What do we really have to fear from the turn of the millennium?
by Tasha Vincent
It's important to understand that planes aren't going to fall from the sky. The elevators aren't going to the basement and the pacemakers aren't going to stop.
—John Koskinen, chair of President Clinton's Council on Year 2000 Conversion
Not a day goes by without some news about the turn of the century and its effects on computers. Those systems designed without the capacity to handle four-digit years will be mighty confused come January 1, 2000, and may think it's January 1, 1900.
Now that computer chips are embedded in everything from global positioning satellites to toasters, there are lots of computers to check up on. But which systems are actually in danger of failing, and with what probable results?
The Good News
Fears about travel, particularly within the U.S., seem to be largely overblown. There is no evidence that computer chips inside your car or truck will fail as a result of the change, because the items they control are not date-dependent.
Similarly, air traffic control computers in the U.S. are on track to be Y2K compliant in plenty of time. The FAA reports that a recent test of the systems in Denver went off without a hitch. The test involved resetting the date to New Year's Eve on FAA computers then using the system to bring a plane in for a landing.
Phones will work. The Federal Communications Commission has determined that the large firms, which serve the vast majority of Americans, will suffer few if any ill effects.
Banks are also leading the way in converting their systems to prepare for the year 2000, having undergone a similar drill to prepare for the introduction of the euro earlier this year. Consolidation in the financial sector means that the number of firms that need to address the problem is relatively small, and many are based in the U.S. The bottom line: there should be no reason to worry about bank accounts or mutual funds held by large firms.
Industry and government officials predict that fuel (such as heating oil, natural gas, diesel fuel, and gasoline) will be available after the new year. Though production of new oil may be interrupted, the interruption is expected to be brief, and vast stores of supplies already housed within the U.S. make shortages extremely unlikely.
Even during the Gulf War, the U.S. government's Strategic Petroleum Reserve (SPR) released less than one-quarter of one day's worth of oil to the market because supplies were sufficient without it. The price hikes experienced in the U.S. were caused by speculation, not actual shortages.
We have Nothing to Fear But...
The most significant problems posed by the millennium bug may result from panic. People who fear that they will be unable to buy food, fuel, or other commodities may hoard supplies before the end of the year. Though there might not otherwise be any problem with supply chains, the removal of large quantities of goods from stores by panicked people may create shortages.
Similarly, logical and reasoned actions taken by individuals can incite panic when expanded to a large scale. Imagine if, purely as a precaution, everyone liquidates 20% of his or her stock holdings and withdraws an extra $500 or $1,000 from the bank on New Year's Eve.
With everyone trying to sell stocks, even just a portion of their holdings, the market will drop precipitously, encouraging still more people to sell, and probably in greater quantities. If ATMs run short of cash, word may spread that there is no money, which again would cause panic. The Treasury department is preparing to avert just such a crisis by having $50 billion in extra cash to be ready to meet any increase in demand.