Y2K Alert - 10/16/98 - 10% of high-tech executives stockpiling
Quick note #1: If you're new to this list and you'd like to view some of the previous headline alerts, you can visit:
y2ksupply.com
Quick note #2: The gauges on the home page (www.y2ksupply.com) have recently been expanded and updated. Simply go to the
main page and watch the left hand side as you scroll down. You'll see a summary rundown of which items are in short supply,
which countries are worst off, and some results from the recent ZD / Harris poll.
Quick note #3: In an effort to take positive action to help avert the banking crisis, we're sponsoring an action-oriented petition. The
title is, "Petition by the citizens of the United States of America urging immediate action on the fragile banking system as it relates
to the Year 2000 problem," and it will be sent to all Senators, the V.P. and the President on January 1, 1999. You may add your
voice to the petition by visiting: y2ksupply.com
MAIN STORY: 10% OF HIGH-TECH EXECUTIVES ARE STOCKPILING FOOD, GENERATORS AND AMMUNITION A just-released
CIO KnowPulse(TM) poll offers yet another glimpse of what high-tech executives are thinking about Y2K (on top of the ZD / Harris
poll released last week). In case you thought the results of the ZD poll were just a fluke, here come the numbers from CIO
Magazine. The poll was taken of 330 high-tech executives, many of whom are actually responsible for solving Y2K problems at their
own companies.
71% of them think the Millennium Bug won't be fixed in time (or are unsure about it)
22% say their company is stockpiling extra cash
Only 8.4% said their company was finished with Y2K repairs
10% are stockpiling food, water, and generators
3% are heading for the hills (relocating)
13% are upgrading personal defense, including buying firearms
Only 22% are training their labor force to operate in manual mode
7% plan to put their money "under the mattress"
ANALYSIS If only 29% of the people actually working on the Y2K problem think it will be fixed in time, we have a legitimate reason
to be seriously concerned. You would expect the confidence level to be higher according to all the public relations statements we're
hearing from almost every company and government agency: "We're on track!" "We're committed to making the deadline!" Yes,
they're on track. On track to a shutdown of critical services.
Clearly, those are non-credible statements from the legal offices and spin doctors at these companies. When you secretly ask the
front line personnel, only 29% of them think it will be fixed. Quite a difference. Conclusion? Don't get your Y2K information from
people who are trained in misleading the public. Get it from the people actually working on the problem.
8.4% FINISHED Only 8.4% said their company was finished. As we're now approaching the 1-year-remaining threshold, this number
is especially worrisome. PC Magazine said that medium-sized companies require at least one year to test the repairs, longer for
large companies. It looks like most of these companies surveyed aren't going to have a year. They're going to have something like
six months to test and implement their repairs, and if dates start to slip (like they almost always do in large-scale software
projects), they are going to slip past January 1, 2000.
You can see the pattern here: the September 30, 1998 federal government deadline came and went. Now they say March of 1999.
The December 1998 deadline of most private companies is fast approaching, and only 8.4% have made it so far. Those companies
will slip to March of 1999, too. And when we get to mid-February, guess what? That March 1999 will be announced as being "only a
goal, not a deadline," and the "real" deadline will move to June of 1999. This will continue in leap-frog fashion, all the way to
December of 1999.
At that point, we'll start hearing companies say their fixes will be ready in March of 2000, but that's nothing to worry about because
they have contingency plans ready. Seriously, you're going to hear this. Never mind how ridiculous it sounds, it will be said with a
straight face by people who appear to have lots of credibility.
10% ARE STOCKPILING FOOD, WATER, GENERATORS This is where the shortages in the survival supply industry are coming
from: these money-heavy high-tech executives who realize, "Hey, my money is at risk anyway. Why not convert it to stuff I can
use?" And 10% of them are doing just that. That number will double (at least) in six months, but at that point, the supply pipelines
for many items will be backlogged through 2000.
By the way, the word, "stockpile" has negative connotations for most people, due in part to the use of the word by the ATF when
describing how the criminals they just busted were "stockpiling" weapons. Lets get over this: when your grandma provided for the
family way back in the "good old days," she stockpiled food. Everybody did. It's called "canning" or "preserving." It's called "having a
root cellar." Everybody stockpiled. It wasn't even called stockpiling, and if you didn't stockpile, you were a fool. Families that didn't
stockpile starved.
In 1998, this negative meaning attached to the word is quite unfair. We may yet see the President (or some other government figure)
come on national TV and condemn people for getting prepared for Y2K. He'll start with the word "stockpiling" and then he'll move on
to the word, "hoarding." Anyone who attempts to buy extra supplies, he'll imply, is hurting the children.
Don't fall for it. Stockpiling is the responsible thing to do. You've got to prepare for the worst to protect yourself, your family, and
your community. Your stockpiling actions right now may make the difference in some starving child's life. Maybe you have an extra
50 pounds of wheat that you can do without, so you help some people out. That's called being responsible. That's called being
prepared. When you hear the words "stockpiling" and "hoarding" being used by the press and by people in the government, a little
red siren should go off in your head, and you should be immediately aware that these people are attempting to condemn those who
are actually taking action to be part of the solution.
The Bible, too, encourages people to be prepared. We have plenty of Bible scholars subscribed here: can someone please reply
with a verse that would demonstrate this? I'll include it in the next alert.
To be caught unprepared, especially when we KNOW the date that Y2K will hit, is the most irresponsible thing you can do. Don't
believe a word of the people who claim that preparedness is somehow wrong. They are fools. Remember: every person who is not
ready for Y2K will become a burden for every person who is ready. Which group do you want to belong to?
3% ARE HEADING FOR THE HILLS The ZD / Harris poll said that 8% of those polled were heading for the hills. This one says 3%.
Perhaps the real number is somewhere around 5%. That's one out of every 20 people, picking up and leaving the city for good.
We're talking about people with high-paying jobs who are willing to leave those jobs and drastically change their lives. Most people
can't make a living out in the country, so they'll have to live off their savings or their wits (or get a low-paying job in the country). Can
you imagine a former high-tech executive giving up his high-rise office and moving to the country to raise chickens? Believe it.
People are doing that. Next time you get stuck behind Farmer Joe's tractor on the road, remember: he might be a networking
expert. You never know.
7% PUTTING THEIR MONEY UNDER THE MATTRESS You might think that 7% is a small number. Unfortunately, it's a huge
number. As mentioned here many times before, if 7% of the American people pull out their money and put it under the mattress (or
bury it, or whatever), this collapses the entire banking system. Why? Because there isn't enough cash in the system.
If you'd like to see the numbers yourself, here's our classic banking chart: y2ksupply.com
You'll see that banks hold about one dollar and seventeen cents for every $100 they owe customers in deposits. That is not a
healthy ratio, especially when you get poll results saying 7% are going to pull out everything. The ZD poll revealed that 20% would
pull out all their cash. To organizations like the Federal Reserve, these numbers are more than just alarming: they are
life-threatening. While the reseve ratios of our banking system are not publicized, they are well-known by the Fed, and they realize
the significance of what could happen here.
Fortunately, in order to avoid the worst-case scenario, the Fed is hard at work printing additional cash and readying an extra $150
billion in their sub-vaults. Throughout 1999, they will be able to inject an additional $200 billion in cash into the banks. Will this be
enough? Maybe. But we're talking about $3.7 TRILLION in deposits. You can do the math here: how much cash is needed if people
take out 10% of their money? That would be $370 billion in cash, right? How much does the Fed have ready? $200 billion. How
much do the banks hold right now? $44 billion. That's $244 billion available, but $370 billion demanded. Oops.
Some people say, "No problem. My account is FDIC insured." Now you can get a whopping one dollar and twenty five cents for
every hundred dollars the bank owes you. The FDIC strives to maintain a 1.25% ratio of insurance reserves to covered deposits. And
that's not in cash: that's mostly stored as electronic records (funny money). Want to look at the numbers yourself? Check out:
y2ksupply.com
This chart shows how the FDIC is "promising" to cover $2 trillion in deposits with a mere $29 billion in reserves. Here's what that's
like: suppose you loaned me $100, and I then went out and spent it. You'd be worried about whether I could pay it back, right? So to
calm your worries, I set up an insurance fund to cover the $100 I owe you. How much money do I put in the insurance fund? One
dollar and twenty five cents. There, do you feel better now?
Of course not. The numbers don't add up. But why do millions of American depositors "feel better" when they think their deposits
are protected by the FDIC? The answer, of course, is because they don't know the real numbers.
Want to know what you can do to help? Come sign our petition to help save the banks: y2ksupply.com
22% SAY THEIR COMPANIES ARE STOCKPILING EXTRA CASH If you didn't think the cash problem was bad enough based on
personal withdrawals alone, lets look at corporations. This poll says 22% are going to withdraw extra cash. We can't put this to a
strict analysis because we don't know what percent of the total deposits this will represent. But the important point here is that
companies are going to want cash, too, not just individuals. This will put increasing pressure on the banking system, the Fed, and
the FDIC to do something.
WHAT CAN YOU DO TO HELP? Aside from signing the petition on banking, get in touch with your Senators and Congresspeople.
Tell them you're concerned about the unreasonably-low reserve ratios of the system as a whole. You're fed up with the Fed's wimpy
cash-printing plan and you think the FDIC should have a LOT more reserves.
If we as a nation are going to prevent a total economic collapse, we've got to keep the banks up, period. No banking = no economy.
The Fed should right now be printing at least $500 billion in cash (I know, inflation is a risk, but not as large as the risk of
collapse...). The FDIC should be "hoarding" reserves (there's that word again!) equal to 5% or 10% of the deposits they claim to
cover. The banks themselves should be reducing their loans and increasing their internal cash reserves. These are CRITICAL
measures that are not being taken, but should be.
One ray of hope is that the Fed can change the denomination of the cash they're printing. In order words, they've ordered $50 billion
in currency right now, but they could just tell the engraving & printing people to print $50 bills instead of $10 bills. That would
magically turn $50 billion into $250 billion. (Like magic, wow!) While this would normally be an inflationary move, not in a time like
Y2K. We need the cash. Remember, inflation isn't a risk because people aren't taking this cash and spending it. They're taking this
cash and HIDING it. They're removing it from circulation. The inflation risk is zero. The big risk is deflation -- a shrinking supply of
dollars.
Also, I've been told by the Fed that even if all this extra money was printed and stuffed under peoples' mattresses, once the bank
panic ends (if it ends) and people deposit their cash again, the Fed will just yank it back out of circulation, thus leaving the situation
pretty much where it started.
Full CIO poll story at: cio.com
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