It wasn't until February that President Clinton appointed John Koskinen as Y2K czar, launching a concerted federal effort to repair the millennium problem and get the word out to business, the public and foreign nations.
But unfortunately, as knowledge grew, so did fear.
Sum of all fears
Congress took action late in the year, passing Good Samaritan legislation that provides limited liability protection to companies that share their Y2K status. And the Securities and Exchange Commission issued a ruling late in the summer, requiring that publicly traded companies disclose their Y2K-related expenditures in quarterly reports. "Any business that approaches the New Year armed only with a bottle of champagne and a noisemaker is likely to have a very big hangover on New Year's morning," President Clinton said in a speech on the problem at the National Academy of Sciences.
But on the governmental front, Clinton has been mostly silent. Throughout the year, as the still-critical Y2K condition of some federal agencies was revealed -- including a disturbing report that the Defense Special Weapons Agency, which manages the nation's inventory of nuclear weapons, had faked its Y2K compliance reporting -- Clinton has left the issue alone.
Fear grew in an information void. Awareness, followed by a long hiatus before reliable information surfaced about Y2K, only increased the public's anxiety.
Now, as 1999 dawns, the world is gripped by a millennium bug panic, because of the complexity and ubiquity of the problem. And, then there's the cost, which has skyrocketed.
The information flow really didn't begin until the fall.
The federal government has bumped its Y2K repair estimate up throughout the year. The bill now sits at $6.4 billion.
Throughout the fall, corporate Y2K costs piled up. For example, the top 60 insurance companies will spend $2.1 billion; the 12 largest banks will dish out $1.75 billion. Kmart, the No. 3 retailer, will spend $75 million. Sears, Roebuck and Co., the second-largest retailer, revealed it had spent $67 million by the fall and that it will ultimately cost the company $143 million to repair its Y2K problem. At some small companies, it became clear that Y2K repairs will consume the profit earned in a normal quarter.
The apparent suddenness of these has been left with the impression that most work is still uncompleted -- and that the scope of the problem cannot be estimated.
Where are we today?
According to research firm Cap Gemini, global Y2K spending almost doubled in the last six months of 1998, from $256 billion in April to $494 billion in October.
But no one yet knows what the final bill will be, because post-2000 repairs, lost revenues due to Y2K problems and liability lawsuits can't be calculated today. But, a ballpark figure is possible, based on a survey of estimated costs to fix the problem.
Total cost: $1.5B-$2.5B
At ZDY2K, our best estimate for the total cost of the Year 2000 problem, including all the direct costs (repairs, lost revenue and liabilities), is between $1.5 billion and $2.5 billion, based on a consensus estimate produced by research firms.
The impact on the stock market, which could fall in response to unexpected costs or the prospect of widespread liability suits against companies, is not included in this estimate. By comparison, the Asian currency crisis cost global markets approximately $3.5 billion in lost value.
It's also becoming clear that many of the worst-case scenarios for Y2K won't come true. Power generation and distribution systems in three regions are already operating using post-1999 dates. The banking industry has made excellent progress, with fewer than 5 percent of all banks thought to be behind the curve. Telephone companies have announced their networks' readiness to handle calls in 2000.
When most state and federal governments began their fiscal year 1999 calendars, in July and October, respectively, errors had been expected that did not occur. As the fiscal year begins, computers begin to look forward into the next year.
Presumably, government systems with Y2K problems should have experienced at least a few significant failures when performing this look-ahead processes. None were reported.
In the end, 1998 is a microcosm of the total Y2K problem. The year saw awareness and fear grow side by side. As the Y2K picture becomes clearer next year, managing fear will become the foremost issue for society and business.
As we close the calendar on the year-before-the-last-year-of-the-millennium, we're awake and ready to deal with what will come, whether it be hell or high water.