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To: long-gone who wrote (27006)	1/25/1999 4:00:00 PM
From: John Mansfield	Respond to of 116759

'The Implications of the Year 2000 Bug This technology problem is arriving at a time when global tensions are high and rising. Wolff expect it to exacerbate market volatility during the closing stages of the millennium. Post January 1st 2000 there is a high probability that the fallout from this phenomena will create a global recession, on the assumption that the global economy is not already sliding into recession. Let us consider for instance a mining company, who is only 70%, convinced or even 90%, that their mine or even power provider is year 2000 compliant. Will they risk sending their workers into the mine? How long will it take to restore power or re-open the mine if problems were to occur? Concerns have also been voiced about transportation networks, in particular shipping. With the possibility that trade flows may be disrupted for an unspecified period, Wolff believe that globally, industry will look to build stockpiles ahead of 2000, switching from 'just in time' to 'just in case' inventory. This is expected to boost Western metal demand and price during the second half of 1999. Expenditure on the year 2000 problem is a drain on industries resources and will restrict future growth through investment. This expenditure does not create wealth. The vast sums being spent represent only a short term injection for domestic economies, through the creation of temporary employment. In the months beyond January 2000, these positions will no longer be required. Post 2000 two probable scenarios arise, both of which could tip the already fragile global economy into recession. Firstly, the disruption to transportation networks is sufficient to slow industrial output, prompting employers to reduce their workforce. Corporate expenditure to fix the problem increases, rising unemployment places an added burden on government budgets and investment plans. The resultant increased volatility and uncertainty about the future prompts higher domestic saving, which further restricts GDP. Second scenario: almost no problems occur. High business inventories and individual consumer stockpiles now need to be reduced. The resultant slowdown in demand prompts employers to reduce their workforce, as GDP slows. Year 2000 work contracts are terminated, and investment is redirected into growth projects, which take time to produce results. Unemployment rises throughout the industrialised world. Commodity prices decline, refuelling the deflationary arguments and concerns about emerging market debt repayments. This is not an attempt to sensationalize the problem, but highlight where the risks lie in relation to the global economy and metal prices. ... commodities-now.com