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Topic: Contingency Planning -- Articles

Year 2000 Aftershock

By William Ulrich
September 17, 1999

This paper was published as part of a George Washington University Study. You can find other papers from this study at www.gwu.edu/~y2k/categories/y2kstudy.html

The following Aftershock scenario paper was developed in August 1999 and delivered in September 1999. It assumed that mainstream utility and communication systems would remain on-line during the rollover and this is what occurred. It also assumed that more problems would surface internationally than what apparently has been the case. Having said this, the first few weeks and months will continue to enlighten us on where we will be by April 2000.

William Ulrich - January 3, 2000

Introduction

By April 15, 2000, some of the initial impacts of the year 2000 problem will have dissipated. Many others, however, will have cascaded into a series of long-term, systemic challenges. Most of the scenario planning around Y2K has focused on the 24-hour period that begins on December 31, 1999 and ends on January 1, 2000. Unfortunately, looking at the year 2000 problem through this narrow window only considers a limited number of year 2000-related issues.

The countless issues stemming from secondary Y2K impacts are unlikely to manifest themselves for days, weeks or even longer. The concept of the three-day snowstorm that has been promoted by government leaders and emergency managers ignores this reality. Determining how Y2K might impact us requires examining various domestic and international situations that could emerge as the first wave of problems subsides.

These global premises outlined in this paper are based on documentation that exists today. The localized scenario, which brings the issue home for many people, draws upon this data in order to personalize the situation. The Aftershock Scenario represents neither a best case nor a worst case set of circumstances, but an educated guess as to what may ultimately occur.

The Aftershock paper outlines secondary impacts by industry that could challenge businesses, governments, individuals and communities which set the stage for the localized scenario contained in section two of the paper. This paper addresses the following topics.

I.    The need for honest dialog
II.   Basis for the aftershock
III.  Assumptions
IV.  General industry considerations
V.   An industry-by-industry analysis
VI.  Looking ahead

Part I calls for honest dialog from all those involved in addressing and responding to the year 2000 challenge. Part II provides a foundation for where the paper's conclusions were derived. Part III provides the many of the assumptions driving this paper's conclusions, while Part IV identifies industry considerations that support these assumptions and the conclusions reached later in the paper.

The industry-specific sections include cross-industry analysis to address the integrated nature of how the year 2000 problem may play itself out. For example, the economic outlook draws from the manufacturing section as a way to assess economic conditions resulting from supply chain disruptions. Similarly, the health section considers governmental failures as a threat to health care coverage for the poor and the elderly.

Part VI, looking ahead, looks beyond the first 100 days of the millennium and discusses how we can put this behind us and look to the future. Appendix A contains a dialog between several individuals that are living through the Aftershock.

The Aftershock paper may help people refine their thoughts about where the year 2000 will take them. More importantly, it will hopefully continue to expand our collective dialog surrounding this issue.

Part I: The Need for Honest Dialog

The conventional wisdom, and the official position, on the impact of the year 2000 problem is that there will be a few days of hardship followed by a series of small inconveniences. Once these events subside, the situation will basically resolve itself. This paper takes a contrary position to this stance and makes the argument that the long-term issues are potentially more problematic than near-term power, communication or other outages.

Challenges to this conventional wisdom have been downplayed for many reasons. Some of the reasons for ignoring or downplaying the year 2000 problem and its potential impact include:

1. Claims that all of the real problems have been corrected;
   
2. Speculation that most of the problems, on an individual basis, can be corrected within a short period of time once they are discovered;
   
3. The belief that people claiming that there will be real and lasting problems are just trying to make money;
   
4. Not wanting to be labeled a "doomsayer";
   
5. The point that the government says the problem is well in hand and that claims to the contrary are just an exaggeration;
   
6. The idea that change is disruptive to institutions, like the stock market, the Federal Reserve Board, the food industry, an increasingly competitive power industry and others; and
   
7. The thinking that people do not feel they can impact the situation one way or another so they have decided to ignore it.

It should be pointed out that there are people that plan to profit from this situation, that there has been a tremendous amount of good work done across numerous industries and that some of the original claims, like planes falling from the sky, were unfounded in the first place.

This does not mean, however, that anyone should attempt to stifle honest dialog regarding real year 2000 risks or attempt to label people that are concerned about the issue. This paper encourages honest dialog so that those entering the next millennium, prepared or not, can do so with a better basis of understanding.

Part II:    Basis for the Aftershock

The basis for this paper includes research on the year 2000 across a range of industries and geographies. The position that the paper takes is speculative, but it draws upon actual problems reported to date as well as a number of different research sources. Pre-2000 testing has given us a taste of what may occur. For example, during a date rollover test at a chemical plant, an acid leak was triggered by a PC-based date rollover failure. In another rollover test, a milk pasteurization plant could not record heat settings. This problem would have shut down the plant as of 01/01/2000.(1) Additional problem citations are available, but outside of the scope of this paper.

In addition to actual occurrences of date problems, research sources provide the basis for much of the paper's conclusions. These include the Naval War College's Year 2000 International Security Dimension Project Report, Gartner Group, Infoliant Corp., Cap Gemini, Independent Validation & Verification (IV&V) studies, U.S. Senate hearings, the President's Council on Y2K and many others. In addition to this, my personal experiences with the year 2000 problem, across a multitude of industries, are incorporated into this analysis.

One source the paper shuns are the "urban legends" frequently cited by amateurs professing their year 2000 expertise to communities around the globe. Actual data and solid research eliminates the need to draw upon unverifiable hearsay, the likes of which just fuel the fires of those that believe the year 2000 problem to be the mythical creation of doomsayers.

It is worth noting that many "legitimate" research sources reflect conflicting information - until one verifies the source of the findings. Coming to some rational conclusions among all of this information required an educated guess in many cases. This is particularly true as the analysis ventures into secondary and tertiary impacts.

The reader should also consider the fact that much of the discussion is viewed from a U.S. perspective, although extensive consideration is given to global conditions. One research source noted that totally unacceptable conditions within the U.S. could easily be considered "business as usual" in developing countries. Given the fact that all things are relative, this paper strives to avoid putting a doomsday spin on negative projections.

Again, it is not the intent of this paper to create a climate of fear or to cause people to act irrationally. It is just that society should take a good look at many of the issues that could result from the year 2000 problem as it takes hold beyond the initial onset of the next millennium.

Part III: Assumptions

The following assumptions underlie the scenarios presented in this paper.

1. There will be year 2000-related failures in numerous systems domestically and internationally;
   
2. Some percentage of these problems will be in mission critical systems;
   
3. Some of the problems will result from failures in other systems;
   
4. Some of the problems will result from human error caused by confusion stemming from seemingly trivial failures within computer systems;
   
5. Multiple failures, in near proximity of each other, can compound a problematic situation or cascade into multiple failures and thereby delay repair times on critical systems;
   
6. Contingency plans, which in many cases are being developed only for systems deemed non-compliant, will not adequately address some mission critical failures in a timely manner;
   
7. International failures will be more common and of a longer duration than those that occur in the U.S. and other modern, reasonably prepared countries; and
   
8. Scenarios are likely to play out in a slow buildup through a cascading series of interconnected events and then slowly subside.

Part IV: General Industry Considerations

The assumptions outlined in the prior section are based on a number of general considerations, along with a number of industry-specific factors discussed in the next section. Certain general considerations are worth citing here because they cross industry and geographic boundaries.

Year 2000 industry considerations include the following findings.

Other reference points can be cited. For example, a Triaxsys Research study found that Fortune 1000 companies were only 66% of the way through their year 2000 spending as of April 1999. This is a bit disconcerting given that most of these companies began work on the problem several years ago. Another concern is the fact that several date calculation patents do not consider the year 2000, February 29, 2000 or December 31, 2000 to be valid dates.(14) At this point, however, the reader should get the picture that many outstanding issues remain.

Just to be clear, the above points were introduced into the Aftershock discussion because major media coverage of the year 2000 states that it will be little more than a "bump in the road". This is not meant to place blame on the media. They are only echoing pronouncements from government officials and industry associations.

For example, the President's Y2K Council's Third Quarter Report on the Nation's Readiness for the Year 2000 tells a very different story than one may surmise from the findings above. This report(15) claims that:

This paper is not ignoring these findings. It is prudent to point out, however, that these findings are based on "self-reporting" by these institutions. The data was then assimilated by the North American Electric Reliability Council (NERC), the Edison Electric Institute (EEI), the Federal Reserve Board, the National Food Processors Association (NFPA) and other professional organizations. These associations were created to improve public opinion of the industries that they represent.

In addition to this, the U.S. President's Council is focusing on how to reduce public fear surrounding the year 2000 issue. This well meaning, yet misplaced, view has created an avalanche of positive findings that has been gathered by these associations and then fed to the public through powerful public relations machinery.

Part V: An Industry-by-Industry Analysis

Viewing the year 2000 issue by industry helps put the issue into perspective. Most of the problems foreseen in this paper are not insurmountable and, as stated earlier, all things are relative. The discussion begins with the most common year 2000 concerns such as power, natural gas, communications, water and sewage treatment, and financial issues. We then examine transportation, oil, manufacturing, food, health, insurance, defense, societal impacts, economic and political factors.

The following industry-specific scenarios take place in the second quarter of the year 2000.

Power
While NERC reports from the second half of 1999 were very positive, not all U.S regions came out unscathed. Fortunately, domestic power companies addressed initial regional blackouts during the month of January. The Eastern U.S. was hit harder due to the many independent utilities with no contingency plans. Some cities suffered outages for a few days while other regions were brought off the power grid to balance the load. Massive outages never materialized, but inconveniences were common.

Because of these "spot" outages, a number of municipalities and private companies took legal action against failed utilities in various regions. This was predictable based on a 1999 power failure in downtown Chicago that resulted in the mayor encouraging companies to seek remuneration for damages caused by the outage. Small and large businesses took losses that will likely never be recovered. If damages are paid out, the money will probably have to come directly from the utilities because their insurance companies do not cover year 2000 failures.

Pre-2000 research was predictive of power industry failures. One report(16) found that many smaller power companies started late, did not commit adequate funding and lacked a strong commitment to a year 2000-resolution program. The report went on to say that the August 1999 NERC report on year 2000 readiness only represented 251 of the total 7,941 U.S. power providers. In other words, the positive conclusions offered up by NERC on power preparedness were drawn from a scant 3% of the total number of U.S. power providers.

Internationally, Latin America, parts of Asia, Eastern Europe, Russia and many African nations are still trying to stabilize power production and transmission. In developing countries such as Nigeria, power stability was never ideal in the first place and people are dealing with the situation. In countries where power is required and expected, such as Russia, Japan and China, outages have caused people to lose their patience. Global outages have slowed manufacturing, oil production, harvesting and other essential functions. The impact of these outages on various industries will be more fully addressed in later sections.

Nuclear Power
The Nuclear Regulatory Commission (NRC) ordered two nuclear plants to be brought off-line in late December due to non-compliance. Backup generators, while shaky, have kept cooling ponds intact in regions where power outages hit. Solar powered backup systems were installed where spent fuel cooling ponds had no diesel powered backup systems. These systems kicked in during the brief regional power outages that sprinkled various regions of the U.S. This was fortunate given that spent fuel ponds contain much more radioactive material than does a nuclear core and could melt down in a couple of days without power.

With summer around the corner, concerns continue over the plants taken off-line. Industries and individuals may need to conserve energy this summer, depending on how well the overall electric utility industry responds to current oil shortages (discussed in a subsequent section).

Internationally, the status of nuclear power remains unclear. Russian facilities are working at less than full capacity and it has been a long winter in numerous countries where systems had to be brought off-line. The ex-Soviet nuclear sites located in a variety of regions had no backup generators until the Russians succumb to last minute cries by environmentalists to install at least a few backup power systems. This was the best money the U.S. and Russian could spend.

Natural Gas
Domestic interruptions in natural gas flow were limited, but plagued various regions well into February. The fix-on-failure strategy employed by a few energy companies slowed natural gas delivery due to problems with transmission equipment. This equipment had been certified compliant by the vendor, but ultimately failed. Problems resurfaced on February 29, 1999 as a handful of leap-day routines failed. The situation appears to be under control at this point and not as bad as a Navy report had initially indicated.(17)

Natural gas flow from Russia, which produces over 35% of the world's total supply, was cut off for a period of time, sending Eastern European countries into a deep freeze. There is no clear indication as to when all of the problems would be rectified. This is has caused a population shift from Eastern European regions to Western European regions. People have been fleeing cold weather areas with no heat for regions with reliable heating systems. Hopefully these systems can be back in shape by winter of 2000.

The impacts on businesses have been even more severe. Numerous delays, closures and other problems have made their way to the western press over the past few months. Western companies with suppliers and subsidiaries in these regions realized that natural gas outages were causing more than a passing disturbance.

Communications
Domestic phone service ran into some limited interruptions in rural regions and areas serviced by small independent communication providers. Generally, many of the problems reported in the communications sector had to do with reconciliation of payment among long-distance and local service providers, billing errors, voice mail problems and the process of establishing and managing customer accounts.

International communication system failures resulted in 25% degradation in phone service between the U.S. and foreign markets. The hardest hit regions were Russia, Latin American, China and Eastern Europe. Satellite links have also seen some problems, which have since been resolved. Foreign investments have suffered as a result of these problems.

In August of 1999 Vint Cerf of MCI WorldCom Inc. and Don Heath, president of Virginia's Internet Society, made claims that the Internet would be working in the year 2000.(18) But the entrepreneurial spirit that built the Internet meant that the systems controlling the root servers were never audited for compliance. Corporations have known for years that PC, mid-range, database and networking systems were susceptible to the year 2000 problem, but academia and many high-tech companies felt they were immune to the problem.

The Internet survived after numerous logjams that kept users waiting and home pages idle for weeks. This took the glitter off of E-Business and E-Commerce companies for a while, but these companies bounced back when response time returned. The year 2000 did, however, highlight the need for the Internet to seek out a much more resilient system of governance.

Water & Sewage Treatment
Two major cities and numerous outlying areas experienced water treatment problems in the early part of 2000. Residents were forced to boil or filter water in these areas. This result, however, was more positive than the one predicted by an American-Canadian conference held in February 1999. At that meeting, attendees determined that only 89% of community water systems servicing populations of 100,000 to one million people would achieve compliance.(19)

With thousands of water districts, and the difficulty of determining if any one is year 2000 compliant, there was no way of telling how this situation would turn out. The Center for Disease Control (CDC) issued warnings to these regions and predicted that the potential for disease might be on the rise.

Internationally, water shortages, along with power and communication failures, have slowed the influx of pilgrims that Italy expected to arrive to celebrate the new millennium. One lesson learned from this experience is that water is such a key resource, and a fragile one in many regions of the U.S. and globally, that people should not take it for granted.

Sewage processing problems were sporadically reported around the U.S. and internationally. Cities and towns found themselves jumping into action to deal with spills leakages similar to the Southern California spill reported in June 1999. (20)

Overall, water management and sewage processing problems resulted in more challenges to the general populous than did power and communication outages. Internationally, many countries found that they did not have a high degree of computerization in their water systems. But similar problems plagued more modern regions.

Financial Institution
Most people feared the worst from financial institutions while regulatory agencies suggested that there was nothing to fear but bank runs. Fears of not being able to get their cash out of the bank or of banks losing investor money were largely unfounded, at least domestically. Large financial institutions have, however, experienced numerous errors in transactions being processed through international institutions. It has been difficult to say how much money may have been lost to year 2000 errors infiltrating internal systems from external sources. Security breaches also hit certain institutions throughout the first quarter, but activity in this area stayed within Gartner Groups $1 billion estimate.

On a personal level, the bank runs anticipated leading up to the year 2000 never really materialized, but there was a significant amount of cash stashed away by individuals in any case. Some ATM systems failed, but investors had little problem going into a given bank and getting money out of the system. At least a few ATM failures were anticipated. One pre-2000 test uncovered massive problems that would have shut down over 8,000 ATM machines had they not been found and corrected in advance.(21)

Internationally, banks did have problems processing transactions and keeping accurate records. Many of these problems were passed on in the form of direct deposit delays, inaccurate cash balances, ATM failures, credit card failure and credit record problems. Many of these issues will take time to correct, particularly when a credit record has been corrupted.

Transportation, Shipping & Travel
The shipping industry was hit with a pre-2000 shipping rush as a result of corporate stockpiling. Companies increased inventory levels for raw materials, fuel, replacement parts and component parts. Stockpiling was held up by a shortage of ocean liners. European countries imposed surcharges on large bulk shipments of containers being sent into the region.

After 2000 arrived, various sectors of the shipping industry were hit with problems. Rail transport experienced routing system problems that resulted in delays with product and fuel delivery. Scheduling of passenger transit systems was also upended in many urban areas. Truck companies experienced problems with engine diagnostic equipment, fuel availability, routing systems and inter-modal rail transport coordination.

Ocean going traffic was delayed because of problems with computerized load balancing systems, navigation systems, port control systems, automated locks and canals, and paperwork linked to import / export controls. Ocean freight transport has been reduced by 30-to-40% and governments have had to prioritize what could be shipped to whom and when. Medical supplies, food and fuel had priority over and above other goods. Because of this, numerous industries found themselves waiting in line for non-critical products and materials.

Many of these problems plagued the passenger travel industry as well. No safety problems were experienced in the airline industry. Air travel, however, ran about 72 or more hours behind schedule and well below normal capacity. These delays were in many cases precautionary and self-imposed by certain airlines or airports. Airport systems also experienced delays due to security and building management system failures, staff scheduling problems and runway management.

Internationally, many of these problems were more pronounced. In a number of countries, the U.S. State Department abandoned their embassies. Travelers that did not heed early warnings from the State Department found themselves with nowhere to turn and no way out of many developing regions. All in all, the first quarter was a lousy time to be a tourist.

Oil
Domestic and international oil producing companies, using a fix-on-failure strategy, had problems with large oil wells, refineries and pipeline routing systems. According to one pre-2000 study, almost 75% of embedded devices in large oil wells and pipelines were inaccessible for compliance testing. Repairs were delayed where replacement components did not fit into larger pieces of equipment. This situation snowballed in many cases and forced upgrade teams into replacing entire valves that surrounded the equipment needing replacement.

Two domestic refineries were shut down because of power outages in those regions. A 90-day restart requirement has kept them off-line to date. There is a fear that shortages could impact peak power supply demands this summer.

While the problem is coming under a degree of control domestically, the problem was worse internationally. Major infrastructure problems crippled Venezuela causing oil exports to drop to 30% of normal capacity. Similar problems slowed exports from Saudi Arabia, the UAE, Kuwait and even Canada. The handful of countries that delivered almost half of U.S. oil supplies were not keeping up with demand and maritime delays magnified these problems.

Ninety-day oil supplies, already drained from motorists filling up their tanks in December 1999, are running low. Gasoline prices rose to $3.00 per gallon by March 2000. Rationing is now in full force. Gasoline rationing has even slowed the delivery of food to some areas.

In addition to the problems found in the oil industry, chemical plant system failures have resulted in severe warnings from government regulators if safety and other containment systems cannot be corrected. Spills and seepages have sprung up around the U.S. The health of a number of communities has been compromised. Internationally, the Red Cross estimated that hundreds of incidents of this kind have been reported in more than 20 countries.

Manufacturing
The Naval War College presents multiple scenarios in their research study on the year 2000. One of these scenarios is called the "Flood Scenario" in which the problem slowly builds, at some point peaks, and then slowly subsides.(22) In that report, the manufacturing sector is one of the "low lying" areas that would be hit by this scenario due to the delayed impact of the supply chain.

International supply chain failures stung numerous manufacturing sectors. Import / export delays were compounded by transportation problems and slowed delivery of fuel, raw materials and component parts. Several ports and canals are just reopening. Companies shut down production and assembly lines for days or even weeks. Many remain closed.

Manufacturing firms impacted the most were those relying heavily on international suppliers or subsidiaries. International power, communication, transportation, government and other infrastructure failures forced the closure of manufactures in Eastern Europe, Latin America and Asia. Some U.S. multinational corporations had to close operations entirely in areas where recovery times look to be indeterminate.

Domestically, many small and mid-size companies have defaulted due to a halt in product demand from large downstream customers. Delays in the delivery of electronic components from Asia hurt the computer industry's ability to ship new product. One pharmaceutical firm was receiving 80% of their raw materials and products from international sources. While this firm had things under control internally, reliance on a failed international supply chain forced this firm to retrench its business strategy.

While the manufacturing industry has been hit hard by year 2000 problems, most sectors should be digging out later this year. The impact on small businesses with only a handful of large customers has been devastating. Internationally, it may take more than a year for many of these companies to reenter foreign markets where infrastructure problems continue to plague their ability to do business in those regions.

Food
Canning system failures at two U.S. plants halted the production certain food products. International food production and delivery has slowed. Fresh produce selections are limited in many northern markets. Problems appear to be escalating.

The food industry requires the growing, processing, warehousing and distribution of an endless variety of products that very much mirrors the manufacturing industry. International supply chain and transportation failures slowed or halted the availability of certain types of foods. Governments have assured consumers that food shipments from international destinations will take priority along with that of fuel and medical supplies.

International delays are one problem, but failures at domestic processing plants have occurred as well. Problems with certain types of computerized production and control systems resulted in food that did not clear the quality control process. This resulted in the slowing of production and shortages in certain areas. While these problems are being corrected, they could have been predicted. In July of 1999, a Gartner Group survey found that only 25% of the companies surveyed had completed work on the embedded systems that control many of the processing and tracking functions.(23)

Shortages have additionally been fueled by the fact that certain U.S. regions decided to hang on to food produced locally that would normally be shipped to other domestic locations. U.S. food exports are also slowing, although the full impact of this situation is unlikely to unfold until the fall. The bottom line is that people are not starving, but shortages of key items continue to plague domestic stores throughout the country.

Health & Wellbeing
This discussion centers on the increased likelihood of a rise in various health problems and the decreased capacity of the medical profession to address these challenges. An increase in emergency cases was reported due to sewage and water treatment system failures and chemical accidents. This was compounded by the failure of hundreds of 911 systems around the U.S. Home care and nursing home patients were also impacted by failures in computer-controlled dialysis, IV and other types of monitoring equipment.

Health care is highly reliant on the pharmaceutical, biomedical equipment and insurance industries. The pharmaceutical industry is, in turn, highly reliant on countless suppliers spread across dozens of countries. Thanks to good contingency planning, shortages were mostly limited to non-critical drug supplies. But the industry has yet to catch up in the manufacture and distribution of the full breadth of drug supplies.

The biomedical industry experienced certified many systems as compliant, but subsequent testing found them to be non-compliant.(9) This ultimately backfired on the many hospitals, extended care and other health care facilities that took product compliance data at face value. Fortunately, no serious problems have been reported due to this situation.

The insurance industry, particularly medicare and medicaid, have been slow to respond to health care claims. Pharmacies and hospitals are also working through communication problems with insurance companies due to computer data errors. In addition, many smaller hospitals have been hit with enough patient admitting, billing and payment delays that they had to either close down or be bought out by bigger hospitals.

Insurance Industry
Medicaid, medicare and numerous health maintenance organizations have run into snags processing claims and ensuring eligibility. This was particularly problematic for the countless individuals that had enrolled in group health plans at the end of 1999. This has turned into one giant headache for the health care industry.

The insurance industry as a whole is embroiled in an almost endless stream of disputes regarding claims that may or may not be year 2000 related. This is particularly true in the marine, directors and officers liability, and property and casualty areas. This stems from the fact that many providers are not covering year 2000 related claims. Companies that wanted to sidestep this issue placed claims that were supposedly not year 2000 related.

Insurance investigators discovered, however, that many of the data loss, equipment failure and other claims truly are year 2000 related. The biggest dispute is whether or not an insurance company should consider an issue as year 2000 related when the cause was indirect, such as a supplier failure. U.S. based lawsuits are being filed in earnest, despite the law that attempts to limit liability.

Military & Defense
It is unlikely that anyone will ever know whether the year 2000 had an impact on many defense systems. The number of administrative systems that were triaged during the remediation phase of the project did cause problems with payroll and other personal functions. Internationally, Russia's early warning system stayed up and ongoing contact with the west ensured that Russia did not overreact to any false missile warnings. The biggest issue for the military, however, was assessing how many global situations they could respond to with limited resources.

For example, a Russian power outage resulted in a call for additional generators and fuel to keep cooling systems functioning on Russia's mothballed nuclear submarine fleet. The U.S. military responded and the situation appears contained for now. Other situations continue to force the defense department to respond in kind. There was an increase in terrorism during the millennium transition period. Protecting oil-producing countries has been a top priority. These challenges are likely to continue throughout the year.

Societal Disruptions
Welfare, child support and related system failures have held up recipient payments. Federal systems and state systems have reported failures. Interface data has been lost or forced bad information into the system. Large urban areas have been on the losing end of these problems.

These failures, coupled with layoffs in the manufacturing and small business sector, have led to an increase in urban crime. Non-profit foundations have also been on the losing end with donations down. The Red Cross, Salvation Army and other sources have been overwhelmed for all of the reasons stated earlier in this paper. All of this has served to drive up stress levels among people, which in turn have led to an increase in domestic violence. These secondary impacts will take much longer to correct than many of the initial impacts of the year 2000 problem.

Economic Conditions
Market fears began in late 1999, but with the year 2000 now here, the economy is in a bind. Fuel price increases and product scarcities have driven up inflation. Manufacturing and transportation layoffs are driving up unemployment, while productivity delays have shrunk corporate profits. The Federal Reserve Board is discussing interest rate strategies, but with inflation up and GDP on the decline, they are in a quandary as to how to respond. The DOW closed under 8000 points yesterday. With international economies in worse shape, the U.S. government hopes that foreign investments will help offset GDP losses. Billions in investment money have disappeared.

Internationally the situation is worse. Many developing countries are stuck with import / export, transport, shipping and infrastructure failures. Asia, facing many similar problems along with manufacturing and financial system failures, has slipped back into financial doldrums. As predicted, numerous business failures have erupted in Balkan countries and in Russia.(24) Italy is in an almost equally problematic state. It is likely to take some time for these economies to stabilize.

Political Consequences
U.S. presidential primaries have found some new heroes and made some people scapegoats. In late January, President Clinton unceremoniously fired John Koskinen, the U.S. Year 2000 Czar and put Al Gore in charge of straightening out the situation. With no history of dealing with the issue, Gore was able to come in and appear to save the day. His poll numbers are up and he appears to have wrapped up the Democratic nomination for president. The future is yet to unfold on this topic.

Internationally, governments have toppled due to major year 2000 impacts. Russian President Boris Yeltsin was an early casualty. Unrest in China is also growing. As the situation evolves, it appears that any politician in the wrong place at the wrong time was a target for removal.

Part VI: Looking Ahead

The Naval War College study stated that "If Y2K proves to be an historical turning point between one era and the next, it won't be because of what Y2K is, but because of what it told us about the status quo and the need for change. In short, it's not what Y2K destroys that will be important, but what it illuminates."(22)

Political scenarios, economic conditions and equanimity among the masses may have shifted forever. In the U.S., the masses have learned that political machinery, public relations experts and industry associations are not always the best source of information on a serious problem. The rich are still rich, but even they are taking a hit. Individuals that rely on social services are more alienated than before.

The healing process will be more than economic. Why did people wait so long to begin fixing the year 2000 problem and then jump so quickly to claim that they were finished? Government and private sector institutions have systemic problems that require correcting. The year 2000 has exposed this and hopefully this is a direction that we can all turn to in unison. Until then, good luck to us all.

Appendix A - Aftershock Scenario

Note: This scenario was designed to dramatize a meeting of neighbor's where they are discussing the impact of the year 2000 challenge - and how they are responding.

Players:

John: Neighbor whose house they are meeting at and executive in Silicon Valley semiconductor manufacturer.

Joan: Owner of a local travel agency.

Mark: Owner of local investment firm.

Sandy: Activist working for local non-profit that feeds homeless and elderly.

Sydney: Works for public works department.

Place: Any-town, USA:

John: Thank you for coming over. I realize you are all busy, but I thought we should take stock of our situation. I am really glad that we developed the neighborhood Y2K group so we could coordinate our response to these issues. How are all of you doing with food?

Sandy: Well I am glad that we didn't feast on our dried and canned foods this past January once initial problems passed. When food shelves were restocked by mid-January, some people felt that we had overreacted and that we should begin to deplete our stored food supplies. It really was a few weeks for real shortages began to show up.

Joan: I sure don't know when the travel industry is going to pick up again. Nobody wants to go anywhere with economic uncertainty and so many international destinations suffering shortages and infrastructure problems.

Mark: My investment business has gotten interesting. People are shifting out of the stock market, not because of panic, but because of shrinking corporate profits. Layoffs and inflation can sure take a bite out of discretionary spending. I hope that the energy industry can get its act together soon. I have got to believe that the manufacturing sector is going to be hurting for a while. Brazil, Mexico and other heavy manufacturing countries are taking way too long to get their power and production systems back into shape.

John: This problem really hit us where it hurts. Our company can't get the electronic parts from Asia to produce the circuit boards that we sell. Japan has had nothing but slowdowns and China - well forget about China. It's the same all over the Far East. They got caught flat-footed by not testing and upgrading their production and assembly line systems. I guess they got such a late start that they never reached that stage of the project. They also did not plan for contingencies. At least we stockpiled extra components near the end of the year. That kept us rolling for a few weeks. But now I don't know where we will end up.

Sandy: You people think you have problems. Let me tell you that you are out of touch with reality. I have people with nowhere to live and little or no food. This has always been the case, but when the economy was doing well, we had donations flowing in. You know what happens when the middle and upper class feel a pinch; the lower class gets stuck holding the bag.

Sydney: You're right Sandy. Let's get back to discussing local issues. Our water system has been repaired and is now in good shape. Thank goodness that our sewage system never went down. Those poor people down state had to evacuate. Apparently FEMA actually made it into that city, unlike the other 40 towns that had problems. And our 911 emergency system is now working at 100% capacity, along with that fire equipment that malfunctioned. I hope poor Mrs. Baker can collect on the insurance.

John: You know that reminds me, our insurance company is not paying any of our Y2K claims that we filed. Supplier failures are costing our company, and our competition, millions of dollars. People in this area can't stand another round of layoffs.

Joan: Well my husband works for one of those competitors and he is spending his days working with corporate attorneys in depositions. What a crank he has turned into. They are grilling him on issues that he raised over three years ago. He is now in a position where he is making the executives look like idiots for not demanding tests on critical products and not building contingencies in case failures occurred. Home life is not so pleasant anymore.

Sandy: Come on folks, you're getting off track again. There are still food shortages for the elderly and homeless. I am so glad that we held the food and clothing drives at our local churches last fall. It's going to be difficult, but I plan to lobby people to contribute more canned foods. But selections at local stores are limited, especially with shipment and production delays escalating. And people are less likely to provide for others when they are having economic problems themselves.

Joan: All I can tell you is that I plan to close down my operation at the end of next week. I just cannot continue to pay rent and my employees with no new business coming in.

Mark: I am facing many of the same decisions. The investment business is not what it was. I need to leave town anyway. I stashed away some funds and now I may need to leave for Ohio. My parents aren't doing well and their community never really rallied around the year 2000 problem the way we did.

Joan: I have cousins in Eastern Europe and they are in a world of trouble. There hasn't been any heat there since the Russian natural gas pipeline went down this winter. I would try to bring them back here, but the State Department has shut off all travel visas since late January. More and more people were trying to get into the U.S. due to infrastructure failures in Eastern Europe and Latin America. They don't want us to leave because of the risk over-seas and they won't let people into the U.S. for fear of opening immigration floodgates. So I plan to just stay here and stick things out.

Sydney: That's good Joan. I think that we created a fairly resilient community here with the awareness building that we did up through the end of last year. Stored food only goes so far. Our gardening project is going well. So I believe that this is the best place to be.

John: You're right. I realize that with all of the hassles going on at work, at least my neighbors and community are holding strong. I feel sorry for the isolationists. Locking oneself up, which there was no need for anyway, just ends up breeding discontent. I may be having a little time on my hands soon if things don't clear up at work. I am glad that we paid off our mortgage. I can brush up on my gardening skills. Hey Sandy, do you need anymore volunteers over at the nonprofit group?

Mark: Count me in too. With my investment business slipping, I am thinking about getting into some other lucrative profession. Maybe I could work with the homeless.

Bibliography

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