Senate Banking, Housing and Urban Affairs Committee

Field Hearing
The Implications of the Year 2000 Computer Problem

INTRODUCTION

My name is Ed Deak, and I am Professor of Economics as well as Chair of the Economics Department at Fairfield University. I would like to thank Senators Alfonse D'Amato and Christopher Dodd for offering me the opportunity to share my thoughts on what might be some of the potential economic impacts resulting from "Century Date Change" or "Y2K" problem. I would like to note for the record that my views are strictly my own and may or may not be shared by my employer, Fairfield University, or any other group or agency with which I may be associated.

Let me state clearly and unambiguously from the outset that no one knows the true extent of the economic costs and benefits that will be associated with the century date change effort! It is a global information technology problem. The actions that are taken or not taken between now and the year 2000, along with the renovation choices that are made will profoundly affect the final Y2K bill. A few well informed and credible professionals have undertaken the task of trying to bracket the dollar size of the problem. In every case they have fully acknowledged that their estimates include a high margin for error and are based upon very simple as well as heroic assumptions. What I have tried to do is to collect their estimates and extrapolate what economic impact information might be available for Connecticut and New England. As such, I caution you to aware the high error margins and heroic assumptions required for the following estimates.

My plan is to divide my discussion today into two tasks. The first is to present a macroeconomic assessment of the possible State, regional and Federal costs of correcting for the Y2K problem. Many of these costs will be incurred before January 1, 2000. But there is a high probability that significant expenditures on litigation, error retrieval, and the repair of failed computer systems will continue up to and possibly beyond 2005. The second task is to cautiously outline what might be the macroeconomic or business cycle impacts on the Connecticut and national economies. This data depends to a large extent on the macroeconomic research of other experts, and the condition of the U.S. and global economies as we turn the calendar on 1/1/2000. If at that time we are experiencing a continuation of the present expansion, the affects will be different and potentially less severe than if we are experiencing a recession brought about by other forces.

THE ORIGIN OF THE Y2K PROBLEM

I have with me a Hollerith card that is the departure point for the current problem. In the early days of mechanical and later electronic tabulation and analysis these cards contained the tabulation programs and raw data. They are 80 characters wide, severely limiting the amount of information that can be stored on a single card. Many shortcuts were employed to economize on the use of card space including the truncation of annual dates to the last two digits. As program and data storage moved from the card to magnetic tape and disks old habits died hard. I remember writing programs in the computer languages of Basic, PL-I, APL, Cobal, and Fortran using truncated dates. In fact economy of instructions was a hallmark of good programming. And even if anyone thought of truncated dates as a potential problem, who would expect that programs written for computer systems in the 1970's and 1980's would still be in use today. Well they are!

Today, with computer memory so cheap, and programmer labor costs so high, the focus is on getting the job done quickly and correctly regardless of the logic flow. But again old habits die hard, and truncated year references remained common well into the 1990's. But as the date on the calendar turns to 1/1/2000 the problem will begin to appear. If I enter my birth date as 3/17/43 and today's date of 2/17/98, the computer will subtract the former from the latter and tell me that I am 54 years old with a birthday due in one month on St. Patrick's day 3/17/98. But if I ask the computer to tell me how old I will be on 2/17 in the year 2000, it can't supply the right answer. It subtracts 3/17/43 from 2/17/00 and tells me that I am - 43 years of age if it tells me anything at all. Worse still, if this date is used in another file, the result will be either an output using and supplying corrupted data, or the shut down of the computer because of a logical inconsistency. All computer systems including mainframes, minicomputers, desktops and laptops face this date problem. It appears in software, data input routines, and in the binary O's and I's of machine language, Only the most recent programs and computer systems may be exempt. Hence the essential need to go back into the information technology systems to identify and correct for every instance of truncated date entry.

THE MICROECONOMIC COSTS OF CORRECTING FOR Y2K

The process of correcting the Y2K problem has a number of labor intensive phases including- awareness, assessment, renovation, validation/testing, and implementation. There are a few reliable estimates of the potential global cost of correcting for Y2K. They range from an admittedly conservative 1996 estimate by J.P. Morgan Securities of $200 billion to the $600 billion figure offered by the Gartner Group of Stamford CT. ⁽¹⁾ Given that billions of lines of software and machine language code must be scanned or viewed worldwide, and the fact that contract repair service costs appear to be rising at 20-50% per year as we approach 2000, the $600 billion estimate seems credible and is frequently cited in the Y2K literature.⁽²⁾

The $600 billion figure is based upon an estimate of the cost of correcting and testing each line of code (LOC) of approximately $.50 -$1.1O, plus added costs for management and other expenses. Most sources agree that 50% or more of the cost will be borne in the testing stage after renovation. I have contacted a number of firms to try and confirm this cost estimate. None that I talked to would speak for the record. They are all deeply concerned about potential litigation and liability claims. However, their unofficial estimates were in the $.50 -.60 per LOC cost range. Be aware that these firms started renovation early, were heavy Cobal users, and successfully used automated search engines to identify and adjust a portion of their code. Each of these characteristics lowers the correction cost.

A second highly sophisticated and credible estimate has been provided by Capers Jones, Chairman of Software Productivity Research in Burlington, MA. ⁽³⁾ He employs a costing technique using estimates of "function points" within individual software applications. His estimate for the global cost of Y2K repair is $530 billion in dollars of 1996 purchasing power. ⁽⁴⁾ However, initial repairs and testing are not the only cost elements. To this must be added the costs of-, fixing bad software repairs, data base repairs, hardware replacements and upgrades, and the potential costs of litigation and damages. These added charges bring the global Y2K cost up to $1.635 trillion, making it the most expensive single problem in human history. ⁽⁵⁾ The Jones estimate is consistent with the Gartner Group total when potential litigation costs of $400-900 billion are added to the $600 billion estimate for renovation.

U.S., State, and New England regional costs - The research by Capers Jones is summarized in Table 1. It provides some detailed estimates of what the cost might be to resolve the Y2K problem in the U.S. His total for software repairs for all U.S. sectors equals $70.7 to $75.3 billion. ⁽⁶⁾ The industries with the highest expected repair costs include; Military $14.3 billion, Financial services $4.95 billion, Manufacturing $4.67 billion, Communications $4.2 billion, Services $4.44 billion, insurance $4.1 billion, and wholesale distribution $3.8 billion. The total appears reasonable given a GAO estimate of $20-30 billion for the Federal share of repair Costs. ⁽⁷⁾ However, when bad fix and data base repairs along with hardware replacements and upgrades are added in, the total climbs to $177 billion. If estimated litigation and damages charges of $100 billion are included, the total cost of U.S. Y2K expenses rises to $277 billion in 1996 dollars. Inflation affects would drive this figure still higher.

Mr. Jones disaggregates the total U.S. repair cost of $70-75 billion by state. ⁽⁸⁾ He estimates that the work effort for all entities in Connecticut will require 126,664 programmer months with an estimated average monthly charge of $8,500 per programmer. This yields a cost for repairing the Y2K problem in our State of $1.09 billion. Again this estimate appears plausible given that the State government alone is expecting to spend upwards of $135 million for its share of the effort. Also, Connecticut has a high concentration of insurance and financial services firms that will be big volume users of Y2K repair services. For all of the six New England states, the regional total would approach $4.48 billion. This regional total is comparable to a $6.04 billion estimate for New York State. Again, these figures can grow by a factor of approximately four times when other repairs, hardware, and litigation charges are added in.

Weighing the macroeconomic costs and benefits - Not all of these expenditures represent lost dollars. First, it is apparent that some firms are accelerating the pace of equipment purchases as an alternative to repairing older legacy systems. This adds more efficient equipment, potentially boosting productivity. My contacts indicate that this is their choice for approximately IO% of the equipment and software. However, the replacement option becomes more limited for large systems as we approach the 2000 date. Second, as firms undertake renovation, they will become more familiar with the extent of their software inventory. This will leave them "in a very strong position to plan new applications and align their software and data assets with their business strategies." ⁽⁹⁾

On the cost side, a large share of the renovation spending is expected come from existing information technology (IT) budgets. If the $600 billion global cost is realized, then as much as 60% of that will have to be financed by internal transfers, leaving 40% covered by incremental spending. ⁽¹⁰⁾ This will result in other IT projects being delayed or canceled entirely. Again my contacts tend to confirm this trend, with some buyers and software vendors indicating a slowing of orders for new applications as orders for renovation tools increase. Consequently, one of the lasting costs of Y2K renovation may be the existence of a smaller capital and software base as firms enter into 2000. Depending upon the magnitude of this deficit, it could have adverse affects on U.S. productivity and economic growth in the early years of the 21st century.

The current status of the Y2K renovation effort - Most experts agree that government agencies and private industry have been slow to understand and react to the Y2K problem. This is particularly injurious because the dollar cost, time, and the amount of available resources are the true limits on renovation not the difficulty of the specific solutions. The scope and complexity of the problem are immense. But given enough time, money and resources the fixes can be made, tested and implemented. Insurance companies and banking institutions are the farthest along in renovation with the latter being overseen by the Federal Reserve. ⁽¹¹⁾ The expectation is that both of these industries along with most financial services firms will be ready to handle the date change.

But what about the readiness of government agencies, foreign banks, domestic and foreign manufacturing or transportation firms, and businesses in the service sector. We live in a highly interconnected global economy. Will all Parts of the economic food chain be ready together? The answer is clearly no. On March 15, 1998, the Office of Management and Budget (OMB) is scheduled to release its quarterly report on Federal progress towards renovating the Y2K problem. The expectation is that several key agencies including the Social Security Administration, the Internal Revenue Service, and the Federal Aviation Administration will have affected only a fraction of the necessary changes and may miss the 2000 deadline. ⁽¹²⁾ The Government Accounting Office estimates that "only 25% of state and local governments will be ready by 2000" ⁽¹³⁾. Many large manufacturing firms have begun to address the problem. But with hundreds of millions of lines of code to review, and time growing short there is a strong probability that most small and medium sized firms will see some of their systems miss the target date. ⁽¹⁴⁾

For Y2K renovation experts, the key words today are "mission-critical systems", "triage", and "contingency planning". Firms are practicing information system triage by focusing their Y2K dollars on a priority basis looking at mission-critical systems that must be fixed first. Systems that deal with safety, payments flow, public infrastructure service delivery, customer support, record keeping, and order processing are getting first attention. If these fail, the firm or agency will not be able to carry out its primary function. Given the starting date and the size of the renovation task, some secondary systems including end-user macros stored on PC hard drives are likely to fail. In anticipation of these disruptions, the firm or agency must devise a contingency plan to deliver services temporarily after 1/1/2000 until the cause of the failure can be identified and corrected. Today, firms have adopted lean manufacturing with "just-in-time" inventory delivery. Therefore, while General Motors may be ready for 2000, its parts suppliers might not. This could cause almost as many headaches for GM as a Y2K based failure of its own computer systems.

Also there is the Y2K problem related to imbedded chips. These are logic chips that keep track of or display time and dates in appliances, heating and air conditioning systems, vaults and door locks, office machines, elevators, medical equipment, etc. They are part of the system, operate without lines of code, and may go undetected by the Y2K review process. They will only be noticed if and when they fail. In my contact with various IT renovation teams, I raised the issue of imbedded chips. None of them had included these chips on their renovation work schedules.

Lastly, Y2K is a global not just an American problem. How well are governments, businesses, and financial services firms on other continents dealing with the renovation task? Not very well according to most assessments. ⁽¹⁵⁾The U.K. is ahead of other Western European nations in dealing with Y2K, but "50 per cent of companies have not yet acted on the problem." ⁽¹⁶⁾ Ian Taylor, the former UK science minister, warns that "Unilever has estimated that up to a fifth of its smaller suppliers may not meet the compliance requirements in time and are therefore likely to lose their business with the group." ⁽¹⁷⁾

Other nations in Western Europe are already spending sums in excess of $100 billion to allow the conversion of domestic currency transactions into the new euro as of January 1, 1999. But "given the demanding schedule for Year 2000 compliance and the overlap resources necessary for both projects, we (J.P. Morgan Securities) believe that successful completion of both projects is unlikely." ⁽¹⁸⁾ To complete the European assessment, my research has not revealed any available information about the Y2K renovation status for nations in Eastern Europe or the members of the former Soviet Union. This is particularly troublesome given the heavy concentration of aging computer based military weapons systems in some of these countries.

The reports from Japan are only mildly more encouraging. Internal transactions frequently employ a dating system based upon the year of the reign of the current emperor and are exempt from the problem. ⁽¹⁹⁾ Firms with external contacts such as those in banking or travel are on their way towards dealing with Y2K. But as of mid-1997 a survey by the Ministry of International Trade and Industry revealed that 19% of firms had not started to act on Y2K, and 25% said the issue was under investigation or that they were working on it.

The inescapable conclusions from this brief status survey are that some computer systems will not be made year 2000 compliant, and that the failures will be distributed globally. One interesting observation is that the year 2000 does not start at the same time worldwide. It arrives in Tokyo, Beijing and Moscow before appealing in Frankfurt, London and New York. I suspect that there will be some anxious government officials and IT professionals watching attentively as the turn of the year 2000 computer calendar works its way westward from the international dateline.

THE MACROECONOMIC COSTS OF THE Y2K PROBLEM

The expenditure of renovation dollars, the risk of a computer capital deficit, and the potential net loss of some productivity may not be the only potential consequences of the Y2K problem. Another possible cost is that a significant global IT failure may cause a worldwide slowdown in economic growth. If the task of estimating macroeconomic Y2K conversion costs involved heroic assumptions and a high error margin, then the macroeconomic task of anticipating the size and cost of a global slowdown borders on speculation. Some highly imaginative scenarios are available. ⁽²⁰⁾ And the respected IT professional Ed Yourdon has discussed the possibility that Y2K failures may "trigger a depression on the scale of the Great Depression in the U.S. during the 1930's" ⁽²¹⁾

It is my view that Dr. Edward Yardeni, Chief Economist at Deutsche Morgan Grenfell, has offered the most credible opinion. It is credible both because of the financial market and business cycle background of Dr. Yardeni, and the volume of information that he has amassed in support of his contentions. Dr. Yardeni believes "that there is a 40% chance of a global recession during 2000 as severe as the 1973-74 downturn". ⁽²²⁾ He anticipates that the downturn could last upwards of one year, and further contends that these recession odds will most likely rise to 60% after the next OMB Federal progress update on March 15, 1998. Dr. Yardeni has collected, organized, and interpreted an impressive amount of Y2K information at his web site: www.yardeni.com. He has also spoken before this Senate Committee, sharing both his accumulated information and some suggestions for dealing with the Y2K issue. ⁽²³⁾

While it is impossible to verify or deny both the probability and magnitude of Dr. Yardeni's assertion, it is the most complete assessment in the professional community. Therefore, I adopt it, with considerable caution, as a departure point for discussing the potential business cycle impacts from possible Y2K computer system failures. My plan is as follows; first to review the magnitude of the recession in 1973-74, second to apply a similar range of decline to economic conditions as they exist currently, and third to look at the assumptions that would have to prevail if a decline of this magnitude were to occur.

Magnitude of the 1973-75 and Y2K downturns in the U.S. - The downturn of 1973-75 was triggered by the global cutback in OPEC oil supplies and aggravated in the U.S. and Connecticut by the drop in post-Vietnam military production. Real chain weighted U.S. Gross Domestic Product (RGDP$92) fell by -0.64% in 1974 and by another -0.44% in 1975. Together, RGDP$92 fell from an annual average of $3,916.3 trillion in 1973 to 3,873.9 trillion in 1975 for a total loss of $42.4 billion or 1.08%. ⁽²⁴⁾ On a seasonally adjusted quarterly basis, the high for RGDP$92 was $3,947.1 trillion in 1973:4, dropping to a cyclical low of $3,800.9 trillion in 1995: 1. Calculated this way the recession caused a peak to trough loss in RGDP$92 of $146.2 billion or -3.7%. The U. S. unemployment rate rose from a low of 4.6% in October 1973 to a peak of 9.0% in May 1975. Lastly, Total Nonagricultural Employment fell from a peak of 78.569 million in October 1974 to a cyclical low of 76.298 million in May 1975. The total drop was -2.271 million jobs, or a -2.89%. These numbers and all subsequent calculations are summarized in Table 2 at the end of this testimony.

If these same percentages are applied to RGDP$92 for 1997-98, and 1997:4 to 1998:4, the losses become -$78.4 billion on an annual basis, and -$269.7 billion peak to trough. Data for 1997-98 are used only for illustrative purposes to generate a contemporary order of magnitude estimate. Actual figures for 2000 would depend upon the phase of the business cycle and the size of real GDP at that time. The unemployment rate would rise from 4.7% today to a high of 9.2% at the bottom of the recession. Correspondingly, the number of jobs would decline by -3.7 million positions peak to trough.

Magnitude of the 1973-75 and Y2K downturns in Connecticut - Connecticut's reaction to the 1973-75 downturn was probably aggravated by two circumstances beyond the affect of a general rise in oil prices. First, the coincidental drop in post-Vietnam military spending targeted the State with its heavy investment in industries producing sophisticated weapons systems. Second, Connecticut was more dependent upon fuel oil for heating, electricity generation, and industrial power than other states. Therefore rising oil prices could be counted upon to convey a disproportionately heavier economic burden upon the State. In addition, any Y2K State impact assessment should take into account the fact that Connecticut is home to numerous financial service and insurance firms. This may help to lessen the possible impact of a Y2K recession in Connecticut given that these two industries are among the leaders in Y2K renovation efforts. However, the advantage might be offset by the possibility of external failures in the payments system being introduced at either the Federal or international levels.

With these three mitigating points in mind, the Connecticut unemployment rate rose from a low of 5.8% in November 1973 to a peak of 10.3% in September 1975. This is shown in Table 3. Nonagricultural employment fell from a cyclical peak of 1.269 million in August 1974 to a recession low of 1.217 million in June 1975. The difference was -51.9 million positions, or -4.09% of the jobs at the cyclical peak.

If these same percentage changes are applied to the levels of employment and unemployment that existed as of December 1997, the results would be as follows. First, the unemployment rate would rise from 4.4% to 7.81%. And second, the level of employment would fall from 1.633 million jobs to 1,566 million jobs. This is a potential peak to trough job loss due to a Y2K induced recession of -66,800 positions.

Magnitude of 1973-75 and Y2K downturns in New England - Data for the New England economy is dominated by the State of Massachusetts that accounts for approximately 1/2 of the regions total employment. Given that the share of information technology employment in Massachusetts, Southern New Hampshire and Connecticut exceeds the national average, both the potential exposure to Y2K failures and the available skills to repair the problem are greater. My guess is that this would work in favor of the region getting the majority of its Y2K problems behind it before the calendar turned. This would lessen the magnitude of a Y2K cyclical downturn in the region. In fact a Y2K global recession might be expected to create jobs in the region's software and computer industries both before and after 1/1/2000. Nevertheless, applying the same percentages as calculated above could raise the regional unemployment rate from 4.2% to 7.8% and cut some 287,100 jobs from the employment base.

Necessary conditions for a Y2K based recession - The above economic scenarios represent order of magnitude assessments with a very high margin for error. The actual probability and magnitude of a Y2K recession are indeterminate. However, again the information from the IT professionals indicates that the probability of either slower growth or a recession must be assigned a value greater than zero. First, there would have to be pervasive and persistent mission-critical failures at the governmental level. Examples would include the IRS being unable to collect tax revenues, the Social Security Administration unable to deliver a significant amount of pension checks, and the Federal Aviation Administration unable to guarantee the safety of commercial passenger and cargo flights. These would have to be computer system failures that could not be corrected by massive diversion of programming effort to identify and fix the source of the problems. I can tell you from my limited contacts that private firms are concern about the likelihood of these kinds of failures.

Second, there would have to be major failures in the infrastructure system delivering essential services. Examples here include electric power outages, disruptions in the flow of natural gas, oil, water, and product distribution services. I would guess that if these problems do occur that they might be handled on a case by case basis with the infusion of targeted programming resources. Any disruptions here would appear to be burdensome, but short term and correctable with some catch up of lost business after repairs are made.

Third, there would have to be a significant number of failures along the economic food chain from small to medium to large scale producers of goods and services. Here the Capers Jones report provides some chilling thoughts. He sees the greatest vulnerability to century date change failures among the mid-sized firms with 1000-10,000 employees. They rely a great deal on computer systems and software, and have the least internal ability to maintain the information technology. W. Jones anticipates a 5-7% failure rate among these firms and offers the following observation:

There are about 30,000 companies in the "mid sized" range in the United States, and a 5% to 7% business failure rate would mean that from 1500 to perhaps 2100 companies might close or file for bankruptcy as a result of a year 2000 problem. This is a significant number and it is an open question as to whether the impact of the year 2000 problem is severe enough to trigger a recession. ⁽²⁵⁾

He further estimates a 1% chance of failure among Fortune 500 class firms and a 3% failure rate for small firms with less than 100 employees. ⁽²⁶⁾ Earlier I noted the observation made by Unilever regarding a 20% failure rate for its smaller suppliers. And there is the comment made by Midland Bank of the U.K. that one-in-five companies may not survive the Y2K problem. ⁽²⁷⁾ There is also the possibility that in reaction to faulty logic commands, computers will produce corrupted data, or loose some data entirely. Sorting out these errors and correcting for them will take time and money.

Taken as a whole, the above comments begin to raise the recession probability above zero. However, all is not lost. As firms fail, new distribution channels and suppliers will emerge. Some of the losses in early months may be made up and something resembling normal product flow reestablished fairly quickly. As new suppliers are found, their output will expand helping to absorb the workers displaced from the failing firms. The real questions are how big the disruptions will be and how long will this adjustment process take.

Fourth, there would have to be a breakdown in global trade and payments flows. I have already commented upon the pressures in Western Europe on available IT resources as members of the Economic Union strive to meet both the demand of euro conversion and the repair requirements of Y2K. Shifting attention to the current financial meltdown in Asia, the situation there does not create a lot of confidence that Asian banks and manufacturers will be fully Y2K compliant. Many of these firms are trying to survive to 2000 let alone worrying about the technical performance of their computer systems.

SUMMARY AND CONCLUSIONS

Senators, as much as I was able, I have tried to provide you with an estimate of the potential macroeconomic and macroeconomic Y2K problem costs. I do not want to be regarded as an alarmist, but rather someone who has responded to a very difficult and open ended question about potential economic impacts. In no way am I predicting the likelihood of a Y2K based recession. However, the scope of the problem is broad and complex with global interconnections. It will require nontrivial dollar costs to repair, and will almost assuredly result in a slower macro growth rate with or without the onset of a recession. While no one knows for sure either the size or the extent of these costs, there is no escaping the Y2K problem. And the costs will be bigger depending upon the degree of public ignorance, apathy and delay. To the extent that your hearing today alerts the public to the potential magnitude of this problem, you are better preparing them for the tasks and challenges that lie ahead.

Thank you for your attention.

Source: Capers Jones, "The Global Economic Impact of the Year 2000 Software Problem", Version 5.2, January 23, 1997, Software Productivity Research, Inc., Burlington, MA., www.spr.com

Source: U.S. Dept of Commerce, Bureau of Economic Analysis, www.bea.doc.gov

Source: U.S. Dept of Commerce, Bureau of Economic Analysis, www.bea.doc.gov

ENDNOTES

^1. J.P. Morgan Securities, Inc., "The Year 2000 Problem: It's Worse Than We Thought", May 15, 1997, www.ipmorgan.com.

^2. "The Year 2000 Countdown", PC Magazine on Line, 9/29/97, p. 1, www.zdnet.com.

^3. Capers Jones, "The Global Economic Impact of the Year 2000 Software Problem", Version 5.2, January 23, 1997, www.spr.com.

^4. Ibid., p.57.

^5. Ibid., p.58.

^6. Ibid., p.26, p.36.

^7. See "The Year 2000 Problem: It's Worse Than We Thought, op. cit., p.7.

^8. See "Global Economic Impact....", op. cit., pp.35-36.

^9. Ibid, p.10.

^10. See "The Year 2000 problem....", op. cit.. , pp.8 -10.

^11."The Clock is Ticking: Are Financial Institutions Prepared for the Turn of the Century?", Federal Reserve Bank of Dallas, Fourth Quarter 1997.

^12. Edward Yardeni. "Y2K, Tabloid Economics and Prozac". Deutsche Morgan Grenfell The Y2K Reporter, January 5, 1998, www.yardeni.com..

^13. See "The Year 2000 Problem......" op. cit., p.7.

"Year 2000 Scoreboard", Computerworld, September 18. 1996, www2.computerworld.com.

^15. See "The Year 2000 Problem...... " op. cit. p.8.

^16. "This could be the year of panic", The Financial Times, February 4, 1998, p. 1, www.ft.com.

^17. Ibid, p.2-3.

^18. See "The Year 2000 Problem......."op. cit., Appendix IX.

^19. "Japan: Double trouble date", The Financial Times, January 21, 1998, www.ft.com.

^20. "Community Impact of the Year 2000 Problem", www.erols.com/steve451/economy.htm

^21. "The Personal Consequences of the Year 2000", The Yourdon Report, Vol 1. No.4, June 1997, p.2. www.cutter.com

^22. See "Y2K, Tabloid Economics & Prozac", op. cit., p.1.

^23. See Dr. Edward Yardeni Prepared Testimony, Hearing on Mandating Year-2000 Disclosures for Publicly-Traded Companies, Senate Banking, Housing and Urban Affairs Committee, Subcommittee on Financial Services and Technology, November 4, 1997, this is located on the U.S. Senate Banking Committee website at www.senate.gov/~banking/97_11hrg/110497/witness/yardeni.htm

^24. These figures are derived from Federal Bureau of Economic Analysis NIPA Data available at www.bea.doc.gov

^25. See "The Global Economic Impact......", op.cit., p.42.

^26. Ibid. p.41.

^27. See "This could be the year of panic", op.cit., p.1-2

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