We had an old friend stop by our house a couple of days ago. I took him into our basement and showed him our Y2K supplies. He saw the food, water, batteries, sun shower, solar panel, lights, etc. Outside I showed him our propane and cords of firewood.
He said that he really hadn't thought too much about Y2K. Just thought that every thing was under control. He wanted to know why I thought it might so bad.
I asked him to image what would happen if the only serious thing that went wrong on January 1st was that the ball bearing industry came to a grinding halt because of Y2K problems with their equipment, and that it couldn't be repaired, only replace. And, it would take 6 to 24 months to replace all of the machines.
All businesses that used ball bearing would either be out of business or severely impacted. The major automobile manufacturers would be forced to stop all production. The new car auto dealer's would soon run out of inventory and have to lay off some workers. The companies that supply the car seats, tires, batteries and other accessories would loose significant business and probably forced to lay off many workers.
With all of these layoffs, consumer spending would drop and company profits would suffer. As companies' profits level off, or even decline, the stock market, which is already at a very high valuation, will react dramatically. This in turn will lower consumer confidence even more and spending will drop further. This trend will continue to spiral down until the problems are fixed and the economy put back on track.
Thus, we will see a sudden increase in unemployment and a decline in consumer spending. I suggested that since he was in an industry that relies on a high level of consumer spending, he should start planning now for a period of unemployment. He should pay down all of his debts and try to accumulate some cash.
He asked whether he should stay in the stock market. I told him that if he decides that he wants to ride the stock market out, he should be certain that he has enough cash to pay all of his expenses for at least a few months. You don't want to be forced to sell your holdings in a down market if you find yourself temporarily short of cash. A least, take a little money off of the table.
I then told him that it looked like the overseas oil producing nations might have some serious problems. He knew that we get about 50% of our oil from overseas, so he immediately grasped the seriousness of that situation. We talked about the 1970's oil embargo and it's effect on gas prices and availability, and how a raise in gas prices would ultimately affect food prices.
This is when I told him, that even if we don't have serious problems next winter, I believe that the price of food will probably go up. And with the current drought, some foods might be scarce next year. So, by storing food now, we are simply paying this year's prices for next year's food. We are only stocking food and supplies that we would use anyway, regardless of Y2K. Since we have taken several extended sailing trips on our sailboat in the past ten years, we have learned how to stockpile provisions.
Well our buddy decided that he was going to rethink his position on Y2K and it's possible repercussions, and since he was particularly concerned about it son, decided that he will at least get some provisions. It felt good to be able to explain to someone the possible problems that Y2K could cause.
I realize that I didn't explain all of the possible Y2K problems. We did lightly discuss the water, electrical, financial and other general Y2K problems. My wife thought that I was starting to scare him, so we changed to topic to something more pleasant before I frightened him too much.
Just thought that I would share this experience with everyone.
B.K. |
