them that the cost of their ride was that they would have to listen to me sound off on the Year 2000.... The man immediately said that he knew a lot about it and that we were headed for disaster.... I asked the man what he knew and he told me that he worked in the Commerce Department and was on their Year 2000 Task Force. For two years they have been meeting and talking, but haven't touched a single piece of code. I asked if this meant that there wouldn't be a census in 2000 and he answered that they had purchased a new system this decade for which the original specs included Y2K compliance, so Census should be alright, but "the Weather Service is gone". I asked if anyone at Commerce had the task of assessing the readiness of the private sector and he answered "Nobody". - Jay Golter
In February the Federal Deposit Insurance Corp., the watchdog agency that regulates 6,200 banks across America, issued the results of a year 2000 audit. Its findings are startling: The efforts of 124 banks are "unsatisfactory" and 1,128 banks "need improvement." The FDIC -- itself eight months behind on its year 2000 solutions -- plans to begin closure proceedings on the most lethargic banks by September of this year. How many banks will close before the Wall Street bears knock several thousand points off the Dow Jones and NASDAQ averages and convince aging baby boomers to put their retirement nest under a pillow? - Gary Beach [Publisher, CIO Magazine]
....At FEMA, we are optimistic that the Y2K will not result in a national emergency.... But the President could declare an emergency under the Stafford Act if disruptions engendered by the Y2K problem were deemed severe enough.... Disruptions are more likely to be local or isolated in nature, a condition that permits and encourages cooperation and assistance from other entities.... Even if Y2K is unlikely to cause mass disruptions in essential services, severe emergencies may occur for a variety of reasons. The Federal government has the responsibility to mitigate the occurrences and assist those afflicted. - G. Clay Hollister [Chief Information Officer, Federal Emergency Management Agency, in a December 8, 1997 letter to Steven Davis]
This isn't blind faith.... This is a logical expression of the confidence I have that each line of code in each of the FAA's computer systems will properly recognize the rollover to the year 2000. - Ray Long [Federal Aviation Administration Y2K Program Office Director, who says he will be in the air when the FAA's computers roll over to January 1, 2000]
Usually when PHM types make statements like this it turns out that for some reason they are not around when the time comes to make good on them.... I sure wish I had a recording of the DEC manager.... who, when confronted circa 1976 with the issue of the PDP-8's operating system having a date format that ran out in 1978 (they stored the entire date in 12 bits, with only 3 bits for the year; 0 = 1970), said, "Well, if the PDP-8 is still around in 1978 I personally will fix the date problem." It was, he was no longer in charge of PDP-8's, and he didn't.. - Daniel P. B. Smith
I am confident that all of the mission-critical systems of the government will function effectively. - John Koskinen [chairs the president's council on year 2000 conversion]
I keep hearing of the potential problems that our electrical utilities may have with embedded systems. I cannot imagine being a software engineer writing software for a process controller that would be used in such a critical application and not questioning a design which would be guaranteed NOT to function within the foreseeable future. And don't tell me about being "ordered to do it" by some PHM. That defense didn't work at the Nuremberg trials, and it doesn't fly with me. It is incompetence. I've said before.... that there is going to be a reckoning after 2000 in the software industry. Many organizations involved in the software industry are going to be sued into oblivion -- some of them, rightly so. I also expect some sort of requirement for licensing or certification of programmers to be enacted. The widespread economic and social disruption that we are going to see in 2000 is going to prove that the development of software is too important for us to continue doing it in the same fashion that we did 30 - 40 years ago. - Bob Hermann
I remember requesting to make a particular application Y2K compliant. "No. That can always be done. You have management reports to write". I left the company and came back two years later to work on the same application. Since I had to modify the database and most of the programs, I offered to make it Y2K compliant. "No. Just make the changes we specified. And by the way, how about some more reports". A year later, again consulting (tele-commuting), working on the same application. Improving, expanding. Offered to make it compliant. "No. We will be replacing it soon with a PC-based system". I should have made it compliant anyway and not said anything. But I wanted to be a good boy and do what management wanted.... By the way, a couple of weeks ago I called one of the guys still working for that company. We chatted a bit, and at the end he asked "By the way. That application you wrote, is it Y2K compliant?" Bwa-ha-ha-ha-ha... - Bob Tyler
Survey 1Q-1998 results [on Internet newsgroup comp.software.year-2000]... 1 - it ain't gonna happen; 3 - bump in the road, 80-hour weeks for all in 1999-2001; 5 - possible collapse of economy, start hoarding now. 93 geek responses, 11 non-geek. Geek average response: 4.18; average [programming] experience - 19.65 years. Non-geek average response: 4.29. Overall average response: 4.20. - Eric Turner
The average man or woman does not appreciate what is going to happen... I'm going to plan for the absolute worst - I am talking about the need to start buying candles, tinned food and bottled water from mid-1999 onwards. People think that I am mad, but a company director I met last week is intending to set up a commune and buy a shotgun because the potential for looting is also quite high. - Barclays Bank senior executive, anonymous at his request
I had occasion to talk to tech support at my local ISP. While he was checking things out for me, I brought up the y2k problem. He told me that my ISP was fully compliant, to which I said S_U_R_E!! And even if I believe you, what use is that when fully half of the Internet will be blacked out? To this he replied, w..e... l....l, maybe offshore. I then told him to be prepared and that my gun was at my side and food to be purchased soon. His retort, "I'm already there". From this conversation, I'll take what was not said as confirmation of what is being said here [on the Y2K newsgroup]. Credentials? This guy is in the business and on the firing line. I'll listen to the private on the battlefield sooner than listen to the general back in Washington. - Ivan Schaffel
I recently worked for an Exploration/Production company in Calgary, Alberta, Canada.... The major finding was that there were numerous real-time clocks in the control systems and metering. About 70% were not year 2000 compliant.... The worst-case scenario (without testing) would be a shutdown of the system components when the sample interval was found to be "negative time". Although this posed little danger in terms of safety, it posed great problems in terms of operability.... Down-time at a facility site was not considered acceptable under any circumstances.... For a company with this kind of operating philosophy, there was a great "danger" in having a system shut down for any length of time.... My experience (lately) has been that control system components are difficult to obtain rapidly. Most of the delivery times (for new components) have been in the order of 8-14 weeks. I can't imagine what the president of an oil company might do (explode?) if he was told that his revenue stream would be cut in half (or worse) for 2-3 months because control system components are not year-2000 compliant. - Tom Bratrud
I've been mulling over three scenarios: Scenario A - No big deal, intermittent power outages, an hour here, a day there, brownouts, blackouts; bills for $19,000,045.75, pay up now, you deadbeat, you're 1201 months late; fighting with the mean lady at the Safeway for the last can of Chef-boy-ar-dee. Return to normal in a few months. Scenario B - The failures continue for a year; loss of life attributable to Y2K 50,000 to a million. This shocking number does not mean that YOU will be in a firefight; it means that between one person in 5,000 and one in 250 is killed by a Y2K incident, frozen to death, starved, given the wrong medication, bored by the lack of cable TV, etc. Return to normal in a year or two. Some people go bankrupt, some people, mostly programmers, end up extremely wealthy. Scenario C - We fight the second U.S. Civil War and spool down into the second dark age. In this scenario.... the rag-tag army of free Richmond counterattacks the combined forces of Baltimore and DC in the battle to control the estuaries of the Potomac and Chesapeake. - Cory Hamasaki
I'd venture to say that I have more possibilities that most have considered. Here are a few:
1. The U.S. could de-evolve into a few hundred city-states, no federal government left but some kind of inter-state planning commission. A passport and visa are required for a trip from Baltimore to Reston.- Cory Hamasaki
2. Global dark ages, depopulation to 5% of the current levels; the driver for this isn't starvation but sanitation and the collapse of the medical support infrastructure.
3. Europe ascends, they survive the EMU and none of the French reactors blows up. The U.S. economy collapses for a few years but the still vast natural resources and remaining industry allow us to rebuild quickly. No depopulation but a lot of financial misery....
4. Economic earthquake, Dow falls 6,000 points in a year.Yuppies and Gen-X'ers wiped out, reduced to near indentured servitude to a few superrich. Robber barons own everything, we all learn to wait tables, trim hedges, peel grapes for our betters....
5. Military near-dictatorship, current government structure endures but the military industrial complex asserts undue influence due to unstable world conditions. Civilian resources are diverted to the military.
6. California fruits and nuts take over. Central Federal authority is shaken by the Y2K failures. States' rights increase but with a neo-hippie, return to the earth flavor as a consequence of all the Y2K preparations. Chickens in every back yard, bicycles and buses become primary transportation....
7. Yuppie heaven.Y2K sweeps away the marginal industries, the fittest businesses survive, rapid mergers, accelerated Wall Street activity as the S.E.C. and other nuisance agencies of the failed Federal Authority sell their souls to private industry... the drivers for this are the partnering plans of the IRS... What were they thinking? Turning over tax collection to aggressive private companies, excellent service providers like the H.M.O.s?
8. Hyperinflation, $500 for a big mac but the good news is that all debt is erased. The bad news is that so are our savings and any paper dollars. The elderly, who tend to hold paper assets, become wards of the state. The economy tanks but the stock market goes straight up to a 5,000,000 DOW. The numbers are so big that we don't notice that it takes half our income to buy food and pay for energy. Home owners make out; renters lose. Paying for Y2K is the trigger....
9. Oh yeah, something about spike-hairs and looting...
This makes it highly likely that the meltdown will now occur with the market open, as it was in 1987, unliess it is closed by presidential directive (Clinton might be willing to do what Reagan wasn't). So, the scenario will more closely resemble the one I pictured in the May 1995 issue (if you multiply the numbers by 2), where the market is nominally open, but effectively closed by the crush of sell orders, the drying up of liquidity, and a communications traffic jam. In other words, you won't be able to place your order.
But a crash does not mean a straight line to hell. I've been very puzzled as to why the Federal Reserve has allowed this mania to get so out of hand.... until I concluded that the Fed probably thinks it has the ability to prop up the market by manipulating futures, as it belatedly did in 1987 and successfully did last October (in my opinion). Thus, the Fed can (it thinks) keep stock prices afloat until the economy catches up, allowing it to manipulate money according to the health of the economy and ignore the financial bubble.
Well, that remains to be seen; but it is a recipe for the greenhorns to lose a lot of money before the bear market even gets underway. Imagine: The market plunges from the 8000s to the 6000s - Joe Six-Pack panics and sells near the bottom; the Fed intervenes, and stocks return to the low 8000s - Joe Six-Pack switches back into stocks; another sinking spell takes stocks down 2000 points again - Joe Six-Pack panics again.... you get the idea. When the fall of 1998 arrives, the bear market gets underway for real, but Joe Six-Pack has already lost 40% of his money in two or three of these Fed-induced whipsaws. This virtually guarantees him a wipeout in the killer bear, rather than the more usual 80% or 85% loss.
Speaking of Fed-induced whipsaws, we may get to see the "plunge protection team" swing back into action
soon. At the moment, it appears that at least an intermediate top is in place; a "Timer's Trend" sell signal was
given on Friday April 24 and, after Monday's additional losses (I am writing this on Monday, April 27, just
after the market close) it doesn't appear we'll get another buy signal in the
immediate future. I hesitate to say we've seen the final top, after being burned so many times before....
especially since the Federal Reserve still has its foot lightly on the monetary gas. Dow 9800 now looks
remote, though the rate at which the market climbed to its mid-mid-April peak was about the same as in 1929
and 1987. Time will tell.... needless to say, the risk of remaining in stocks is currently extremely high. In
other words, don't risk it. At least pay attention to "Timer's Trend", don't get sucked up into that buy-and
hold-forever, you-will-always- come-out-ahead mantra which has been the kiss of death for many a well
intentioned investor in previous manias.
Original cost: $ 8,090.45
Present value: $ 7,399.25
Increase: $- 691.20 [-8.54%]
The performance of this portfolio and its predecessors ("Hedger's Delight", "Present and Future Income", "Crapshooter's Folly") from January 1987 to the present is +3.71%, for a compound annual rate of return of +0.32%. COMMENT on "Phoenix": There is no change from the last issue.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $ 8,075.00
Present value: $ 7,937.41
Increase: $ -137.59 [-1.70%]
COMMENT on "PIG": The PIGs will probably very soon be buying Ciber Inc. (CBR), a Y2K company, whose price is now returning to earth. The PIGs' Web page is at
http://www.assumption.edu/HTML/Faculty/Kantar/WPigs.html
C. Fidelity IRA - real portfolio, includes commissions:
SUMMARY - IRA:
Original (1983-86) cost: $ 8,326.19
Present value: $13,688.86
Increase: $ 5,362.67 [64.41%]
The performance of this portfolio (including its predecessors) from January 1, 1987 to the present is +24.82%, for a compound annual rate of return of 1.90%.
D. CREF Pension plan; I switch between indexed stock/bond/money funds:
Date Sold Bought
13Mar92 stock @ 56.65 MM @ 13.41
29Apr92 MM @ 13.48 bond @ 31.19
19Jun92 bond @ 32.14 MM @ 13.55
29Jun92 MM @ 13.57 stock @ 56.74
24Jul92 stock @ 56.76 MM @ 13.61
29Oct92 MM @ 13.72 stock @ 58.61
23Dec92 stock @ 61.48 MM @ 13.78
16Jan95 MM @ 14.83 equity-index @ 26.44
20Jan95 eq-index @ 26.19 MM @ 14.84
30Oct97 MM@ 17.24 bond@47.56 (27.17%)
30Oct97 MM@ 17.24 i-i bond@26.12 (27.17%)
11Feb98 bond@ 48.84 MM@17.52 (27.17%)
11Feb98 I-I bond@ 26.23 MM@17.52(27.17%)
Values, 27Apr98: stock, 154.45; MM, 17.70; bond, 49.14; inflation-indexed bond, 26.30
Gain, 1988: 18.91%; 1989: 14.48%; 1990: 8.28%; 1991: 27.93%; 1992: 10.20%; 1993: 3.08%; 1994: 4.07%; 1995: 4.80%; 1996: 5.28%
Gain, January 1 through December 31, 1997: 5.38%
Total gain since January 1, 1988 (10 years): 159.20%
Compound annual rate of return: 10.00% (My long-term target: in excess of 15%)
Gain shown excludes the impact of additional monthly cash contributions.
Buying CREF stock on January 1, 1988 and holding it gained 341.21%, for a compound annual rate of return of 16.01%.
E. Current unfilled portfolio good-til-cancelled orders: None.
COMMENT on "Timer's Trend": Comment on "Timer's Trend": We're on a just-received SELL signal generated April 24.
______________________________ TIMER'S TREND _________________________________
Mon 23 Feb 98 . | . # | 8410.20 | . + *
Tue 24 Feb 98 . | #. | 8370.10 | . + *
Wed 25 Feb 98 . | . # | 8457.78 | . + *
Thu 26 Feb 98 . | . # | 8490.67 | . + *
Fri 27 Feb 98 . | . # | 8545.72 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 2 Mar 98 . | . # | 8550.45 | . + *
Tue 3 Mar 98 . | . # | 8584.83 | . + *
Wed 4 Mar 98 . | .# | 8539.24 | . + *
Thu 5 Mar 98 . |# . | 8444.33 |~*~+~~~~~~~~~~~~~~~~~~~~~~~~~
Fri 6 Mar 98 . | . # | 8569.39 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 9 Mar 98 . | .# | 8567.14 | . + *
Tue 10 Mar 98 . | . # | 8643.12 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 11 Mar 98 . | . # | 8675.75 | . + *
Thu 12 Mar 98 . | . # | 8659.56 @| . + *
Fri 13 Mar 98 . | . # | 8602.52 | . + *
Mon 16 Mar 98 . | . # | 8718.85 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 17 Mar 98 . | .# | 8749.99 | . + *
Wed 18 Mar 98 . | . # | 8775.40 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 19 Mar 98 . | . # | 8803.05 | . + *
Fri 20 Mar 98 . | . # | 8906.43 |~.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 23 Mar 98 . | . # | 8816.25 |~.~*+~~~~~~~~~~~~~~~~~~~~~~~~
Tue 24 Mar 98 . | . # | 8904.44 | . + *
Wed 25 Mar 98 . | .# | 8872.80 | . + *
Thu 26 Mar 98 . | . # | 8846.89 | . + *
Fri 27 Mar 98 . | # | 8796.08 |~.~*~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 31 Mar 98 . | . # | 8799.81 | . + **
Wed 1 Apr 98 . | . # | 8868.32 | . + *
Thu 2 Apr 98 . | . # | 8986.64 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~*
Fri 3 Apr 98 . | . # | 8983.41 | . + *
Mon 6 Apr 98 . | .# | 9033.23 |~.~~+~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 7 Apr 98 . |# . | 8956.50 | . + *
Wed 8 Apr 98 . I # | 8891.48 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~
Thu 9 Apr 98 . | . # | 8994.86 | .+ *
Mon 13 Apr 98 . | # | 9012.30 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 14 Apr 98 . | . # | 9110.20 |~.+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Wed 15 Apr 98 . | . # | 9162.27 |~.~+~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Thu 16 Apr 98 . I# . | 9076.57 |~.~+*~~~~~~~~~~~~~~~~~~~~~~~~
Fri 17 Apr 98 . | . # | 9167.50 | . + *
Mon 20 Apr 98 . | .# | 9141.84 | . + *
Tue 21 Apr 98 . | .# | 9184.94 | . + *
Wed 22 Apr 98 . | .# | 9176.72 | .+ *
Thu 23 Apr 98 . I# . | 9143.33 | .+ *
Fri 24 Apr 98 . #I . {| 9064.62 | + *
Mon 27 Apr 98 * . #I . | 8917.64 | +.~~~~~~~~~~~~~~~~~~~~
========================================================================
{, } = "Timer's Trend" (4% and 10% exponential) SELL ({) or BUY (}) signal
NEXT ISSUE - will appear about May 29.
/Nick Chase