April, 1998

Dear ICE Subscriber:

Get a sheet of paper and a pen. Write down what you have done to protect yourself against Y2K. You have received my reports for months, maybe a year. Exactly what steps have you taken that would give you a head start over your colleagues or neighbors if the 2000 crisis began prematurely tomorrow morning?

Do you need a full sheet? Or will a 3 by 5 card suffice?

The problem is denial. It comes in many forms. There are many responses to the Year 2000 Problem. I have seen them all in letters from subscribers and hostile critics.

My favorite is Rev. Ostrich's, which I cited last month: "I think it's a big joke!" When the bank runs begin and his pension is gone, he will find it less amusing. If the power grid goes down, will he die laughing?

Then there is this one: "You're only telling one side." This comes from people who have yet to read one article that says that there is another side, namely, that there will be no problem. Actually, there is such a report: from the chief information officer at Reader's Digest, where every story has a happy ending. I have posted it on my Web site. (Just for the record, "You're only telling one side" can be applied equally well to the doctrine of hell, with analogous personal effects.)

I have heard this one second hand on many occasions. "I have tried to present some of the evidence, but he won't listen. I've told him about your Web site, but he refuses to visit it." This is the same approach that was commonly adopted by homosexuals with respect to getting tested for AIDS, at least until proteas inhibitors were discovered. "Since I don't intend to do anything about this if it's true, I will not look at the evidence. Why worry about it when I don't intend to change my behavior anyway? I might feel inhibited."

There is another response: "Yes, it's a problem, but not that bad." This is the standard response. My response: "How much time and money have you spent to avoid the personal effects of this problem?" I know the answer: zero. The phrase, "It will be a problem," means "it will be a problem for someone else, but not me. I won't spend a dime to take evasive action." In late 1999 and 2000, he will spend a lot more than a dime, but the actions he takes probably won't work. It will be too late.

The phrase, "it's a problem," really means, "it's not the gigantic problem that Gary North says it will be. It will be less of a problem. Much less. Really, not all that bad." When you hear the phrase, "it's a problem," ask to see a copy of the highly confident forecaster's recommended step-by-step program of evasive action necessary to avoid the worst effects of the problem. See if the person has such a list. Any problem with no list of evasive actions or solutions is not a taken seriously as a problem.

What I have noticed is that those critics who say, "it's a problem," do not publish a list of what they personally have done to protect themselves. They do not tell their readers what to do: products to buy; names, addresses and prices of these products' distributors; and what to do in case these recommended actions aren't enough. In short, what I want to see is contingency plans: for governments, banks, airlines, public utilities, stock brokerage firms, manufacturers, railroads, traffic control, telephone companies, the post office, and, above all, my local power generating plant. What I see is a stack of form letters that tell me not to worry, that each outfit will be through with all code corrections and ready for a full year of testing on December 31, 1998.

On January 3, 1999, panic will begin to set in among senior managers when the programmers tell them, "We aren't finished. We don't know when we will be finished."

Every "December 31, 1998" letter will come back to haunt them. So, keep these letters. On January 3, send a photocopy of the letter back to the one who sent it. Include this letter:

Dear Sir:

Enclosed is a photocopy of your letter of [month, day], 1997, which informed me that your programmers would be finished with Year 2000 code repairs on December 31, 1998. Did they finish? Has testing of their repairs begun? Please let me know as soon as possible.

On January 3, 1999, the fast shuffling will begin. Board members sitting in 1999 on corporate boards of directors, who will be sued personally (if the courts survive) in 2000 if these firms have gone bankrupt because of Y2K, will begin sending in their letters of resignation. Wise members will resign in 1998.

When Your Light Switch Doesn't Work

On March 2, Business Week ran a cover story on the Year 2000. It was the scariest story in the conventional media since Newsweek ran its cover story on June 2. The story's headline indicated a slight slowdown in GNP in 2000. The text of the story indicated otherwise. The scariest section dealt with power generation.

In particular, electric utilities are only now becoming aware that programmable controllers -- which have replaced mechanical relays in virtually all electricity-generating plants and control rooms -- may behave badly or even freeze up when 2000 arrives. Many utilities are just getting a handle on the problem. "It's probably six months too soon for anyone to try to guess the complete extent of the problem," says Charlie Siebenthal, manager of the Year 2000 program at the Electric Power Research Institute, the industry group that serves as an information clearinghouse. "We don't know" if electricity flow will be affected, he said.

"We don't know." Think about this. Here is the most important industry on earth. Without electrical power, Western civilization would collapse in one month. Without water, cities would die in a month. The utilities have to have electricity to pump water and treat it for disease-bearing organisms. Without electrical power, we're fried. Will we have it? The experts say, "we don't know." You are now betting your life on a system that is so much at risk that the experts say, "we don't know." The article continued:

Nuclear power plants, of course, pose an especially worrisome problem. While their basic safety systems should continue to work, other important systems could malfunction because of the 2000 bug. In one Year 2000 test, notes Jared S. Wermeil, who is leading the millennium bug effort at the Nuclear Regulatory Commission, the security computer at a nuclear power plant failed by opening vital areas that are normally locked. For that reason, the NRC is in the process of issuing a letter requesting confirmation from utilities that their plants will operate safely come Jan. 1, 2000. Given the complexity and the need to test, "it wouldn't surprise me if certain plants find that they are not Year 2000-ready and have to shut down," says Wermeil.

It gets worse. Rick Cowles works as a Y2K advisor for power generating companies -- big ones. He has a Web site on Y2K and electric utilities. Here is his assessment, as of February 27: the industry will not make it. It won't even come close. He writes: "Most electric utilities are still, for the most part, in the awareness/inventory stage of Y2k. Some are actually still fighting about 'how to conduct inventory'. There is very little upper management appreciation of the depth of the Y2k issue." My comment: according to the California White Paper (the state of California's official guideline), awareness counts for 1% of a repair project; inventory is 1%. When you've completed the inventory, you have 98% of the project ahead of you. Cowles' sample of America's power companies indicates that most of them have not completed their inventory. He goes on:

Not one electric company has started a serious remediation effort on its embedded controls. Not one. Yes, there's been some testing going on, and a few pilot projects here and there, but for the most part it is still business-as-usual, as if there were 97 months to go, not 97 weeks.

Almost all electric utility projects are severely understaffed. I was at an independent generating company this week, which is responsible for production of nearly 3000 megawatts between just two large generating plants. This company still doesn't have a single full-time person dedicated to Y2k, and this includes the project manager. This is a . . . $5 billion operation, and their management has committed only a few hundred thousand dollars of 'seed money' to the project. I sincerely feel sympathy for the Y2k project manager.

Rev. Ostrich must find all this amusing. Hilarious. A laugh riot. "What'll they think of next?"

How about mass starvation?

There was a movie last year, The Trigger Effect. I don't recommend it. It was not a good movie. Its premise was a good one, however: a major city's power goes off for days. The story line isn't good, but some scenes are. The scene in the supermarket is good. The scene in the local gun store is better. The movie's theme is on target: when the power goes off and stays off for a week or two, community life will disappear. It will not be restored, even if the power is.

We live on a thin thread, rather like Jonathan Edwards' spider in the sermon. We do not acknowledge how a thin thread it is. Men trust their lives to computers and the social structures operated by computers, which have been tested for only a generation. On Jan. 1, 2000, they will fail their final exam. At best, they will get a D-: barely passing.

What will you get?

How Big a Problem?

Yes, Y2K is a problem. You must decide: How big a problem is it? I think it's big enough so that I took delivery in January of three 10-kilowatt natural gas power generators. They sit on a 60-acre property that has its own natural gas well. The property has a spring-fed water well. If necessary, I can pump water by hand. I'll buy a DC pump and a solar power cell next month.

I had a well drilled on ICE's new property in Texas, since my staff has decided not to move. ICE's real estate inside Tyler and moved the operation 10 miles south of town. I ordered extra propane, and this summer, when the price drops, I'll order another 2,000 gallons. There is a home on the property, and ICE will buy a 16 by 80 used mobile home soon. I want the staff protected. When the banks shut down, so will most of ICE's operations. If the Internet goes down, there won't be much that ICE can do. But at least the families of the employees will get some protection. Is this a good use of ICE's money? I think so. In short, I take Y2K seriously.

What about you? Your monthly budget tells you. Review it.

Sincerely,