Thanks for that link. Re-affirms why I question and look at everything so closely.
"WASHINGTON--Billions of dollars spent making repairs to prepare computers for the year 2000 will likely have only a minimal effect on the U.S. economy, Federal Reserve governor Edward Kelley said yesterday. "
"Asked about predictions that computer glitches could throw the U.S. economy into a recession, Kelley said such a scenario was unlikely. "I can't say that's an impossibility," he added. "But it's hard to induce a recession in this economy."
news.com
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I wonder what new, re-assuring news the Fed got over the past 2 months for Kelley to confidently make the above statement?? Wish they'd share it with us. Here's an excerpt from ACTUAL televised Humphrey-Hawkins testimony to Senate Banking committee Feb 25 '98.
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GREENSPAN: "The difficulty is that we don't know what part of that several hundred billion dollars would have been spent anyway. A lot of it is on new equipment merely because the simplest way to resolve a problem which seems to be unsolvable with respect to programs is just rip out the whole business and stick in something new.
And so, it's hard to know which part of this is real lost effort. A good part of it is. How much we don't know. So, there is automatically before we reach the year 2000, an economic loss in the sense of the diversion of resources to non-productive endeavors.
We do NOT know or cannot really realistically make an evaluation of what the economic impact is as a consequence of the breakdowns that may occur.
We do NOT know the size.
We do NOT know the contagion and interaction within the system, and we do NOT know how rapidly we can resolve the problem.
For example, one of the things that we at the Federal Reserve are very acutely aware of is there is a two-pronged issue here. One, try to prevent the problem for happening. And two, what do you do when it happens?
I mean, for example, we had a very major bank in the City of New York a number of years ago, computer went out and the New York Federal Reserve Bank had to lend them over $20 billion overnight. Now, if we weren't there, I can tell you that the system would have been in very serious difficulty.
So, part of what we are trying to do is figure out what we can do to assuage whatever problems might arise, and that it's a difficult exercise because there is such a huge element of UNCERTAINTY in the nature of the problem itself. But we are trying to come to grips with the best we can."
Something else I found interesting:
SENATOR BENNETT: Last week, Governor Kelley from the Federal Reserve said, "The Federal Reserve believes that certain countries" -- I'm quoting -- "believes that certain countries around the world have not embarked on aggressive compliance supervision and examination programs so that there is a likelihood that banks in those countries have NOT yet begun to effectively address the problem and will now find it increasingly difficult to be ready." Unquote.
Chairman Levitt of the Securities and Exchange Commission has expressed, both publicly and more emphatically privately to me, his concern about the inability of financial institutions - and particularly in his case stock markets -- to comply with the Y2K requirement.
We've had testimony before my subcommittee in which the chairman has been active, more active than I think he is on other subcommittees, because of his interest in this -- that have suggested that there is a significant chance that a worldwide recession could be triggered by the inability of companies to meet their supply deadlines, to meet their customer requirements, because their computers are shut down because of the Y2K problems.
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His prepared speech did NOT mention Year 2000. Senator Bennett brought it up. I watched the entire thing on CSPAN. It was interesting to see that Greenspan had been a programmer:
"I'll do a mea culpa, too. I'm one of the culprits who created this problem. I used to write those programs back in the '60s and '70s ... and was so proud of the fact that I was able to squeeze a few elements of space out of my program by not having to put 19 before the year. And back then it was very important."
bog.frb.fed.us
You won't find the actual televised transcript here. This link takes you to the prepared, pre-submitted transcript. Contact CSPAN.
Cheryl
P.S. Maybe now you'll understand why I research and cross-reference so thoroughly.
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