2000 could cause recession, experts say

NEW YORK--A former Federal Reserve Bank official and a former Defense Department
systems chief both recently warned the government about global fallout from the year 2000
computer crisis.


"It's time to prepare for trouble," said Edward Yardeni, who once worked at
the Fed in New York and is now chief economist and managing director of Deutsche Morgan
Grenfell, a multinational investment bank. He spoke at a conference here late last month.


Yardeni predicted the date code crisis would cause a global recession, comparable to
the one that followed disruption of the global oil supply in 1973 and 1974.


"A disruption in information could have the same impact," he said.


Yardeni predicted interruptions in such things as IRS operations, air traffic control
systems and the electrical power grid.


"Are they going to be significant enough to cause a deflationary recession?"
he said. "I think the answer is very, very likely. At this point, I'd say it's 60
percent."


The government's experience in handling natural disasters will come in pretty handy,
Yardeni said.


Paul Strassmann, who was director of Defense information during the Bush
administration, said the year 2000 fiasco is not as blame-free as the popular phrase
"millennium bug" implies.


Responsibility for the crisis, Strassmann said, rests squarely on the shoulders of
government and industry leaders who failed in their oversight of programmers.


The date code problem is a result of "carelessness, disregard, dereliction and
thoughtlessness," he said.


The rest of the world wants to know "why logical and analytical-minded experts
neglected fixing something that in due course would cost untold billions," Strassmann
said.


The explanation, he said, requires an understanding of the information technology
budgeting process and the fact that executives mistrust computer managers.


"This plague covers up hundreds of other cases of accumulated neglect that fester
inside organizations as a chronic condition" stemming from negligent information
management, Strassmann said.


If the year 2000 experience teaches anything, it should be that IT must be managed with
an eye on long-term consequences, Strassmann said.


Systems "have a surprisingly long life. Databases last for decades, and software
logic is potentially immortal," he said.


Yardeni said the year 2000 crisis has made everyone realize how dependent we are on
programmers and "how creative and undisciplined programming is."


Federal efforts to stave off the crisis have been inadequate, Yardeni said. "We're
still monitoring progress like we're going to get there," he said, referring to
oversight efforts by Congress and the Office of Management and Budget.


"We need to approach this as a wartime effort," he said. "The Year 2000
Conversion Council should have the authority to break kneecaps if necessary."


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