IP: Yardeni Senate testimony on Y2K

[Dave Farber <farber () cis upenn edu>]

Date: Fri, 14 Nov 1997 10:30:24 -0500
From: Jock Gill <jgill () penfield-gill com>




Dave,


FYI -


I note that Ed Yardeni, as Chief Economist of Deutsche Morgan Grenfell,
is now offering odds of 35% that Y2K will cause at least a moderate
global recession.


Sorry the forward did not work out.


Regards,


Jock


D. Isenberg sends the following.


Subject:=A0=A0=A0=A0=A0=A0=A0=A0 Senate Testimony Site
=A0=A0 Date:=A0=A0=A0=A0=A0=A0=A0=A0 Fri, 14 Nov 1997 08:48:21 -0500
=A0=A0 From:=A0=A0=A0=A0=A0=A0=A0=A0 "David S. Isenberg"=
 <isen () research att com>
=A0=A0=A0=A0 To:=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 jgill () penfield-gill com


Jock,


Please check out the below:


http://www.senate.gov/~banking/97_11hrg/110497/witness/yardeni.htm


which I linked to from=A0 http://www.yardeni.com/


Ed Yardeni, as Chief Economist of Deutsche Morgan Grenfell
does not have a consulting practice to build . . . it can
be argued that he is just doing his job.=A0 His statements are
quite level-headed *and* quite extreme, e.g., "I believe that it is
inevitable that it could disrupt the entire global economy in
several ways."


I enclose a few of the opening paragraphs of his testimony below.


David I
-------




Senate Banking, Housing and Urban Affairs Committee


Subcommittee on Financial Services and Technology






Hearing on Mandating Year-2000 Disclosures
for Publicly-Traded Companies




=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=
=A0 Prepared Testimony of Dr. Edward Yardeni
=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=
=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0 Chief Economist
=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=
=A0=A0=A0=A0=A0=A0=A0=A0=A0 Deutsche Morgan Grenfell


=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=A0=
=A0=A0=A0=A0=A0 10:00 a.m., Tuesday, November 4, 1997






Full Text Of Testimony


Mr. Chairman, Distinguished Members of the Subcommittee:


My name is Ed Yardeni. I am the Chief Economist of Deutsche Morgan
Grenfell,
a global investment banking firm. I
appreciate the opportunity to testify before this Subcommittee on the
issue
of mandating Year 2000 disclosure by publicly
traded companies. The title of my prepared testimony today is, The Year
2000
Problem: We Need Answers. Of course, all
the opinions I express today are my own and may or may not be shared by
my
company. I am here as a concerned citizen, not
as an official spokesman of my company or industry.


The Year 2000 Problem (Y2K) is a very serious threat to the US economy.
Indeed, I believe that it is inevitable that it could
disrupt the entire global economy in several ways. If the disruptions
are
significant and widespread, then a global recession is
possible. The depth and duration of such a downturn is hard to predict
at
this time. To do so requires answers from
government and business leaders around the world to many questions about
the
problem. They must publicly provide much
more information, so that we can determine the economic risks ahead and
prepare for any foreseeable and plausible
worst-case scenarios if we fail to fix the problem properly in time.
With
regard to the specific topic of this hearing today, I
believe that all businesses, both incorporated and unincorporated,
should be
required by a new law to publicly reveal their
cumulative and current quarter outlays on fixing Y2K. They should also
be
required to reveal their best- and worst-case
projections of such outlays. Most importantly, all business
establishments
should be required to post a "Y2K Progress Report"
of their current and projected progress. This report should be very
detailed, including:


=A0=A0 1.a schedule of companywide progress, showing the projected and
realized
dates of the standard five stages of
=A0=A0=A0=A0 remediation: Awareness, Assessment, Renovation, Validation, and
Implementation;
=A0=A0 2.individual schedules of progress on all mission-critical
activities, or
at least a summary of how many mission-critical
=A0=A0=A0=A0 activities exist and what percentage of them are at each of the
five
stages listed above;
=A0=A0 3.specific lists of business activities that are expected to be
impaired
or terminated, either temporarily or permanently, as
=A0=A0=A0=A0 business triage decisions are made between now and January 1,=
 2000;


=A0=A0 4.a discussion of progress and risks related to outside vendors and
customers who might not be Y2K compliant in time,
=A0=A0=A0=A0 including suppliers of electricity and telecom- munications
services;
=A0=A0 5.a discussion of Y2K-related legal issues, including budgets for
anticipated litigation expenses and liability outlays;
=A0=A0 6.and, finally, a discussion of contingency plans in the event that
Y2K
compliance is not achieved on a companywide or a
=A0=A0=A0=A0 line-of-business basis;


I recognize that the current regulatory system does require each
individual
corporation to report Y2K outlays and risks that are
likely materially to affect the corporation's financial condition. The
current requirements for reporting Y2K issues are the same
as those required for any other event that might have a material impact
on a
corporation's balance sheet and income statement.
However, Y2K is a unique business risk that requires unique disclosure
requirements. It is a systematic risk that will affect all
businesses, all vendors, and all customers all of us. It will affect
even
those who long ago anticipated the problem and expect to
be completely ready for the year 2000.


In other words, it is a risk to the well-being of our entire local,
national, and global community. We must protect not only the
interests of investors, but also the general public. As I discuss below
and
in the attached appendix to my testimony, there will
be Y2K problems that are bound to disrupt all our lives. We need all the


information available to prepare for this problem as a
community. Our system of self-interested capitalism is not designed to
handle a systemwide indeed global risk to our collective
well-being. Individual business management must protect the interests of


their own entities. For competitive reasons, they are
likely to reveal as little as possible about material risks to their
business. In this case, the public's need to know all the Y2K
risks must prevail over the legitimate, but parochial interests of
business
managers.
************************************
David S. Isenberg
************************************
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isen () research att com
************************************









--
____________________________________________________________________
Jock Gill
jgill () penfield-gill com
www.penfield-gill.com
____________________________________________________________________=20








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"Photons have neither morals nor visas"  --  Dave Farber 1994
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