[asia-apec 914] the worst is yet to come

[Roberto Verzola]

M-bombs and Millennarians
by Roberto Verzola
Sept. 18, 1998
Philippine Journal

The chorus of rosy scenarios is unbelievable. Economist Bernardo
Villegas forecasts a 2% GNP increase in 1998 and an "even bigger
increase in 1999." Then comes the IMF, which sees a GNP growth of 4%
in 1999. The World Bank follows suit, predicting 3% growth in 1999 and
5% in the year 2000. President Estrada's economic advisers, according
to the news, project an even rosier scenario. Hello? Are we living on
the same planet?

Here is a totally different scenario. If you are now making plans for
the future, I urge you to consider this scenario carefully before you
set any plans into motion:

The financial and industrial centers of the world will be confronting
in a year or two a crisis so serious that it can sink the world into a
recession and worse. The coming economic and financial turmoil can
also bring down with it those developing countries who delay putting
up the protective walls that more enlightened Asian leaders are
hastily setting up.

At least four factors point towards this looming economic and
financial crisis, the likes of which our generation has never seen:

* The world's financial system today is already extremely shaky. Every
currency devaluation in one country or stock market plunge in another
threatens a new round of collapse in other countries. One tremor after
another is threatening the weakened foundations of the system. It has
become quite clear, from the way minor financial tremors in one corner
of the globe trigger more tremors elsewhere, that international
finance is showing the symptoms of a badly-designed system edging
towards breakdown and failure. From the vantage point of systems
design, the cause of this instability is glaringly obvious: its
designers had committed the fatal mistake of putting efficiency over
reliability, refusing to implement modularization, and relying on
global instead of local factors.

* At the turn of the millennium, major disruptions will occur in all
financial and industrial centers of the world, triggered by the
millennium bomb, also known as the Year 2000 (Y2K) bug. The M-bomb
will hit the economies which are most automated the hardest. The
ensuing confusion and turmoil can lead to breakdowns in basic
services. US computer experts, for instance, are painting worst-case
scenarios that include food riots, bank runs and widespread financial
collapse. If you are looking for The Big One, here it is: millions of
pieces of automated equipment in the very heart of industrial society,
failing and causing near-paralysis at the same time. Today's isolated,
occasional financial tremors--which are bad enough--will be nothing,
compared to the tremendous impact of simultaneous widespread
foreshocks, jolts and aftershocks that will hit every financial and
industrial center in the world as a result of the M-bomb. We may not
be as hard-hit from the direct impact of the M-bomb, but its financial
and economic fallout will be all over us.

* We all know exactly when the M-bomb will go off. The tension and
mass anxiety as everybody anticipates the impact of the turmoil will
build up in 1999 and can easily lead to hysteria and panic. It is a
most unfortunate coincidence that the end of the millennium is also a
period of renewed activity by millennarian movements and doomsday
cults. Their apocalyptic messages and the public's justified anxiety
over the M-bomb will tend to reinforce each other. Thus, at a period
when the financial system badly needs public confidence to survive the
crisis, such confidence will probably by at its lowest.

* The ecological crises caused by corporate deforestation, large-scale
mining, land conversions and other forms of nature-abuse are now
coming to a head, it seems. Consider two news items, hidden in the
inside pages of most newspapers: 1) we are now supposedly in the
middle of the rainy season, but the waters of the Angat and other dams
that supply Metro Manila are still way below normal; and 2) Indonesia,
traditionally a rice exporter, will be importing rice next year. Thus,
the year 1999 threatens us with a water crisis more serious than this
year's, as well as a potential rice crisis as more populous Indonesia
competes with other rice-importing countries for dwindling supplies in
the international rice market.

Each one of these four factors is problem enough. Together, the
quadruple combination of a worsening financial crisis, the economic
turmoil triggered by the M-bomb, an impending water and rice crisis,
and hair-trigger public responses sharpened by turn-of-the-millennium
anxiety comprise a truly explosive mix.

We are definitely in for a supertyphoon. Instead of bringing out the
picnic basket, as economists wearing rose-tinted glasses advise, we
should close our doors and windows tightly, as our neighbors have
started doing.