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Y2KAOS: Why The Year 2000 Millennium Bug Will Bite HARD!

February 13, 1998

"We are all competing right now in a race against time to avert an impending computer catastrophe." - Con. Connie Morella (D-MD) Speech at 1997 Y2K Symposium

"A global financial crash, nuclear meltdowns, hospital life-support system shut downs, a collapse of the air-traffic system are possible without proper attention now." - NY Times, feature article 4/2/97

On October 7, 1997 I went to bed around 10 PM as usual. I watched the news, then Nightline with Ted Koppel, but still I could not sleep. I had a heavy burden to share with you, our Swiss America family, that just couldn't wait any longer. I found myself glued to my computer until 4:45 AM writing you this letter. My urgency is based upon building evidence regarding the Year 2000 computer crisis ("Y2K" for short). I'll briefly summarize the Y2K problem because you probably haven't heard much, or have ignored the coverage so far, as I have.

A $Trillion "Millennium Bug" Is Born ...

Over three decades ago, computer programmers who wrote mainframe computer software saved computer disk space by designing year codes as two-digit entries: "67" instead of a four digit code, "1967." All this hoopla is over two tiny digits—deeply embedded into millions of computers worldwide that may bring modern culture to its knees, starting next year. The problem originated with the idea of saving disk space, which seemed like a wise decision because of the high cost of memory and physical space requirements. Now experts are in agreement that this may prove to be the most expensive and potentially chaotic forecasting error since Noah's flood.

Computers only do what they are programmed to do. They have been programmed to recognize "2000" as "1900" (uncorrected PC architecture DOS Windows-based desktop computers will revert back to 1980 or 1984). They can be corrected, but once you turn the machine off the correction dies. It will reboot to "1980" or "1984" as a default. PC programs must be redesigned.

What programmers have ignored for three decades is that the year 2000 two-digit code of "00" will disrupt everything. So, at midnight, January 1, 2000, most computers will produce incorrect results whenever "date arithmetic" is carried out. Every computer using unrevised software will die. If old acquaintances are in the computer, they will indeed be forgotten.

Programmers who recognized the implications of this problem did not care. They assumed that their software would be updated by the year 2000. That assumption now threatens every piece of custom software on every mainframe computer around the world, unless they have rewritten the code. In some cases, this involves coordinating half a million lines of code. That means that AT&T's whole system could be shut down because of a one-digit error, the same way America OnLine was shut down.

The "Millennium Bug," or "Bomb" is unsolveable, according to the experts. There just is not enough time left. Nevertheless, a brave attempt to minimize the damage is now getting under way both in the private sector and on the federal government level. Sadly, a recent poll uncovered that only one in six Fortune 500 companies are presently "year 2000 compliant." This is troubling indeed because this time bomb cannot be fully disarmed—at any price—and don't count on a "silver bullet" either.

Last summer, Newsweek (6/2/97) carried a cover story entitled, "The Day the World Shut Down: Can We Fix the 2000 Computer Bug Before It's Too Late?" which issued a sobering warning about the Y2K crisis:

"Drink deep from your champagne glass as the ball drops in Times Square to usher in the year 2000. Whether you imbibe or not, the hangover may begin immediately. The power may go out. Or the credit card you pull out to pay for dinner may no longer be valid. If you try an ATM to get cash, that may not work, either. Or the elevator that took you up to the party ball room may be stuck on the ground floor. Or the parking garage you drove into earlier in the evening may charge you more than your yearly salary. Or your car might not start. Or the traffic lights might be on the blink. Or, when you get home, the phones may not work. The mail may show up, but magazine subscriptions will have stopped, your government check may not arrive, your insurance policies may have expired."

"Or you may be out of a job. When you show up for work , after the holiday, the factory or office building might be locked up, with a handwritten sign taped to the wall: OUT OF BUSINESS DUE TO COMPUTER ERROR."

"Could it really happen? Could the most anticipated New Year's Eve party in our lifetime really usher in a digital nightmare when our wired-up-the-wazoo civilization grinds to a halt? Incredibly, according to computer experts, corporate information officers, congressional leaders and basically anyone who's given the matter a fair hearing, the answer is yes, yes, 2,000 times yes! Yes, unless we successfully complete the most ambitious and costly technology project in history, one where the payoff comes in securing raw survival."

The Millennium Bug, by Michael S. Hyatt (Regnery Press, 275pp, 3/98 release date) is one of dozens of new books on the subject that you will soon see. This book is an excellent general primer because Hyatt tells it like it is and uses tons of footnotes. For example in Chapter One, "Pennywise and Pound Foolish" he states, "Unless the Millennium Bug is tracked down and squashed, you, your family, your friends, and your friends' friends are at risk. Many of the things you have learned to depend on and take for granted, could suddenly disappear, leaving you for all practical purposes, in the year 1900. The difference, of course, is that if you were suddenly transported back to the beginning of the 20th century, people would know how to cope with life without the aid of computers. In our high-tech, computer-permeated society, few do."

In Chapter Five, "Hot Checks and Cold Bankers" Mike cuts to the chase, "We are well on our way to becoming the umpteenth society to have destroyed its [fiat] money, and it is this which gives Y2K its power. Without it, Y2K would simply be a nuisance."

According to Jim Lord, author of The Y2K Survival Guide, "Y2K is not a technical problem, it's a management problem of monumental size and complexity. I liken it to knowing when a river will flood your town, but not being able to convince anyone to start stacking the one million sandbags needed to handle the flood waters. The frustration is in knowing that if everyone would immediately address this problem, the damage could be greatly contained. Instead, we are in deeper trouble everyday that nothing is done. If we fall into a state of emergency it will take years and years to fully recover. I suggest that you reread Executive Order #11490 which gives president Bill Clinton as much power as any dictator to control transportation, communications, utilities, banking and financial markets, food, wages, prices and enforce martial law. Just that thought alone should be enough to send you scouting around for your copy of a Boy Scout's Survival Manual."

Despite the national publicity Y2K has drawn, few see Y2K as a serious threat. Denial is running high among leaders in both the public and private sectors. As I've researched this problem, I have been struck by the lack of press on the subject, despite the fact that most computer experts consider this to be the biggest problem the world has ever faced. Millions and millions (maybe as many as a billion) pre-programmed computer chips will begin to shut down systems that they automatically control. Systems that run our military complex, our social services, railroads, telephone lines, public utilities, and yes, the financial markets and the global banking system. Panic could ensue.

Trying to prevent a Y2K panic is like being the first to spot a fire in the theater. If you scream "fire!" Panic may ensue immediately, but if you whisper "fire" softly no one will take you seriously. Nevertheless, it would be irresponsible to simply flee for your own safety without warning all who are threatened. So here's your warning ...

Nine Y2K Flash Points: Starting 7/1/98

There are at least nine critical Y2K flash points over the next 25 months. Mark these dates on your calendar: The first date is only seven months away; 7/1/98 which is the first day of fiscal 1999 for 46 of 50 states. The second is 10/1/98 which is the beginning of fiscal 1999 for the federal government. The next date is 1/1/1999, widely expected to cause data and software failures globally. The next date is 7/1/99 which is the first day of fiscal 2000 for 46 of 50 states. The next date is a red hot flash point; 9/9/99. Programmers have used this code (9999) to store a wide variety of files. Some programmers used 9999 to denote infinity, others have used it to trigger a computer test for shut down. The next flash point is 10/1/99, the beginning of the federal government's fiscal year 2000. Computers will hit a brick wall when non-compliant programs see the code "10/1/00."

The biggest cyber-bang will be heard on 1/1/00, (a Saturday) which will probably be like adding insult to injury. Monday 1/3/00 should be interesting, I may stay home and watch TV, if it is still working. The final flash point is 2/29/00, leap year you know. So, as you can see, long before January 1, 2000 we are in for some very tough sledding. Any day now I expect the press to finally smell a hot story—then everyone from Geraldo to Hard Copy will put their spin on what could happen.

The Y2K Global Crisis: Real or Virtual?

Think with me for a moment about what would happen if the majority of computers went down overnight, and didn't come back up for days, weeks, months, or years. Are you beginning to understand why I can't sleep tonight? Many of you could be devastated by this time bomb unless you take immediate action to defuse its effect on you and your loved ones. You may not be able to stop its devastation but, you can protect yourself against the fall out. I'll show you how later.

But, is this crisis for real or not? Is a global computer meltdown possible? YES, according to one of America's foremost computer programming experts, Ed Yourdon. Mr. Yourdon has written no less than two dozen books on programming. His latest book, Time Bomb 2000 is so critical that his publisher, Prentice -Hall, has allowed him to publish his latest drafts, chapter by chapter, on the Internet until it is published in hard-copy in early 1998. Yourdon comments on the Y2K crisis ..."I bet you thought the U.S. government, big corporations, and the media were really on top of this Y2K Problem ... they're not! The year 2000 computer bug will impact EVERYTHING and EVERYONE. Y2K is exponential and unpredictable. Its impact will range from annoying (like being bitten by 1,000 gnats) to troublesome (100 mosquitoes) to potentially fatal (10 bumblebees or 1 rattlesnake bite)—possibly all at the same time!"

Yourdon's research spells out, in spine-chilling detail, just how serious this threat is to the entire world. You may not believe nor act upon my warning, but you better not ignore what Yourdon is saying. Tens of thousands of programmers will heed his warning. His message is simple: "Now may be the time to quit your big city jobs and head for safer places." If they listen to Yourden (as they should) there will be no programmers to solve the problem.

The Fed Is Preparing For The Worst

On July 30, 1997 Alan Greenspan was invited to give testimony on the Fed's Y2K progress before the Subcommittee on Financial Services and Technology of the US Senate's Committee on Banking, Housing, and Urban Affairs. He didn't attend. Instead, he sent Federal Reserve Board Governor Edward W. Kelly, Jr., whose testimony stated ... "As a result of our experience in responding to problems arising from such diverse events as earthquakes, fires, storms, and power outages, as well as liquidity problems in institutions, we expect to be well positioned to deal with problems in the financial sector that might arise as a result of CDC [Century Date Change]." This statement may appear true, but I wonder ... how you can be sure you're "well positioned" for the most chaotic technological rollover in history. I don't place my faith in the Fed.

The Fed claims to be prepared to function as the data processing vendor of last resort for financial institutions that are "unable to access their own systems." Mr. Kelley added that the Fed can also operate paper-based payment systems should there be problems with the electronic payment system. The Fed will join other banking agencies in the takeover of any banks that become insolvent as a result of Y2K.

Mr. Kelley threatened "possible use of enforcement actions as appropriate," against banks that don't move quickly enough to become Y2K compliant. He told the Congressional committee that large banks are moving faster than many small ones that have underestimated the efforts necessary to ensure Y2K compliance. The Fed is working with the Bank for International Settlements and the Group of Ten (G10) central banks on global banking Y2K issues. Perhaps Mr. Kelley's testimony was reassuring to some, but it seemed a bit clinical to me. Remember: logic and rational judgment are often clouded by emotion and instinct—especially during a crisis or panic.

The Fed is setting up an isolated mainframe data processing center for "testing our payments system applications," which are targeted to begin in June 1998. By the way, Fed Chairman Alan Greenspan will retire from the Fed in June 2000.

The Y2K "Ripple Effect"

Who in their right mind is going to leave their money in the bank if they think the bank's computers could be unreliable? A recent NY Times article stated "The potential problems are great enough that 38% of 1,100 computer industry executives worldwide surveyed said they would withdraw their personal assets from banks and investment companies just before 2000." Need I say more. A worldwide run on the banks will create havoc with the investment markets. Many months before January 1, 2000 people will begin pulling their money out of stocks, not knowing if they can get to their equity. The markets will tank overnight. People who have built their hopes, dreams, and hard-earned savings on intangible securities, could easily see their assets vanish overnight. How reliable will the stock and bond markets be if the banking system falters? How will the government, which has been rapidly moving towards paying every bill electronically, get paid or make payments?

Today in America the average investor is almost 100% dependent on computers to manage their money. Fact is, most wealth is purely intangible. We depend on getting a periodic computer-generated account statement from our broker telling us what we are worth. But, when the clock strikes midnight on Saturday, January 1, 2000, and the computer freezes up, some or all of your intangible financial assets might accidentally be jettisoned into cyber-space, leaving your broker clueless. The sad part is that it won't be your brokers fault; nevertheless, it will be reality.

Have you ever tried to transact business with your bank when their computers are down? The problem is, even if your bank's computer system is "fixed," it is still interdependent upon the whole Federal Reserve System. What if the system should "forget" you ever existed? (It could, unless your account dates back to the year 1900). How about accessing information on a bill, or a current balance on a charge account? We all know what it is like when a computer glitches. Time lost, money lost, and in the case of Y2K, lives lost.

Here is a good example of a Y2Kaos scenario: Let's say you have $4,000 in your bank at 5% compounded interest. On January 1, 2000 your bank's computer thinks it's January 1, 1900, so it calculates that you should receive 5% interest for 99 years. Let's say that adds up to $10 million bucks. Your bank statement arrives and you're overjoyed at the error...that is...until you open your mortgage statement that says you owe them $100 million bucks! You see, your 8% mortgage was also recalculated and your account is past due - 99 years! Can you even imagine the late fees? Now, think of the effect this will have on governments, banks, etc. that owe each other trillions of dollars. Scary!

Kiss The IRS Goodbye

The government may have to impose a flat tax-rate system in 2000. Why? Because it is increasingly likely that the federal tax collection, processing, and compliance systems will break down in that year. The IRS is so desperate that they want to form "strategic partnership" relationships with private industry.

Thus far, no tax collection agency above the county level is Year 2000 compliant. The IRS has millions of lines of code, few of which are Year 2000 compliant. IRS Chief Information Officer, Arthur Gross, announced that getting the IRS Year 2000 compliant is the "highest priority for the IRS. Failure to achieve compliance by Year 2000 will jeopardize our way of living on this planet for some time to come."

Perhaps what is most incredible and disturbing is a "Request for Comments" (RFC) from IRS prime contractors, dated May 15, 1997, which appears on the Web site of the US Internal Revenue Service. The IRS unambiguously admits that unless they're bailed-out by private-sector "partners," their computer systems probably will fail in 2000! For comparison purposes, consider the fact that the Social Security Administration began working on its year 2000 repair in 1989! Social Security has 30 million lines of code. By June, 1996, the SSA's 400 programmers had fixed 6 million lines.

What if the IRS is not technically equipped to pursue tax evaders after December 31, 1999? What if 20% of America's taxpayers believe that the IRS can't get them if they fail to file a return? In 1999, the IRS may find a drop in compliance from the self-employed. If they can't prosecute these people, expect a mass defection. When word spreads to the general public, there will be economic chaos. I expect to see numerous "flat tax" proposals gain widespread acceptance before 1999 is over. The're simple, easy to manage.

The whole tax system rests upon faith, which will be called into question in the year 2000 and before. If the IRS cannot collect taxes, and if all other mainframe computer-dependent tax collection agencies don't fix this, what happens to the debt markets worldwide? To interest rates? To the government-guaranteed mortgage market? Kiss them goodbye. And what about: money market funds, that are heavily invested in government debt? Banks, when depositors figure out that the FDIC is bankrupt and that nobody insures their accounts anymore? The delivery of food into cities, when money fails because banks are broke? The 42 million people on Social Security? Your retirement fund, when ERISA, the government pension guarantee program, goes under? The world economy, when this scenario is multiplied across every government?

Get the picture?

What I Would Do Now:

1. Start by investigating if I am telling you the truth about Y2K. You can access information about the year 2000 computer crisis on the web at a variety of sites including: ","
"" and

2. Decide what you will do ahead of time. What if utilities were shut down for six months ("Who ya gonna call?" especially if your phone is dead). Make a checklist of potential dangers that could result from a Y2K crisis. True self-sufficiency will take on a whole new meaning in the next two years.

3. Get your financial records in order. Be prepared for accelerating political, social, and economic chaos. That means getting printouts of all your accounts, all of your contracts, and any dealings with the government. Assume that on January 1, 2000 you will no longer be a blip in any mainframe computer. Get hard copies of your insurance records that will stand up in court. Start checking with your bank and your financial brokers to find out if they are Year 2000 compliant. If they tell you they are, have them send you confirmation on their company letterhead. You'll find out in a hurry whether they are confident in their ability to avoid a computer system meltdown.

4. Buy some "wealth insurance" today. I'm speaking of converting a reasonable portion of your assets from intangibles to tangibles, like gold and silver coins. Virtually every Y2K expert is in agreement that gold coins are the perfect Y2K financial shelter to protect yourself financially. Swiss America brokers are respected across the nation as true professionals. They have a reputation for spending the necessary time to educate their clients about protecting their assets by diversification. That means shifting your paper and electronic assets into hard assets personally held by you. We recommend placing a portion of your assets into uncirculated gold and silver coins, and a portion into higher quality rare U.S gold coins. To "Y2K-Proof" your portfolio call (800) 289-2646 for specific portfolio recommendations. If the Y2K damage is minimal, you'll never regret buying tangible assets because they offer protection, privacy, and profit potential.

5. Finally, prepare mentally and spiritually. Pray for a clear mind. Pray for our leaders. Remember, God remains in control even in the face of confusion, chaos, and crisis—in fact the truth often shines brightest in the darkness. Share what you learn about Y2K with your pastor, priest, or rabbi. Above all, once you are convinced the Y2K threat is serious, do something to alert those whom you love that very serious trouble is coming and the time to prepare is now. As I have often said, I'd rather that you're prepared a year early than just one day late, this statement has never been truer than it is about the coming Y2Kaos—be prepared! - C.R. Smith

P.S. Although I am preparing for the worst, I remain a hopeful skeptic that Y2KNET, with its educational campaign plans, will help. I am committed to keeping you informed as this crisis unfolds. The fastest way to stay in touch is on the internet. We will be posting updated news on both,, and our new site, The Swiss America team wants to help our generation to hold up the banner of truth, freedom, and liberty, even in the face of such a massive techno-storm. If my article has not convinced you (and especially if it has) please carefully read over the testimony of two economists, Dr. Edward Yardeni and Tony Keyes given on November 4th before Senate Committees. Read 'em and weep.

Editor's Note: This article is copyright free, please duplicate it and distribute it widely. This should give you a hint of what sort of disruptions could occur in finance, transportation, shipping, manufacturing, retailing, and power generation in plausible worst-case scenarios. In D.C. policy makers are asleep at the switch. Just the way Union Pacific lost track of its freight cars, we could lose track of vital components.

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