Panic as 2000 Approaches?

------------------------------------------------------------------------

By Sean Paige

------------------------------------------------------------------------

 

 

Our computer-based world could be in for a shock in 2000, but how real is the danger? Estimates of what the millennium bug holds in store run from sanguine to apocalyptic.

 

It may not be the only thing we have to fear, but fear itself -- the "nameless, unreasoning, unjustified terror" against which Franklin Roosevelt inveighed during the Great Depression -- may turn out to be the factor that determines how big a bite the so-called millennium computer bug eventually takes out of America.

. . . . Some 16 months before midnight, Dec. 31, 2000, when mainframe computers and microchips the world over will be coldly oblivious to the revelries under way in Times Square, our machines will begin encountering dating codes that don't compute -- causing no-one-knows-quite-what to occur. Already observers are starting to wonder whether the public will panic.

. . . . The so-called Y2K problem is the result of a memory-saving shortcut taken back in the 1960s by computer programmers who never imagined that the line codes they then were writing still would be in use three decades later -- or that what they were doing would become the foundation upon which the language of our computerized culture is based. But as difficult as it may be for some Americans to believe, given their faith in the quick fix, there's no cheap and easy way to solve this problem.

. . . . By now the costs and technical challenges of debugging our wired society are recognized as monumental -- at least $5 billion for the federal government's Y2K remediation efforts alone, and as much as $150 billion to $200 billion more for private-sector fixes, according to some estimates. And the potential economic consequences of our failure (and the failure of our international trading partners) to solve this single glitch are ominous given the intricate interdependence of today's markets and communications.

. . . . But perhaps the greatest uncertainty is how rank-and-file Americans will react should power grids go down, telephone lines go dead, billions of consumer goods containing imbedded microchips go haywire, communication satellites blink out, the stock market fall silent or bank vaults be emptied of currency as the Western world is plunged back, back, back to the pre-microprocessor stone age of the 1950s.

. . . . Bankers, businesspeople and government officials are talking in muted, measured, reassuring and snooze-inducing tones concerning the extraordinary steps they are taking to reduce the chances that major economic or societal disruptions will occur. Meanwhile, the growing buzz on radio talk shows, at congressional town-hall meetings and among Internet chat groups suggests that the general public is tuning in to the problem and may not be reassured by simple platitudes.

. . . . Century turnovers long have been a boon to doomsayers, but the millennium bug has added excitement to the prognostications of today's dimestore Nostradamuses. A growing industry of Y2K consultants has sprung up, advising manufacturers about how to buffer themselves against supply-chain breakdowns and investors about how to cash in on the possible catastrophe. Plaintiffs' lawyers are licking their chops, anticipating that the new century will dawn with a multibillion-dollar litigation explosion. Luddites are feeling vindicated. And politicians are doing their thing -- magazine magnate Steve Forbes, in a preemptive strike, probably was the first to use the possible millennium meltdown as a cudgel against Vice President Al Gore, whose techie credentials are being tarnished and election prospects jeopardized by what critics see as his benign neglect of the problem.

. . . . For many, however, the millennium bug still represents little more than an annoying speed bump on the information superhighway. "If year 2000 teaches anything, it is that there is an information-technology infrastructure in this country, just like we have an infrastructure of roads, and from time to time they have to be repaved," says Kathleen Adams, point person on Y2K matters for the Social Security Administration, or SSA, which has won nearly universal kudos for recognizing the problem early on (in 1989, in fact) and moving decisively to overhaul its systems. And some early tests of Y2K fixes have been reassuring -- at SSA, on Wall Street, by the Federal Reserve System and at New Mexico's White Sands Missile Range, where the Pentagon ran a large-scale millennium simulation testing radars, computer networks, even a plane in flight, with apparent success.

. . . . Far less comforting, however, are criticisms recently coming from the National Air Traffic Controllers Association that the Federal Aviation Administration's Y2K upgrades are "an administrative gesture" at best. "The contingency plans put forth are convoluted and vague in an air-traffic operational sense and are nearly worthless," the union asserted. Recently, FAA reported to Congress that two-thirds of its computers were upgraded and it would be up to speed by July of next year, leaving it "ample" time for testing. The General Accounting Office, however, said the FAA's assessments were based on "very optimistic schedules that may not prove to be realistic."

. . . . When otherwise reasonable people begin sounding and acting like survivalists -- Utah Sen. Robert Bennett, a Republican, warning of impending power-grid failures; Wired magazine reporting that many computer programmers are acquiring remote hideaways, stocking up on canned goods and arming themselves; respected market analysts such as Edward Yardeni, chief economist with the investment firm Deutsche Morgan Grenfell, placing the chance of a global recession at 70 percent; and the Federal Reserve System printing extra paper money, in case a few hundred million Americans show up at their local banks wanting to make large cash withdrawals -- it's hard not to wonder if, this time, maybe the Chicken Littles are right.

. . . . Even John Koskinen, appointed this spring to head the president's Council on the Year 2000 Conversion, while demonstrating the required can-do spirit, has acknowledged that his job might turn out to be "one of the world's great bag-holder positions," one which only a "masochist" would tackle. "Virtually all" of the government's "mission-critical" computer systems will be Y2K compliant by March 31, 1999, Koskinen has said, but many agencies (including the departments of Defense, Energy, Transportation and Health and Human Services) are lagging far behind others in meeting millennium-bug mileposts.

. . . . Although the Pentagon, with its 28,000 computer systems (10 percent of which it considers mission critical), may be facing the most daunting remediation challenge, Deputy Defense Secretary John Hamre recently took steps to reassure the public that national security -- and public safety -- were not at risk. He said especially intensive testing was being conducted on 76 computer systems involved in command and control of nuclear weapons.

. . . . Somewhat less sanguine about the pace of federal remediation efforts, however, is Rep. Steve Horn, a Republican from California, who earlier this year gave the government a failing grade on its Y2K efforts and spent a good portion of the August recess holding regional hearings on the issue. Based on the testimony he heard, Horn believes that the banking and finance industries are well ahead of government in finding solutions. "I don't think we have to worry about a run on the banks," Horn told Insight after a hearing in New York which left him "pretty optimistic."

. . . . Although the White House's Koskinen is candid in acknowledging that certain failures are bound to occur, and upon his appointment warned that "this really could be a serious problem for the government and world economy," just how serious a problem it might be remains to be assessed. "There's not enough information right now to indicate that stocking up on Coleman stoves and Sterno is an appropriate response," he recently told Wired. In fact, "a lot of people won't notice" the millennium bug, Koskinen said.

. . . . Aside from appointing Koskinen, President Clinton has made but one major speech on the subject, addressing the National Academy of Sciences in Washington. He did propose "Year 2000 Good Samaritan Legislation," which would allow industries to share Y2K information with each other without fear of inviting certain types of lawsuits -- not a proposal well received by trial lawyers. Clinton also announced the establishment of a Y2K World Wide Web site and contributed $12 million to bankroll a World Bank effort to get developing countries on the stick.

. . . . But the president's response to the problem has been far too little, some experts say, and already may be too late to avert a crisis whose tremors are being felt in a jittery stock market and among businesses, many of whom already are experiencing system failures in computer programs that look forward in time. In the meantime, state governments are forging ahead with remediation efforts of their own, and grass-roots Y2K response groups are springing up, many spontaneously, as prudent communities begin to make their own contingency plans.

. . . . "We're confident that all of our systems are going to be ready to go," says Department of Treasury Chief Information Officer Jim Flyzik, who tells Insight that roughly 60 percent of Treasury's mission-critical systems have been fixed. "We've already tested with Social Security the ability to produce checks beyond the year 2000. The department will have a stockpile of checks on hand," Flyzik said.

. . . . Printing orders for cash recently placed by Federal Reserve System banks are 20 percent higher for 1999 than they were for 1998, according to one Fed official with whom Insight spoke, just in case demand exceeds the usual four-month supply of paper money the central bank normally keeps on hand. Tests that began in July between the Fed and the 12,000 financial institutions connected with it have gone "very good so far," the official says. But bank regulators are hoping to guard against a possible run on banks by closely continuing to monitor industry remediation efforts and pressing banks to share more specific information with their customers about their Y2K activities and progress.

. . . . "Nature abhors a vacuum, but doomsayers thrive in one," says the Fed official, who along with many experts with whom Insight spoke believes that addressing the issue honestly, often and soon offers the best assurance that as the 11th hour approaches most Americans will keep their heads, even if some among them are losing theirs and blaming it on others.