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Technology Stocks : Discuss Year 2000 Issues -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (1425)	4/10/1998 7:55:00 PM
From: C.K. Houston	Read Replies (6) \| Respond to of 9818

Alstair, In spite of what you think, MANY of us would like good news. Unfortunately, the URL you posted ... doesn't sound encouraging to me. ================================================================== In the year 2000, our call at this time is for a relatively minor economic blip in the first quarter, which should be offset very soon after. This is based, critically, on the following considerations. First, we assume that key components of government (the IRS in the US and Revenue Canada north of the border) and the financial system (central banks and the machinery of the payments system) will be Y2K compliant. If this is not the case, all bets are off. bmo.com =================================================================== This is a pretty big "IF" to me. Cheryl

To: Alastair McIntosh who wrote (1425)	4/12/1998 12:47:00 PM
From: R. Bond	Respond to of 9818

Al, Some Thoughts On: Bank of Montreal, "SOME THOUGHTS ON THE YEAR 2000 PROBLEM AND THE ECONOMY", by Rick Egelton, Deputy Chief Economist. This report is of interest to all members of this thread -- a Y2K classic. The writer doesn't have a clue. Wonderful bureaucratic doublespeak and obfuscation abound! 1. >There will, of course, be some expenditures in 2000 for those organizations that are not compliant in time, but these should be relatively minor in comparison to pre-2000 spending. < -- What about those which can't afford it. The writer blithely assumes that all businesses can shoulder the necessary spending while waving away 'pre-2000 spending'. 2. >To further complicate matters, one could even imagine a scenario in which businesses reduced capital investment plans and investors moved out of equities and into more liquid assets in anticipation of economic problems in 2000.< -- 'Imagine' reduced capital spending? GM may not reduce capital spending while it sinks $500m into Y2K? 3. >An equity market correction in 1999 in response to the uncertainty created by Y2K is also a possibility. However, the injection of liquidity by central banks, as was the case following the 1987 stock market crash, should be able to stabilize the economy.< -- It sounds so easy. No thoughts for the myriad of factors which may influence the market. Currencies, for one. A ridiculous statement. 4. >In the year 2000, our call at this time is for a relatively minor economic blip in the first quarter, which should be offset very soon after<. -- Define 'very soon after'. 5. >.........we assume that key components of government (the IRS in the US and Revenue Canada north of the order) and the financial system (central banks and the machinery of the payments system) will be Y2K compliant.< -- The I.R.S.? The global payments system? What is this assumption based upon? 5a. >If this is not the case, all bets are off.< -- Warning!! *ss-Covering-Alert! Oh yes, please elaborate. 6. >....... there will be no direct material impact of Y2K on the financial situation of households and businesses in 2000, a typical prerequisite for an economic downturn to emerge.<-- Ever heard of the terms 'small investor', 'mutual fund', and 'pension scheme'? Could they not 'impact' the 'financial situation of households '? 7. >Information technology(IT) groups, in some instances, are using Y2K budgets as a source of funding for non-Y2K IT projects while, in other instances, IT groups are using the occasion to upgrade the quality of both computer hardware and software. Therefore, part of the reported Y2K programming cost may be productive IT investment.< -- Let's see. Having to replace your equipment due to Y2K is not a Y2K-related expense. Will you do my taxes next year, please? 8. >Investors, responding to the uncertainty surrounding the Y2K issue, may decide to reduce the equity holdings and place a greater portion of their funds in liquid assets. A movement out of equities and into cash would ceteris paribus reduce equity values and, through the resultant impact on wealth, adversely impact consumer spending.< -- See No. 7. I suppose this would be an 'indirect' impact. >What can we assert at this time with a reasonable degree of confidence? < 9. >Any economic weakness prior to 2000 stemming from uncertainty-induced equity price declines should be offset by an injection of liquidity by the world central banks. The reaction to the 1987 stock market crash provides a good example. The major central banks responded to declining equity prices by substantially increasing the money supply, thereby significantly lowering interest rates. Economic activity stabilized and growth actually strengthened the following year.< -- Print more money! It's certainly done great things for Japan. 10. >Any threat to the integrity of the financial system will come, therefore, from the financial health of the small and medium-sized (SMEs) customers of the financial institutions.< -- Seemingly blissfully unaware of the systemic nature of the Y2K problem globally. See: Mexican/Asian currnecy crises. 11. >Bankruptcies, unless impairing the financial system, should not significantly impact economic activity because the capital stock of the enterprise still exists, leaving others to simply purchase that physical capital and put it to use.< -- '........unless impairing the financial system.........'? Warning!! Warning!! ACA! (see No. 5a.) 12. >Unanticipated production impediments---i.e. trucks that won't start because of microprocessors---should be rectified quickly<. -- What can one say? Priceless. I'm going to book my menchanic early. Or follow the example of the U.K.: utilities are issuing bicycles to employees as insurance. 13. >While some concern has been expressed regarding the ability of the IRS in the US to be year 2000 compliant, it is reasonable to conclude that, at the end of the day, the US government will bring the required resources to bear in solving the problem.< -- >>cough<< In Conclusion 14.> ...... it is possible that North America could be sufficiently Y2K compliant in time but non-compliance in other parts of the world, like Asia, would adversely impact the North American economies. Such occurrences are certainly possible and nobody will be able to pronounce with absolute certainty that all key industries are Y2K compliant until January 2000.< -- So why the previous assumptions? Al, several important Y2K issues are not addressed or insufficiently noted: Embedded systems - Mass psychology - Systemic nature of possible problems - Credit crunch from banks. I don't have a problem with your thinking Y2K is not important. However IMHO, this report lacks rigorous thinking. There are so many unqualified assumptions that it is clear readers are meant to blindly believe this document written by an 'expert'. Being the stock market participants that we are here on SI, I believe that we need to be fully unbiased concerning the possible implications for Y2K impact on the markets. That's mass psychology/investor sentiment I'm talking about. It's not important whether you believe it or not. If the Herd does, look out. I'd love to lock Mr. Egelton in a room with Dr. Ed Yardeni for a while. Cheers, Bond

To: Alastair McIntosh who wrote (1425)	4/12/1998 5:36:00 PM
From: R. Bond	Respond to of 9818

guide-p.infoseek.com Full story Report Says Y2K Problems Widespread Thomson's International Banking Regulator Thu, Apr 13 1998 Many banks have so far failed to fully address the technical and managerial issues involved in the Year 2000 computer conversion problem (Y2K), said a group of the largest financial institutions worldwide. (snip) The legal risks are diverse and include the risk of shareholder suits for fraud, when companies operate under accounting rules that require disclosure of material potential liabilities. Financial firms must also ensure that software vendors hired to make them Y2K compliant do not contravene copyright protections available to software writers. The IIF report is the product of the work of a task force whose 18 members included Credit Suisse First Boston, Deutsche Bank AG, Dresdner Bank AG, G n rale Bank, Lloyds TSB Group Plc., Royal Bank Financial Group, Securities Industry Association, Standard ChartereBank and Swiss Bank Corp. (Copyright American Banker Inc. - Bond Buyer 1998)