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To: John Mansfield who wrote (22507)	8/21/1998 10:53:00 AM
From: RAVEL	Read Replies (2) \| Respond to of 31646

CORRECTED - Goldman sees millennium bug stinging U.S. economy In NEW YORK item dated Aug 20 "Goldman sees millennium bug stinging U.S. economy," please read in second paragraph...the 1965 northeastern blackout...instead of...the 1954 northeastern blackout. (Corrects year of blackout). A corrected version follows. NEW YORK, Aug 21 (Reuters) - The Year 2000 computer bug could shake up the U.S. economy as much as the 1994 Los Angeles earthquake, say economists at Goldman Sachs, though it is not likely to cause a worldwide recession. "We see it in the broad statistical context of a natural disaster," like the 1994 Los Angeles earthquake or the 1965 (corrects year) northeastern blackout, said Sally Pope Davis, a Goldman banking analyst on a Year 2000 conference call. "It could hit Gross Domestic Product (GDP) for a quarter or two, but not enough to drag us into recession," she said. A space-saving practice used by computer code writers has left many older systems with only two digits to recognize the year. That means that many systems could misread the year 2000 as 1900, causing crashes or mass miscalculations. Goldman recently held a conference on banking and the Year 2000 issue in New York for clients. Two Goldman economists, Ed McKelvey and Alex Patelis, said in a report the date change could disrupt the economy in the first few weeks after the turn of the century, but companies would compensate, working overtime to fix computer bugs. They expect marginal downward pressure on productivity but said economic activity could speed up as consumers stock up ahead of the date change. Wages could see some upward pressure amid skyrocketing fees to fix the Y2K bug. There is already evidence of such increases in the technology sector, they said. The cost of fixing a line of code is expected to jump six-fold, according to MBNA Corp. <KRB.N>, which attended Goldman's conference. It expects that fixing a line will cost $6.70 by 2000, up from $1.10. The economists are also forecasting either declining profits or accelerated inflation. They said either companies will absorb Y2K (Year 2000) costs and report declining profits or pass along the cost of fixing the bug to consumers through higher prices. In terms of world financial markets, they said big-cap stocks could get a leg-up, because their systems are better prepared for the date roll-over than their smaller-cap brethren. U.S. assets could also win more global market share as "flight-to-quality" money seeks a safe haven in U.S. institutions, which are perceived as the best prepared for the next millennium, they said. For interest rates, the outlook is less clear, Patelis and McKelvey said. Inflationary pressures could push for higher rates, but the Federal Reserve may inject liquidity into the system to avoid crisis, which would mean lower rates. Forward interest rates apparently are already pricing in this latter scenario, they said. ((Jennifer Westhoven, Wall Street Desk +1 212 859 1881)) REUTERS Rtr 10:02 08-21-98

To: John Mansfield who wrote (22507)	8/21/1998 11:25:00 AM
From: david sosiak	Read Replies (1) \| Respond to of 31646

Dear John, Thanks for posting this.We have a number of skeptics on this thread that don't get it!! Thanks for all your valuable info... When do you have time to relax?? Regards, Dave