January, 1997
Dear ICE Subscriber:
Son of man, speak to the children of thy people, and say unto them, When I bring the sword upon a land, if the people of the land take a man of their coasts, and set him for their watchman: If when he seeth the sword come upon the land, he blow the trumpet, and warn the people; Then whosoever heareth the sound of the trumpet, and taketh not warning; if the sword come, and take him away, his blood shall be upon his own head. He heard the sound of the trumpet, and took not warning; his blood shall be upon him. But he that taketh warning shall deliver his soul. But if the watchman see the sword come, and blow not the trumpet, and the people be not warned; if the sword come, and take any person from among them, he is taken away in his iniquity; but his blood will I require at the watchman's hand (Ezekiel 33:2–6).
What if the threat is even more destructive than a sword? On the other hand, what if it looks a lot worse than a sword, but may in fact be a Ginzu paring knife ($6.95 plus postage and handling)? Do you sound the alarm? Do you wait for clearer vision? Do you say nothing? That's the position I find myself in. Again.
In 1979, I hired Dr. Angelo Codevilla ("Dr. X"), Sen. Wallop's advisor, to write an article for Remnant Review: "The Danger Is Defeat, Not Destruction." It dealt with the first-strike nuclear missile capability of the Soviet Union. I pulled the copyright. Some 500,000 reprints went out, I think. In 1986, Dr. Art Robinson and I wrote Fighting Chance, on the need for a civil defense system. Dr. Robinson mailed out some 300,000 copies.
In August, 1991, the Soviet Union collapsed in a bloodless coup: the largest empire ever to fall without a military invasion or centuries of prior disintegration. So, was I wrong to sound an alarm? No, because I went by what was possible at the time. A wise military strategist plans in terms of what the enemy is capable of doing, not what he is going to do. You can't know for sure what he is going to do, only what he may be capable of doing.
We now face a new enemy, and, as Pogo Possum said, he is us. Rather, he was us. More to the point, he was a handful of computer programmers in the 1960's who decided to conserve a then-precious and costly resource, hard disk space. As a result of that ancient cost savings, it is at least possible that, beginning on January 1, 2000, we shall enter a period in which the Great Depression will look like a time of comparative social and economic stability. We may be about to enter the crisis era that P. A. Sorokin predicted in his book, The Crisis of Our Age (1941): the end of modern, materialistic, sensate culture. I could be wrong. You should not take my word for this. You should, however, begin checking out what I say within the next 30 days. It's that late in the scenario.
The modern world may be facing its greatest challenge of the century. Because you and I live in this world, we will go through the wringer if this challenge is not met. What I'm about to discuss has society-wide implications (and I don't mean the United States alone), as well as personal implications. Here is the problem: planned obsolescence with no known cure. Experts took a calculated risk. They bet the whole world. Our world.
You may have heard about this. It's called "the year 2000 problem." Four ancient, nearly forgotten computer languages run on most of the world's mainframe computers: COBOL, RPG, assembly, and PL1. These are old IBM 360 and 370 computers. The "sons of 360" also use them. They all have a glitch. In the 1950's and 1960's, hard disk space was expensive. It isn't today, but it was then. So, in order to save space, computer programmers wrote their code to respond to two-digit dates: 1963 became 63; 1985 is 85.
Problem: 2000 becomes 00. The computers can't tell the difference between 1900 and 2000. Every unrevised computer program that is year-sensitive starts acting nutty when 00 appears in the system's memory banks. Consider an annuity, which tracks how much is left to pay over the years. Or an insurance program. Or a retirement program. When 00 replaces 99, these programs start spewing out meaningless calculations. Everything from that point on must be done by hand (i.e., desktop). This will hit in 35 months!
Think two words: Social Security. In 1989, 30 years into the problem, the Social Security Administration finally hired a team of programmers to fix the problem. This repair job is not yet finished. Social Security now promises — a government-guaranteed promise — that sometime in 1998, its revised program will be, in the terminology, year 2000 compliant. Get these three words into your vocabulary. Your survival may depend on them, the answers you get, and the strategy you execute.
On December 11, the Wall Street Journal ran a story on Allstate Insurance. That company started working on this problem two years ago. It now has 100 programmers working on it. Allstate expects to spend at least $40 million. (Postings on one World Wide Web discussion group that covers this issue reveal that mainframe programmers now get $100 an hour.) The insurance industry can't wait until 2000. It sends out policy renewals for the year 2000 in 1999. This industry must be year 2000 compliant by late 1998.
The Gartner Group has released a widely quoted estimate that it will cost businesses world-wide $600 billion to solve the problem. But firms have to start now. Congressman Steven Horn conducted hearings in April, 1996, on the U.S. Government's vulnerability. Cost estimate to fix the problem: $30 billion, but all agencies must start now. A lot of them haven't. I have visited Web sites on this problem that were put up by the Army, Navy, and the Air Force. They admit that the military's systems are dependent on a fix by Dec. 31, 1999. This is no joke. This is no drill. This schedulre must be met. But will it?
I have a good friend who did the original programming 20 years ago for Medicaid. I was on the phone with him for hours in mid-December. He told me the following:
The code that I wrote and the other team members wrote cannot be revised in time. The states have "patched" it for two decades. The original code's documentation is gone. The code's compilers [organizers] are gone. Medicaid is a state program. The states don't know where I am. Nobody has called me. Our team is scattered. Medicaid will go under on Jan. 1, 2000.
Is he correct? I don't know. I have talked with another close friend who is well informed on telecommunications matters. He thinks that Social Security and Medicare will meet the deadline. He didn't mention Medicaid. He is an optimist. Is he correct?
Then there is the IRS computer in Martinsburg, West Virginia. It's an old IBM system. My optimistic advisor says that it will suffer major problems in tracking depreciation schedules. But will the whole system collapse? Technologically, probably not, he says. But, he says, the IRS loses up to 20% of its data files each year anyway, which is why they can't provide data on cases older than three years. I ask: If taxpayers in 2000 think they can't be caught, many will stop paying. If they stop paying, the tax system will collapse. If revenues drop, what happens to the government debt markets? I mean every government on earth! Think about the interest rate implications. 20%? 30%? What?
What about credit cards? One programmer posted a message on a year 2000 discussion forum that I follow daily. She says that she has revised 30 ATM (automatic teller machine) systems. Some were year 2000 compliant; some weren't. Some used four digits; some didn't. Her conclusion: the ATM systems as a unit will default to 2-digits. She didn't say it, but this implies that there will be a major breakdown. It is crucial that your bank's credit card be year 2000 compliant now. You dare not trust a promise of "real soon now."
A posting from England reported that the man had contacted his local water works company. It was still using a mainframe IBM machine. The water works engineer was unfamiliar with the year 2000 problem. What about your local water and sewer system? Is it year 2000 compliant now? Are you sure of this? Are you going to find out? When?
You may be thinking: Why not just transfer all the mainframe data to a new desktop PC, which has more far power than an IBM 370? Nice try, but no cigar. It's not computer power that is the problem; it's the code that tells the computers what to do. These are highly specialized software programs. New ones that do the same work will have to be written, tested, and then told how to communicate with old IBM code that has been patched for 20 or 30 years. The computers don't speak each other's language. So, data will probably have to be re-entered by hand: worldwide, there are billions of files. Who will do this? How fast? Shouldn't it have been done already? Is it now too late to begin?
We have 35 months. And by "we," I mean every government that is still using the old hardware, i.e., which means almost all of them in the West. I mean every large business that still has a mainframe at the heart of its operations. One large Canadian bank is in the middle of its repair. It estimates that the fix will cost $80 million. This assumes, of course, that the programmers can complete it on time, glitch-free. The managers have announced: "The revision is in progress: don't worry!" This is a statement of faith. "Now faith is the substance of things hoped for, the evidence of things not seen" (Heb. 11:1).
Allstate's programs have over 40 million lines of code. Change one digit on one line, and you can affect any of 40,000 subprograms. Every alteration must be consistent with all the others, including 20 years of patches. When America Online repaired a minor part of its code in late 1996, one line of code contained one mistake. AOL went down for a day.
When all the revisions are complete, the team must run them through a compiler, which coordinates the 40,000 subprograms. My ex-Medicaid code writer tells me that the original compilers are long gone. He says the new ones will not work right. When the corrected code is compiled, for every correction five or six new errors will appear. Here is what one Allstate programmer told the Wall Street Journal: "When I started here, I thought I would come in, write a thousand lines of code, and change the world. Now, I'm afraid to change even a single byte. Everything is just so complicated."
But, you assume, everyone must be working on this. Wrong; in very few companies is anyone working on it. Companies that have begun working on it are on a very tight schedule. They are totally dependent on programmers — teams of programmers — who can deal with ancient code. They may not meet the deadline. "Sorry; we did our best. Maybe in 2002. But we need to be paid in cash, starting today. Meanwhile, data will have to be temporarily entered on desktops." How will huge companies create internal control systems that allow full coordination and easy access to desktop-entered data? How will they build in data security? To ask these questions is to answer them. The corrections had better work!
I contacted a full-time computer programmer regarding the scenario in this letter. I did not want to mail it out without consultation. "Where no counsel is, the people fall: but in the multitude of counsellors there is safety" (Prov. 11:14). Because his employer is a famous software design company, he asked to remain anonymous. I trust him. He wrote:
1. On all (even slightly) complex upgrade projects I have always told the customer it is cheaper to rewrite from scratch than to try to retrofit the old software. I cannot even read my own code after 6 months unless it is copiously documented. I can almost never read someone else's code or follow their logic. Systems with 20 years of patches would be nearly impossible to fix.
2. Good programmers do not want to get into year 2000 fixes because there is no future in it (beyond the year 2000).
3. Testing "fixes" is close to impossible. Many systems pronounced "Year 2000 Compliant" may fail when the real year 2000 hits.
4. The internet will not fail in the year 2000.
5. I think a rewrite is possible — if:
a. it runs on the Internet (possibly an intranet - a private Internet)
b. uses Internet technologies
c. enough time is given
d. the goals of the rewrite are vastly simplified.
The last point is a political one. Complex regulations full of complex rules and exceptions will have to be jettisoned. A flat tax program would be a lot easier to write than a system using today's tax laws.
The number of possible interactions on a Pentium Pro chip is greater than the number of particles in the universe. The possibility that government employees and their hired contractors will fix the millennium bugs enough to avoid a catastrophe has got to be nil.
The only chance we have is vast deregulation and decentralization of government and large centralized organizations - especially 'near government' ones.
I am going to make sure I have plenty of cash, food, and survival gear on hand come January 2000.
I have been discussing this with a friend in the insurance industry. He says there are three large software vendors that supply 90% of the programs for local agencies. One sent out warnings about the year 2000 . . . in early 1996. It is now scheduling repairs. It is offering these repair services on a first come-first served basis. My friend says that under half of the nation's local agencies are year 2000 compliant today. He thinks that 10,000 of the nation's 30,000 local firms will go bankrupt in January, 2000. There will be no client base to sell, either. Their clients will depart, en masse, in the first three months of 2000. It will be a bonanza for firms that are year 2000 compliant . . . if the banks are still open.
Here is our problem. Our debtors' checks to us will not be in the mail. Credit cards may not work. Many government computers will be working irrationally. If the government starts getting a million phone calls a day — "Where's my monthly check?" — the busy signals will shut down the government. Every government. All at once. It's Tower of Babel time!
Hardly anyone is budgeting to solve this problem. It is being deferred. Because there is no known solution that every company and every government can adopt in time, bureaucrats and employees are simply not thinking about it. Why bother? But in 1999, the public will be thinking about little else. The horror scenarios will be on TV, in magazines, etc. Everyone will want to know: Is the system that supports me "year 2000 compliant"? What about the systems that my system relies on? We won't know. We'll have to guess.
This could be the ultimate domino effect in recorded history: the breakdown in the international payments system. Of course, if the optimists are correct, hardly anything will happen. I have heard it both ways from men whose judgment I respect. Here is the optimist's faith: "Somehow, a fix will appear. Somehow, every crucial mainframe system will be ported to a desktop computer." But if it's so easy to fix, why has Allstate budgeted $40 million to solve its problem? It started two years ago. What about other firms that aren't so flush with money as Allstate is? If most of the large, mainframe-dependent companies in the West are not compliant today, the payments system will collapse.
Here's another problem, which is closer to home in 1997: PC desktops built before June, 1995, may also have Year 2000 problems. The technical problem here is the ROM BIOS. In the year 2000, millions of PC's will roll back to 1980 or 1984. Your ROM BIOS must be upgraded before this happens. Better to do it now rather than later. The Gartner Group has posted a warning about this: http://www.gartner.com/hotc/pc1096.html. The report says: "Either at a DOS prompt or through Windows, set the system date to 12/31/99 and the system time to a few minutes before midnight. Power the system off [don't you love techie talk?] and wait long enough for the date to have advanced. Turn the system back on, and verify if the year changed to 2000." If it's 1980 or 1984, upgrade the ROM BIOS.
If this problem really is unsolvable, we are entering uncharted waters. There are too many interconnections. Deferral is too easy. "If it ain't broke, don't fix it. If it can't be fixed, quit worrying about it." But if the payments system really can't be fixed, can you get far enough away from the largest dominoes when they start falling? At what price? When?
A Digitized Tower of Babel?
The men of Babel wanted to built a tower that would reach to heaven. They were building a one-world state and a one-state world. That dream still motivates would-be empire builders. The European Community plans to inaugurate a new currency, the EMU, and a new, coordinated central banking system, in 1999. Jean Monnet and Rockefeller's agent Raymond Fosdick were working on this New World Order back in 1920, at the Paris Peace Conference, as Fosdick wrote to his wife. Monnet (d. 1979) pulled it off . . . almost. The final pieces are to be put in place, 1999 to 2010. Consider Babel: "And The Lord said. . . ." Well, you what the Lord said and what He did.
Mainframe computers talk to each other. They have created a massive division of labor, worldwide. But they speak a language whose grammar may break down on Jan. 1, 2000.
We are all interdependent economically. We are also dependent on mainframe computers — how dependent, I don't know. That's why I'm sounding this warning. You will have to decide for yourself. If the world's computers really do go haywire in 2000, then we will be asking ourselves, and historians will be asking themselves 500 years from now: "Why did this happen?" The how will be easy to discuss: the price of hard disk space and the self-interest of computer companies. The why will be a matter of great debate.
I believe the answer is God's covenant. Point four of the biblical covenant model is sanctions. "But it shall come to pass, if thou wilt not hearken unto the voice of the LORD thy God, to observe to do all his commandments and his statutes which I command thee this day; that all these curses shall come upon thee, and overtake thee: Cursed shalt thou be in the city, and cursed shalt thou be in the field" (Deut. 28:15–16).
The modern world denies this. Men believe that there is no relationship between morality and prosperity. They say to themselves, as evil, debauched men said 3,000 years ago, "Come ye . . . I will fetch wine, and we will fill ourselves with strong drink; and to morrow shall be as this day, and much more abundant" (Isa. 56:12). They think that we can offset the effects of a 30% national illegitimacy rate with a flat tax of 20%. They think we can create wealth by tinkering with the tax code, while a rapidly growing class of fatherless, lawless, merciless gang members spreads drug addiction to make themselves (and us) rich. It is as if the economists among us regard cocaine sales as a sign of productivity — a component of any rationally constructed index of national economic output.
I believe in the covenant. I believe that God really does bring predictable corporate sanctions on rebellious societies. Columbus' lecherous crew returned from the New World infected with syphilis, and adulterous Renaissance traders and soldiers spread it as far as China by 1510. Renaissance society, infected, lost confidence in itself and its future. This set the stage for the Protestant Reformation in 1517.
The Millennium Bug may prove to be far more devastating than any staphylococcus. The social division of labor is more fully developed today than in any period in recorded history. Individuals are productive because they cooperate in a free market. This system relies on a trustworthy means of payment — a highly complex system of payments. If this division of labor collapses overnight because of a payments crisis, what then?
When governments raised tariff barriers in 1929–32, they brought on the Great Depression. Yet nations then were far less dependent on international trade than we are today. The break in the international payments system that the tariffs caused was nothing compared to the break in the payments system that will take place if Visa and MasterCard go dead, or the bank computers go dead, or if Social Security goes dead, or if all of them go dead in every industrial nation on the same weekend. "Happy New Year!" But not for long.
But this break in the payments system is nothing — a minor glitch — if the water and sewer systems also break down. Think of what happens in Los Angeles if the city can't get water delivered predictably. I'm not predicting that this must happen. I am saying that if I lived in any city, I would not sit quietly and do nothing. I would find out. If I got evasive answers, I would sell my home and buy a property with a well and a septic tank. Soon.
What You Had Better Do in the Next 30 Days
A watchman who calls others to the tower and asks them to bring their binoculars has not abdicated his post. He has merely called for assistant watchmen. That is what I am doing now. I am hereby inviting you to become part of a research team. This project may well be the most important research assignment you have ever been involved with. Or it may turn out to be a waste of your time. But the stakes are so high that you had better get involved. Here's your assignment. I have included a sample letter that you can use to mail to your public utilities companies, your insurance agent, your bank, your money market fund, and just about anyone else you can think of who supplies you with the things that you need. You will be asking for assurance that his system is already year 2000 compliant and is fully tested. What you don't want to hear is: "We're working on it." Even worse: "We have appointed a committee to study this problem." Worst: "We are unaware of any such problem." If you get no written reply, expect the worst. Plan for it.
Our world has trusted government and has worshipped science. It's time for a change. The question is: What will the costs of this change be? (See Luke 14:28-30.) I want to hear from you about this. Send me photocopies of evasive answers. How many dominoes are there? I think this problem may be for real. I honestly believe that we may be running out of time. I have sounded a warning. I am calling you to come up on the wall and take a close look at the dust I see in the distance. Is this an invader? If so, how big is the threat? I want you to do some basic leg work. If you sit there and do nothing, then your blood is on your head, unless, of course, nothing happens in 2000, in which case the egg is on my face. Give me your informed opinions, with supporting data. I'll report back, with comments and recommended strategies.
Warning: we don't have 35 months to act if this crisis is really coming. The markets will begin to discount it early. Panic will hit before 00 pops up. The cost of taking effective action will become prohibitive for most people in 1999. If banking as an integrated worldwide system isn't fully year 2000 compliant today, then it won't make the deadline. If banking fails, the final year of the 20th century — 2000 — will truly end this century.
There is good news with the bad. What if it is mainly government computers that are running the defective code? What if Allstate is not representative? What if most profit-seeking firms have made the conversion already? We could see the end of big government, overnight, all over the world. Maybe the cloud of dust on the horizon is our deliverance. If so, we will go through some frightening times, but the outcome will be freedom. If you're dependent on a government check, however, you had better start investigating this problem.
Sincerely,
Your street
City, state, zip
Date
Joe Jones [call to find out the name of the man in charge]
Computer Services Division
XYZ Company
Street
City, state, zip
Dear Mr. Jones:
I'm concerned about a something I have been reading about in the press. It's a real problem: the disruption of mainframe computers on January 1, 2000. It's sometimes called the Millennium Bug: "2000" becomes "00." This problem is discussed in a detailed report by J. P. Morgan Securities, "The Year 2000 Problem" (June 22, 1996). You can download a free copy. (Get the capital letters correct, or you won't find it.)
www.jpmorgan.com/MarketDataInd/Research/Year2000/index.html
Several Web sites deal with this: www.year2000.com is one of them. Another is Bill Cook's Web site, with over 100 links:
www.netcom.com/~wjcook/resource.html
Congressman Steven Horn says that the Federal government is now facing a major crisis, and it will take $30 billion to fix it, if there is even time to repair it. There may not be, according to the Congressional Research Service.
What I need to know is this: Has your organization had all of its mainframe computer code repaired? Has it been certified year 2000 compliant? Or, if your firm has hired programmers who are now repairing the code, let me know. If your organization does not in any way depend on mainframe software, let me know. If you're not the person I should be writing to, please let me know who I should write to.
I want to be sure that I'm in no way dependent on suppliers that are dependent on code that may crash in the year 2000. I'm writing to everyone I buy from to get confirmation. I think everyone should do this. We are all highly dependent on each other. The threat of a domino effect is real. I don't want to get hit. I think you can understand my concern. (You may want to use my letter as a model for writing to companies that you depend on. Be my guest. We're all in this together.)
Sincerely yours,
Suggested Recipients
water & sewer company
electric utility
gas company
the banks that issued your credit cards
any institution that owes you money, such as:
banks where you have an account
your pension fund
your local independent insurance agency
the national insurance firms that issued your policies
your money market fund
your mutual funds
the college that keeps your academic records
the companies that keep your employment records
every company that supplies you with goods or services
Your employer is dependent on the same kinds of suppliers and insurers. You should do whatever you can to persuade your employer to make similar inquiries. Maybe you can show him the kinds of written responses you have been sent by those companies you have contacted. If you receive evasive answers, or scary answers, take copies to him. Show him why you're concerned. Recommend that he take similar steps with the companies that supply him. You might hand him a print-out of anything important that you have found on the Internet. The more that you search the Web, the more information you will have. What you find there may help you to target other institutions that you think could be crucial to the payments system. Anything that breaks the payments system lowers the division of labor.
Think through this problem in terms of this scenario: your debtors are not able to pay you, but your creditors are demanding payment. You're in a squeeze. What will you do? Start thinking of your fall-back position. Estimate now whether your debtors will be able to pay you. Are they likely to become your problem? Also, will your creditors be willing to re-negotiate? How long will it take for the courts to force people to pay? Will the claims courts be jammed? If so, what about your ability to get your debtors to pay you? This is the problem of a breakdown in payments. It shrinks the division of labor.
When the division of labor shrinks, men rush for cash. When uncertainty increases, they rush for cash. They pull cash out of their banks and don't re-deposit it. Think of what this will do to the fractional reserve banking system. We saw what happened, 1929 to 1932.
The Federal Reserve will have to print paper money. If it does, what happens to the value of paper money? It will fall. So, there will be massive deflationary pressures if the FED does nothing (unlikely) or massive inflationary pressures if the FED issues cash to meet the demand. This raises the age-old question: In a banking system crisis, what will most people prefer to use for money? Paper? Gold coins? Silver coins? If official forms of money fail, what will you live on? Think about this now, while solutions are cheaper.