09/18/98

Part Five of a Five-Part Series
Once in a Millennium: The Year 2000 Problem

Part 5 -- Don't Believe the Hype
by Yi-Hsin Chang (TMF Puck)


This Feature

Part 1
A Problem, Not Armageddon

Part 2
The Source of Y2K Doomsaying

Part 3
What the Y2K Problem Actually Is

Part 4
How Companies Are Working to Fix It

Part 5
The Problem is Y2K Hype, Not Software

Y2K Message Board
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Y2K Posts

Read what other Fools are saying about the Y2K problem and post your comments on our board.

Despite overwhelming evidence that companies and government agencies are on top of the Year 2000 problem, alarmists remain skeptical. They say it doesn't matter if most U.S. companies meet Y2K compliance because small businesses here and companies in emerging markets such as Russia, China, and Romania won't be ready and thus will essentially cause a domino effect, toppling computer networks around the world. Nice premise for a Michael Crichton novel/screenplay but highly implausible.

Despite the misnomer "millennium bug," the Y2K problem is not contagious like a cold. If a U.S. bank tries to do business with a bank in Russia plagued by the problem, their systems simply won't be able to communicate. The end. The computer at the U.S. bank won't suddenly become infected any more than the Russian bank would suddenly be cured.

The alarmists are right that it is better to be safe than sorry, but this means we should be working to fix computer codes, not panicking and stockpiling water, corn, or wheat. The biggest Year 2000 problem is, in fact, not a software problem but a hype problem, which may actually turn out to be a self-fulfilling prophecy. If enough people are so scared that they sell off their stocks, cash in their mutual funds, and make a run on banks before the end of 1999, such hysteria would indeed cause U.S. markets to plummet even if most companies, organizations, and government agencies become Y2K compliant on time.

Will there be computer problems and billing errors on January 1, 2000? You betcha. But that's no different from any other day in most of our lives. The fact is, even though many of us spend hours in front of a computer every day, we can get by temporarily without it. In the unlikely event that we can't ride the subway, we have to take the stairs instead of the elevator, and if we can't place a catalog order, life will go on. There will no doubt be some annoying Y2K-related problems, but we won't be reading by candles, planes won't be dropping out of the sky, and there won't be a financial meltdown.

What happens if the century date change causes an error in your bank account? Like any other mistake, you get it corrected. Banks and savings associations are required by law to keep backup records in case of an emergency, so you won't lose your money. What can you do to get ready just in case? It's a good idea to fill up your gas tank and withdraw an ample sum of cash to cover expenses for that first weekend in the Year 2000 -- don't forget that includes some serious turn-of-the-millennium New Year's Eve partying that Friday. Instead of moving out to the middle of nowhere to live in a Y2K survival dome, it's probably best to embrace Prince's attitude on the millennium change and party like it's 1999.

Y2K Message Board

Resource Centers:
Center for Millennial Studies
CIO Year 2000 Research Center
Information Technology Association of America
Microsoft Year 2000 Resource Center
Year 2000.com
U.S. Small Business Administration

Do-ers:
Securities Industry Association
President's Council on Year 2000 Conversion

Doomsayers:
The Cassandra Project
Christian Broadcasting Network
Dr. Ed Yardeni's Economics Network
Gary North's one man show
Westergaard Year 2000 (y2ktimebomb.com)
Y2KChaos

Cartoons:
Animated cartoon
Y2K Cartoons and Humor

Other articles by Yi-Hsin Chang (TMF Puck):
-- The Color of Money
-- A Closer Look: Gap Inc.
-- Market of Stocks