The sky's not falling yet

 

By Robert Heady

 

July 28, 1998

 

Herman Geltenfelter, our neighborhood groaner and complainer, is the kind of guy who sees nothing but a black sky, even when the sun is shining.

 

This weekend, for instance, he was leaning on his back fence and unloading his worst fears about a couple of subjects -- the Year 2000 and the economy.

 

"I'm nervous as a cat about my investments," he started out. "I wish those confusing `experts' would all work off the same page. One swears the U.S. economy is rock-solid, even though it's slowing down. That not even Asian countries going belly-up can hurt our markets.

 

"Then Alan Greenspan runs over from the Federal Reserve and tells Congress inflation is still a threat and, kerplunk! The Dow drops more than 100 points. What gives?

 

"Herm, the economy's ticking very nicely," I replied. "The fact that our sales to Asia are way off is what's keeping inflation in check. But there's enough strong momentum -- low unemployment, big increases in housing sales, wage pressures and so on -- to give Greenspan nit-fits about higher prices causing inflation."

 

"OK, so we've got a balancing act between inflation and Asia. But what about the guys who think Greenspan should be reducing interest rates, to prevent the U.S. from falling into a slump?" he asked.

 

"They're whistling Dixie, old buddy. Pumping too much gas into the economic engine would make inflation too hot," I explained.

 

Herman gave his lawn mower a kick and threw his hands into the air. "So what am I and a million other little investors like me supposed to do? Either way, they've got our butts nailed to the wall!"

 

"Herm, just suck in your breath and be patient. Odds are Greenspan's tightrope trick will work. But if Asia's problems belt us a lot harder, U.S. corporate earnings will suffer and so will your stocks. The biggest worry is people losing their cool if the market slumps, by selling off too deeply and thus creating a sort of self-fulfilling prophesy."

 

(I didn't dare tell Herman that if every investor was as much a Nervous Nellie as he is, they could make the market tank real fast.)

 

"And what about the Year 2000 problem? How's that gonna hit me?" Herman wanted to know. "The thing they call the `Y2K' situation? Cute. Sounds like the name of a UFO robot or a new Russian bomber."

 

"Friend, it comes down to this: When some computers see the two zeroes in the year `2000,' they'll assume the year is `1900.' That'll throw all the systems off and could create massive computer failures and erroneous information on your savings and checking accounts as well as your stock portfolios. Plus, one expert predicts the chances of a worldwide recession are 60 percent . . ."

 

"I don't know about you," interrupted Herman, wearing a look of fear and desperation mixed with sweat. "I'm heading for the hills with my jugs of water, a month's worth of cans of Ensure, firewood and all my prescriptions. I know a guy who knows a guy inside the Pentagon. He says nothing's gonna work after the clock hits midnight that night. Banks and their ATMs will fail, planes and trains won't move, and the Asian and European markets will crash!

 

"It's not going to just be chaotic," Herm shouted, "but catastrophic!"

 

"They're working on preventing the problem, but there's a shortage of resources," I insisted. "Anything with computer chips in it could fail as well cars, watches, cell phones, you name it."

 

"Man, this is worse than the Cuban missile crisis," said Herman. "My source says there are 29,000 computers inside the Pentagon, that they're only fixing 2,900 of them, and at least 900 of those won't be done on time."

 

"Herm, that may be just a rumor, but don't base your fears on the Pentagon. A guy on TV the other night described the Pentagon as a `basket case' when it comes to getting ready for Year 2000. But outfits like Social Security and hospitals are way down the road; government checks should arrive on time."

 

"OK, so I've got 17 months to get ready. What do I do?"

 

"Contact everybody you do business with in the financial world," I urged. "Banks, credit unions, brokers, financial planners, finance companies and the rest. Ask them for a detailed explanation of what they're doing to prevent a Year 2000 foul-up with your money. If they give you a bunch of jazz, think about moving your account."

 

Herman nodded and took off with his lawn mower. As I watched him go, it seemed that the sky had gotten a tiny bit brighter.

 

- Credit tip. Some of the new platinum credit cards offer higher credit lines, personal services, higher travel accident insurance and supplemental purchase options, besides tempting you with a free gift.

 

Robert K. Heady is the founding publisher of Bank Rate Monitor and is the co-author of the book "The Complete Idiot's Guide to Managing Your Money." You can write to him in care of this newspaper or send e-mail to jrnl8888@aol.com