Dear y2k-ers,

Do not be afraid, of anything... even death .

Though the author has not been following y2k or updating the site of late, there has been much occurring in the personal life of such astounding and fascinating nature that anything previously written or experienced (even NDE at above link) is utterly dwarfed. It is of such staggering, earth-shattering degree that I will, as "instructed" by one of Higher Authority, reveal shortly after the millennium. It concerns the author's real identity and 'purpose,' and what is to come. I sense some of you have suspected this identity; it is something the author was consciously unaware of until late last October; your suspicions were correct. You are not going to believe it.

And yes, it is of divine, super-natural proportion and origin.

This time I checked the spelling of the page being written. See, I try my best too be a good speller as I now it is the key to good writing style and reeder acceptance. I recieved good grades in scholl and know how to make a good presentation but cant seem to get it rite. Woe is me for shoddy matarial not worth reeding! See how the mistakes aer seriously detracting from the potential mesage--even if important? Maybee I shud be more careful or use a spel-cheker. This is a must for anyone to take yor're material seriously. Or perhaps I should re-enroll in gramar scool! Elementary deja voo.

(LOL!)

Want to see a tantalizing story on Martial Law? See this report from World Net Daily entitled:

Clinton set to declare national emergency

More than 50 simultaneous Y2K crises expected, stretching resources to limit

By David M. Bresnahan

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Also this story from Canada:

Prime Minister Jean Chretien's government will be on full Y2K alert New Year's Eve and ready to invoke an updated War Measures Act if needed, sources have told the Sun.

The Emergencies Act, which was passed in 1988, gives cabinet sweeping powers to issue whatever orders or regulations it believes are necessary to deal with emergencies such as major power outages caused by computer glitches or civil insurrections, major riots and prison revolts.

Click here to see remainder of story

So exactly what is going on with the economy, y2k and stock market? Good question.

Stock Market:

We did manage to escape an October crash resembling that of 1929 or 1987, but the fundamentals continue in a pattern of paradox that boggles the mind. It did correct, but not in a dramatic fashion. Actually it still IS correcting, but not in an obvious manner: While the oft-media reported index averages appear at new highs--on the surface, narrowing market breadth indicates the number of stocks reaching new 12-months lows far exceeds those tiny minority reaching news high; those dang blue chip and technologies. So in this sense we can say that the vast majority of stocks are right now in a bear market, despite whatever new highs indexes occur, pushed by these over-achievers. Stealth Bear Market City!

This is a sure indicator of an upcoming (technical, official) bear market, among many, many others. The Dow Jones utilities and transportation sectors are of particular interest, and continue to fall...day after day after day.

Max Moseley has this to say:

"Decreasing market breadth is highly characteristic of the end of a mania. Breadth on the NYSE began to deteriorate in May 1928, long before the Great Crash. It happened prior to the 1973-74 downturn. Older investors will remember the Nifty Fifty. The phenomenon also happens with assets other than equities: it is a normal consequence of any psychology-driven asset mania."

And as bearmarketcentral.com mentions:

• Market breadth is thin as paper.
• Declining issues have just swamped gainers day in and day out. New 52-week highs have been swamped by new lows.
• Various indicators based on the TRIN have been extremely overbought. Daily advancing volume has slacked way off.
• Put/Call ratios have demonstrated extreme bullish sentiment (a contrary indicator).
• The CBOE Volatility Index (VIX) has been screaming "overconfidence and complacency."
• About 65% of all stocks are down more than 20% from their 52-week highs.
• About 65% of NYSE stocks are below their 200-day moving averages.
• Price to Earnings (P/E) ratio on the NASDAQ is an estimated stratospheric 150, though an exact number
• can't be calculated since so many NASDAQ stocks don't have earnings at all!
• The yield on the S&P 500 is a miniscule 1.13%.
• And on and on and on.

As recently as the Eighties the percentage of the populace owning stocks was 18%. It has now reached 50%. Apparently the sheeple now think stocks are risk-free and can never go down...what a slap on the face they shall receive in a few months! This is why the household savings rate has been into negative territory the past couple years (a) the stock market significantly replaced traditional avenues of savings such as banks and; (b) consumers continue to vastly over-spend, beyond the rise in incomes, fueled by an inflated stock and housing price boom via the wealth effect.

It appears that the market will remain adrift until early January 2000--save for a final-week-panic from y2k preparation-- when it is guaranteed to begin the long road into the abyss. Bear markets rarely start in this time frame (January) but when they do happen they're of very large consequence, as was the case in 1974.

What does George Ure think is going on over at urbansurvival.com ? Here is a chart:

I think he's onto something.

Y2K Bug

Amazing how y2k has evolved over the years and months. The expectations of a y2k panic in fall 1999 have so far not materialized. Is this a "mistake" that us y2k-ers made? One tendency has been to expect concern and anxiety to continue rising in a linear or exponential fashion right up until Jan. 1. What most (including I) did not foresee is the intervention and success of the spin-meisters that have flooded and taken over the public scene and mainstream media, particularly since March 1999. Does this mean we were all way off base and should not be taken seriously, since we were "wrong?"

No, for the following reason: Ever since y2k began raising its ugly head, y2k Gurus such as Ed Yardeni, Gary North, Ed Yourdon, Mike Hyatt and I have tried--and succeeded in raising awareness and have frightened many. That is, into taking action, preparing and taking y2k seriously enough, EARLY ENOUGH so as to create a self-defeating prophecy! Infact, the Fed is, right now, pumping fiat money into the system to a historic dgree to compensate for y2k, for they had plenty of warning, as this story from the New York Times explains:

Even as the Central Bank has been publicly tightening monetary conditions through three interest rate hikes this year, it has been quietly pumping money galore just in case the Millennium madness being predicted actually does happen.

Michael Belkin, a Fed expert who writes the Belkin Report, says Alan Greenspan has allowed $70 billion in cash to flood the U.S. monetary system in recent weeks and has created something called a "repo option." These options could leave the monetary system awash in another $426 billion in additional emergency cash in the next few weeks.

"This all adds up to the biggest Fed credit expansion ever. This monetary boost is wildly stimulative for the U.S. equity market in the short term," Belkin says, "but will leave equities painfully vulnerable to a crash once the Y2K-related credit expansion is withdrawn in the new year."

In recent weeks the Fed has allowed the nation's money supply to soar and has liberalized collateral requirements for government securities dealers doing business with the Fed.

Last week alone, the government's M-3 money supply figure rose at an annual growth rate of 12 percent. That's more than double the normal growth rate......"

For us alarmists have been attacked from all sides for "causing a panic" or Creating a Self-fulfilling Prophecy! .

Here is a few letters one receives when writing on this subject (for your entertainment):

" you really do need some help...i would have to classify you as a doomsdayer... you seem to be a very pessimistic person..... when it does hit jan 1 and none of this crap happens will you feel stupid?? " just wondering

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Erin Lee wrote: It's sick of you to scare people like that. No, 33% of the world will NOT be the end as we know it. That is frankly bullsh*t. So quit the crap! Please write back and tell me what such a demented mind like yours gets out of scaring poor innocent people!!!!!!!!

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I am very upset that a sight such as yours was chosen as the sight of the day on angelfire. You may think that you are being informative, but all you are doing is causing paranoia and panic. What good does this do? You say that there is nothing that can be done, so why create more panic? This is not in my nature to be so critical of someone but i felt that this was necessary.

amanda

Let the reader understand; I rarely receive such messages; As shown in Praise For This Site , the vast majority are very positive. Generally I don't respond to such messages, but since this site was voted "site of the day" at Angelfire, I was flooded with hits and mails, and here is my brief reply:

I used to get many replies like yours... look around...do you see a panic?? My site is based on true information, fundamental issues and evidence...If you are actually willing to check the supporting links for your self.

What more can I say to such people? To go %^#* themselves? Again, see: "Myth of the self-fulfilling prophecy" at: https://www.angelfire.com/or/truthfinder/panic.html Or put another way, our very dire predictions, assessments and alarm bells have effectively disabled the Worst from occurring. Now that is what true prophecy is all about. Unfortunately this cause and effect relationship effect it has also pushed the perception of anyone who dares say y2k will have negative consequences into the crazy, doomsayer, kook, fringe, right-wing, religious fanatic, survivalist or militia category. Prepare for more than 3 days?? You 're a crazy survivalist! Don't you know y2k has been solved? Our own beloved "leaders" have been quite effective in promoting this theme.

Sigh..

Furthermore, we need to get away from the concept that whatever y2k effects that are to happen will happen "on Jan, 1, 2000." Actually, only a small percentage will take place then, and they won't all be of catastrophic nature either. This is not an all or nothing, either/or situation. Most of the failures, in terms of volume will be throughout 2000, showing up in strange and wonderful ways.

Again, January 1, 2000 is NOT going to be the end of the world, and nor has the author ever implied such a scenario. The reason Jan. 1 2000 is of technological significance is largely due to the embedded systems that pervade all sorts of hardware in utilities that are hard-wired and of which will be, by their nature, tested for the first time. It is this simultaneous, across-the-board failures and the cascading effect stemming from such multiple failures that should be the object of focus and concern.

Following the first week or two disruptions are to be of a different, non-disastrous degree. It will be in the everyday services and flow of goods and information that we in such a technologically advanced society depend on everyday. It is these mass errors that threaten a prolonged and very serious recession/depression well into 2000 and 2001.

So, in essence, direct utility failures in the first few weeks are alone enough for a catastrophic bust in early 2000--but it is not yet over; the onslaught of errors has just begun and will continue to mount and cascade over the the months following January.

A section of a story from Westergaard to prove the point:

. . . Firstly, I don't expect anything much to happen on the 1st, when everybody will be watching. That's mostly because anything that could happen wouldn't happen then anyway. My forays around the world lead me to believe that most electricity and water production and distribution facilities are lightly affected at most and fallback/recovery will, at worst, ensure no deleterious effects for some time. Telecoms is more problematic but much the same applies. In any case, rollover errors account for only around 50% of potential failures in embedded systems, so system control engineer friends tell me, which is even more reason to expect nothing worse on the 1st than a hangover. Of course, there are always going to be the dozy few that prove the exception to the rule but they won't crash on the 1st anyway. . . .

So, if there is to be a public "panic," it won't happen until just after Christmas...particularly after Dec. 28. This is the hurricane phenomenon: prepare at the last minute. It is the week and weeks following the rollover that are to be of significance when things will begin breaking down, cascading upon one another.

One must also factor other inter-related issues in order to get an over-view of where the larger global economy is headed, and what underly

ing forces are under its governance at this juncture in time. The Global Economic Collapse that began in 1997 and escalated throughout 1998 is not yet over. So whatever happened to it? A booming U.S. economy held demand so high that it actually benefited from what was going on overseas. Foreign money flowed into U.S. markets thereby inflated the already over-blown bubble. Consumers further increased and accelerated their spending binge of over-seas products. This partly was responsible for the world-wide stabilization of the dominoes falling throughout the world. In this respect one might say we are in the eye of the storm, as we can expect the dominoes to once again fall throughout 2000 and beyond--and this time to a degree rivaling or possibly exceeding only that of 1929-1933.

How can interest rates be so relatively low in the U.S. when the household savings rate is effectively less than zero, and consumers spend like crazy? For one, the immense tax inflows of past years, a result of a booming economy (not the Clinton administration), have eliminated the federal government deficits that plagued us since the eighties and has off-set this net savings short-fall, at least in terms of the national economy. Second, hundreds of billions of dollars have flowed in from overseas--the result of record breaking U.S. trade deficits, filling the demand for savings. Thirdly, as previously mentioned, the stock market has lately replaced traditional vehicles of saving and has the effect giving a misleading picture when one looks at the official data and charts; when the realized capital gains reported to the IRS are accounted for, we arrive at a household savings rate of around 10%...where it has been historically.

This situation is dangerous and cannot and will not continue forever and thus can expect a volatile and disastrous environment in 2000 as world trade is seriously disrupted in 2000 and beyond. At some point consumers will retrench and begin saving again, as they always do in a recession . An action that would throw the economy into a tailspin. It is likely--if the computerized global financial trading system can weather the onslaught of glitches--that investors will, by their actions and loss of confidence in the midst of a such a global recession fly to the nations best prepared and able to handle the effects of y2k. On the other hand, investors may flee to their home country thereby pulling out of what is currently the haven of quality and choice: America.

Obviously the US bubble and boom is soon to die, and such a y2k pullout of markets would be devastating to the U.S. 's economy, and therefore the world economy. Due to all these factors, as well as strong underlying forces such as the internet, I strongly believe we are to experience tremendous deflation in the years ahead. The central banks may try to flood the system with money, but it probably will be ineffective in the long run. Money supply has grown astronomically in the nineties, particularly since 1994. Traditionally this has resulted in price inflation, but not this time, as it has instead gone into and fueled an asset inflation, or bubble in stocks and housing. Other countries; Britain, Sweden and Japan in the eighties have also seen sharp slumps in net savings when they experienced asset-price bubbles in housing or stock markets. Their economies were later severely damaged when bursting asset prices caused savings to rebound to above normal levels, to correct previous over-borrowing. Between 1989 and 1994, for instance, Britain's private net savings rate swung from minus 6% to plus 6% of GDP. The result was obvious: a deep recession.

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One tidbit worth mentioning: The U.S. has had a recession for every year ending in a zero since its birth, save for only three years. What number does 2000 end in? (take a wild guess)

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Here is something from Doug Charmichael's site by Paul Ray and gives various valid reasons why a recession (at least) will occur in 2000:

"".... 0. It's about time for a recession anyway. It's late in the business cycle, and at such times, almost any random event can trigger a recession. The question is, not whether, but when, and how nasty. In this business cycle, the triggers are likely to be cascading from y2k: serious economic problems in other countries, higher costs, many direct hits to volume of sales, a possible energy crunch, inability of governments to do their normal countercyclical aid to the poor, etc. Which is to say, a very nasty kind of inflationary recession is quite likely. Once the financial markets get that this is so, they will exaggerate the problem by their usual panic response.

1. From the stock market to consumer spending and financial sector crunch: The stock market is already at a stratospheric high, in an overshoot-and-collapse mode, beyond prices that are sustainable. Sometime during the 4th Quarter - October is a favorite time - the market analysts can see that Y2K drastically reduces profits next year, and stampede for the exits. Normally a severe market correction is not that big a deal for the GDP, but this time a lot of consumer spending is supporting GDP and critically a lot of consumer spending is built upon the "wealth effect" of high stock prices. A big market correction (probably not a crash, but a big drop) will drive down consumer spending. It will also hit the rest of the financial markets hard. This will also crimp investment and capital formation.

2. Problems with foreign trade partners: Nearly all the U.S.'s foreign trading partners outside northern Europe and Canada are about one-third as prepared as we are for Y2K. Many are going to have very severe declines in GDP because of y2k, probably combined with political and social problems: All the Asian Tigers, Japan, Russia, Italy, Brazil, South America. Many will be unable to export to the U.S. to get out of it, because y2k is going to cut into their ability to export at all. As they become unable to buy, our ability to export to them will be hurt. A big drop in foreign trade will hit our GDP and theirs. Much political instability may result there. All this would cause a severe capital flight from these markets, dramatically worsening their economies.

3. Problems with foreign suppliers: The U.S. doesn't realize how much it depends strongly on an international supply chain in ways that it never before has. It also depends on shipping, and most container ships and tankers, as well as port facilities, appear vulnerable to y2k. Loss of those imports because foreign suppliers, or shippers, aren't functioning well can cripple parts of our supply chain, like parts for manufacturing, and food, and leave a number of industries scrambling, bidding prices up. That will hit the costs and profits of many industries that don't export so much, but do use imports. Especially hard hit will be those who depend on "just in time" deliveries, and can no longer warehouse what they will need. This is very much a matter of cascades of disruptions coming into our supply chain within the U.S., and spreading here. (Just in Time systems are likely to be disrupted here, quite apart from foreign trade.) Disrupting the supply chain also will hurt our GDP, and theirs.

4. Problems of international finance: The international financial system has already been shown to be vulnerable to severe disruption by the way Mexico, Brazil and Southeast Asia all came close to upending the system. What if we see a major economic crisis in many more countries? Capital flight, bank failures, debt defaults, and stock market collapses elsewhere would not stop there. They'd ricochet right into the U.S. banks and financial markets. One of the key triggers to the '29 recession was bank failures in the Balkans.

5. Stagflation with an energy crunch: We are likely to see an energy crunch, because several major suppliers to the world market seem to be really unready for y2k: Venezuela, Nigeria, Saudi Arabia, Russia (maybe Iraq and Iran). The major oil companies will be able to smooth over some of the problems, and emergency oil is being stored, but the problems are not likely to be disentangled for many months. That means an oil/gas price spike may not hit immediately, but after several months - a kind of hanging on bite afterwards. Probably just in time for the high summer demand. It's '73-74 and '79 energy crunches all over again.

The effect of an energy crunch is simultaneously to slow down the economy and increase inflation. Most of society depends on energy, and when energy costs go up and supplies go down, their own production goes down while prices go up. Everything that uses energy intensively is hurt by the higher costs, and that means an especial crunch in several sectors: tourism, transportation, utilities, farming, chemicals, some manufacturing, etc. Stagflation raises the misery index for households: both higher prices and fewer jobs.

In general, economic analysts like Ed Yardeni and Ravi Batra believe that y2k will have stagflation effects very much like an energy crunch. A number of vicious circles reinforce one another.

6. A cascade of small business failures: It's now clear that about half of small businesses are unprepared for y2k, and many are adopting a "fix on failure" strategy. They don't think systemically, and don't know computers. With that many all having problems at once, most will not be able to hire anyone to fix their equipment and systems. Many of these businesses will simply fail. They're not all retail operations, either. Many are suppliers to bigger y2k compliant companies, or suppliers to suppliers. This will directly hit the GDP. It will also give cascading effects of failures to deliver, or to manufacture, or to support other businesses. At the very least it will slow down the economy, even among y2k compliant companies.

7. Federal, state and local government failures: It's now clear that about half of all Federal agencies, and half of state, county and municipal governments will not get their act together in time. It's not just that they perform vital services for society and the economy. Most of them generate a lot of employment directly, and have numerous contracts with the private sector. That's income lost or delayed for many workers and companies, worsening the decline in GDP. In addition, these governments all have major health and social welfare functions that are among the most likely to be compromised. Medicaid, Medicare, unemployment compensation, food stamps, welfare payments. This will directly harm the poor and their ability to spend. It will also worsen the counter-cyclical income flows that normally moderate recessions. If anything, these government failures to spend will aggravate the recession.

On top of that, a huge amount of business in the U.S. depends on the Postal Service, if only for billing, and it appears really unready. Failures to deliver bills and return payments will hit many businesses hard. This too can cascade business failures with parts of the economy that are otherwise okay. It can also hurt the poor who depend on those checks coming. This will directly reduce GDP.

8. Much higher cost, and lower volume, transactions: Our world economy, especially in the First World, depends for its efficiency, and for its level of activity, on high volumes of cheap, automated electronic transactions, many of which have date functions built in. It looks like a number of corrupt or noncompliant dates in transactions between companies will mess up databases, and cause delayed reaction problems: again higher cost, lower volume. Once you fall back on human backups, or can't trust what's coming in, everything is slowed down and made more expensive. This directly cuts at GDP, which is based on transaction volume, and is based on the profits per transaction. Both are going down. This will also crimp investment and capital formation.

9. Inability to deal with crime, fires, disasters. Police, fire and disaster relief have always depended on aid coming in from elsewhere when a community is in trouble. What happens when all 88,000 communities in the U.S. need help? Answer: nothing. They're on their own. Whatever disaster comes in the dead of winter may not be alleviated, so all the local problems are compounded. Major winter storms normally occur with a large response. What if it isn't there? It's not only lives lost, but many businesses ruined, and slow economic recovery. Statistically, this is extremely likely, and will simply worsen the effects of a recession. Most communities are not remotely ready, and the resulting confusion and poor response will also hurt. This will slow the economy noticeably.

10. The cost of an explosion of lawsuits. If any large fraction of the trillion dollars in y2k related lawsuits is true, then this will be a huge direct hit on GDP around 2001 or 2002, and in the in-between-time, it will distract managers for huge numbers of hours. It will tie up the civil courts, so that special courts are likely. This will tend to drag out and worsen any recession, slowing recovery and making the economy much less efficient.

People: PREPARE..now, NOT in the last week of December! And above all...prepare spritually, emotionally and psychologically. Accept the concept that the coming years are going to be rough. It goes beyond having food and water!

Until next time, take care, God bless.

Daniel.

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