ARLINGTON, Texas, Jan. 4 /PRNewswire/ -- After New Years' weekend passed
with little repercussions, John F. Mauldin, author of How to Profit from the
Y2K Recession and editor of the Year 2000 Alert investment newsletter, said
investors should not let their guard down just because computer meltdown did
not occur.
Mauldin spent the last two years doing research and disseminating
information about the Y2K Millennium Bug. His web site http://www.2000wave.com is
devoted to Y2K investments.
"I am pleased to report the potential rollover crisis of computer systems
has passed with little repercussions at this point," he said. "As my
subscribers know, I did not expect core infrastructure failures. My main
concern has always been the Y2K ripple effects to small and mid-size
businesses in the US and abroad."
Mauldin said the pieces are already in place for a recession due to Y2K
and an U.S. economy not ready to combat Y2K ripple effects, a sagging global
economy, deflationary pressures, and increasing world tensions.
Mauldin said many industries have yet to be tested for Y2K bugs, including
transportation, imports and exports, foreign banking, oil refinement, and
small to mid-sized business operations, all of which have the potential to
cause a ripple in the markets.
"It is widely acknowledged the ripple effects of Y2K will continue as we
progress through the year 2000," he said. "As I told CNBC recently, we need
to wait at least four weeks before we can even begin to assess the effects of
Y2K on the economy."
Even John Koskinen, the White House top Y2K adviser conceded, "We expect
there will continue to be small glitches" in the world's computer systems.
Mauldin said there could have been a far worse scenario for the New Year's
weekend, and the fact that it did not is testimony to the hard work of
programmers and engineers all over the world.
"We all owe them a debt of gratitude. So often they work behind the
scenes and we take the results of their efforts for granted, almost as magic.
But it is not magic, it is hard, creative work and our lives are better for
their efforts," said Mauldin.
Still, Mauldin is happy he took a "better safe than sorry" stance and is
still keeping that stance for the time being should any future problems occur.
There have been a few reported Y2K snafus -- such as the credit card
machines that malfunctioned in Britain, and the U.S. Defense Department being
unable to process critical intelligence information flowing from one of its
satellite-based intelligence systems; and more stories are beginning to appear
about "minor" problems. Mauldin said the combined affect of thousands of
these "minor" problems, most of which would be negligible in isolation, will
be the catalyst for the Y2K Recession.
"While I plan to keep a sharp eye on the markets, I still believe we are
due for some serious economic changes -- including the possibility of a
recession this country hasn't seen in 20 years," he reiterated.
Capers Jones, an early Y2K analyst and chief scientist at Artemis
Management Systems, estimates that when it is all said and done, more than
$1 trillion will have been spent on Y2K compliance. According to wire
reports, Jones also stresses that more than twice that could be spent on
cleaning-up the after effects of Y2K, including lawsuits stemming from any
problems.
Many economists predict this year will be no different than 1999. Onward
and upward seems to be the rule of the day, Mauldin said, who added that he
agrees with Y2K expert Ed Yardeni, who recently said Y2K disruptions in the
market, could burst the speculative bubble.
Mauldin said, "If the market is less vulnerable because there have been no
immediate Y2K disruptions, the bubble could get even bigger. Seemingly strong
growth and low inflation could justify even higher valuations in the minds of
investors. If the economy continues to boom, look for the Feds to raise rates
again in February. They have expanded the money supply at over 20 percent for
the last half of last year, and now I think they will slow it down somewhat
from that torrid pace. If they do this in combination with a rate increase,
watch out below. The stock market could go into free fall. It will be a
classic game of "chicken" between inflation and interest rates. Fed Chairman
Alan Greenspan has been able to avoid a collision for many years. I hope he
can continue to do so."
And that's why Mauldin stresses that American investors should not let
their guard down. It's just too early to tell.
John F. Mauldin, an expert on Y2K investment issues, is an Arlington,
Texas businessman. He graduated from Rice University and Southwestern Baptist
Theological Seminary. A former CEO of the American Bureau of Economic
Research, Inc., he serves on the International Reconciliation Coalition,
Knights of Malta, and the Republican Party of Texas.
SOURCE John F. Mauldin
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Related links:
http://www.2000wave.com
CONTACT:
Regina G. Purcell, 817-261-4497 or
800-829-7273, for John F. Mauldin
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