Or, at least the overloading...

Central Standard Time [Y2K started at 6AM CST on December 31, 1999]:

• December 31, 1999: 7AM [1 hour into Y2K]: MyCNN starts destabilizing
• December 31, 1999: 9-10AM [3-4 hours into Y2K]: MyCNN crashes. No error page, total failure to connect.
• Error page available at about 8AM on January 4, 2000: not available at about 11 PM on January 3, 2000.
• Barely up on January 5, 2000. Date-sorting seriously impaired, and only a few agencies clipped.
• Xinhua, African News Service restored January 6, 2000.
• Near-normal coverage restored on January 7, 2000. Password server slightly unstable.

There are going to be partial holes in MyCNN coverage from Dec. 31 1999 to January 4, 2000. MyCNN Asia coverage will be worse: totally blind through at least January 4, 2000. I'm waiting to get a reasonable synchronization before pushing through updates. Subpages may (or may not) be updated earlier than this. I dislike this even more than you ;)

Events related to the Crash

• Brazil reported the following:
• Of the 418,351 workers who became employed in 1999, only 5.6% were legally employed.
• 94.4% of Brazil's workforce was illegally employed in 1999, in contrast to 80% in 1998.
• This definition of illegal is in Brazil's Constitution: it is unConstitutional in Brazil to create a job in Brazil which lacks even one of these: year-end bonus, 30 days of vacation, unemployment insurance. I suspect, from the way the report was worded, that there are more failures that would make a job unConstitutional. The Brazilian government has openly considered amending the constitution to remove these traits for the past three weeks. However, Brazil's unions are fighting this effort.
• There is some debate over whether the flight of businesses from Argentina to Brazil is at risk of increasing Argentina's unemployment rate over 13.8%. The question is whether Argentina's greater macroeconomic stability is more important that Brazil's potential advantages in size of market, and costs of labor, taxes, finance, and tariffs. So far, new businesses have replaced ones that have fled from Argentina to Brazil.

• The World Economic Forum (at Davos, Switzerland) had a miniature version of the protests at the 1999 Seattle WTO convention. The concentration of protesters in the crowd was fairly small, as it seemed many just wanted to observe and/or be entertained by street entertainers. Most of the protesters were French or Italian, and the damaging parts were timed for U.S. President Clinton's speech.
• Vandalizing a McDonald's, and some broken glass and damaged cars. Two policemen suffered head injuries, and at least two arrests were reported. In contrast, no police injuries were reported at the Seattle WTO convention protests -- and far more arrests.

• Indonesia's planned decentralization, while politically necessary in a bid to avert immediate secession of several Indonesian states [Aceh and Irian Jaya in particular], was noted as posing political and budgetary risks in its own right by the World Bank.
• Responsibility for spending must be transferred with the revenues, and some effort is necessary to verify that state and local governments can spend the revenue in a reasonable way.
• If this is not handled cleanly, the Indonesian government could fail to reach consensus on how to decentralize, leaving it without direction on macroeconomic stabilization measures.
• The World Bank started disbursing loan payments to Indonesia again, while warning the military not to attempt a coup. [I presume an explicit coup: the stealth coup is well in progress....].
• Japan's deflation continued in Dec. 1999, combined with a 4.7% drop in consumer spending in Dec. 1999 compared to Dec. 1998.
• The drop in consumer spending is partially explainable by a lack of winter bonuses [8.2% decline in Dec. 1999 from Dec. 1998] and a wage decline of 6.1% in Dec. 1999 compared to Dec. 1998.
• The spending sectors expected to correlate with Y2K preparation were virtually unaffected.
• Unemployment has stabilized: overall, companies are now converting positions from full-time to part-time instead of completely eliminating them.
• The Japanese government is predicting a consumer demand-driven recovery somewhen between June 2000 and September 2000, with 1% GDP growth from April 2000 to March 2001.
• From a political point of view, this prediction had better be correct. Japan is entering the second year out of four it has to use massive deficit spending. That is, before Japan's deficit spending impairs its sovereign bond rating of AAA+....

• Zimbabwe has initiated paperwork to obtain a U.S.$100 million credit line from Libya to buy fuel. It is unclear whether this is a previously negotiated credit line being formally activated, or a new credit line. [Differing government officials make superficially contradictory statements. I presume that all statements are correct....]

• The IMF has sent a team to Kenya to negotiate an IMF loan deal. The last one was suspended in July 1997 as a protest against rampant official corruption, which proceeded to send the macroeconomy into an explicit recession. Apparently, the reform drive in the public service has finally gotten enough results to be noticed.
• This reform drive effectively started in July 1999, with the appointment of scientist Richard Leakey to the head of the public service with an explicit mandate to root out corruption.

• South Korea has announced that a plan for selling off Daewoo's debts has been agreed to. The overall rate was said to be between 38% and 40%. The response deadline is in mid-March 2000; for this plan to formally succeed, 90% of the international creditors must agree to it.

• South Korea's Financial Supervisory Commission has suspended operations at Nara Investment Banking Corp. It seems that Nara's massive exposure to Daewoo bonds and loans has given it enough bad debt to render it (temporarily) unviable.
• Zimbabwe's situation continues to unfold:
• Apparently, NOCZIM's credit lines have been cut over a U.S.$1 billion debt and must be renegotiated. This is the second renegotiation required in two months. (One was required Dec. 9, 1999.)
• Zimbabwe's GDP is reported to have shrunk 1.2% in 1999.
• Zimbabwe continues to totally reject IMF conditions for reinstating aid without suggesting alternatives.
• Zimbabwe's rejection of an IMF audit of Zimbabwe's support of the Congo is reasonable. Permitting it is a violation of national security (not only military operations, but the electricity supply).
• I have no opinion about changing from a managed exchange rate to a market exchange rate for Zimbabwean dollars. Failure to change, however, has contributed to Zimbabwe's inability to get hard currency. That does not mean changing over will improve anything! Indonesia and Ecuador both worsened after such a move. Also, Zimbabwe seems to prefer consulting Malaysia to consulting the IMF.
• With an imploding GDP, it is a technical question what size the deficit has to be anyway. I have no idea whether 3.8% of GDP deficit (let alone 2.8%) is attainable.

• South Korea's Finance Minister Lee Hun-jai believes that an agreement with foreign creditors of the Daewoo conglomerate could be as early as this weekend (Jan. 22 or 23, 2000). The gap in the percentage rate has reduced. Daewoo is now offering 36.5% overall, compared with a South-Korea-reported request by creditors for 45%. An intermediate stage was 59%.
• 59% was incorrectly reported in the South Korean statement as the initial stage in Dec. 2000. The correct initial stage is 75%, as quoted in these pages on Dec. 14, 2000.
• A review of the stories leading up to it gives the impression that South Korea is dangerously overconfident.
• Note: The Korea Asset Management Corp. -- the government method of cleaning up bad debts -- is buying these at 35%, making it politically difficult to go significantly higher for anyone.

• Britain's Export Credit Guarantee Department had reported (somewhen last week) that Zimbabwe had defaulted on repayments, and owed U.S.$1.4 million to it.

• Indonesia is due to announce formally this week its April 2000-Dec. 2000 budget. [It is shorter than 12 months because Indonesia intends to align its fiscal year with the calendar year.]
• The budget assumes U.S.$4.5 to U.S.$5 billion (about 5% of estimated GDP) in borrowing to finance the deficit. This is not expected to be difficult. The deficit for the fiscal year ending Mar. 2000 is expected to be only about 4% of GDP, due to delays in spending on the social safety net.
• About U.S.$2 billion of sovereign debt to the Paris Club is expected to be rescheduled this month.
• ASSUMPTIONS: oil price U.S.$18/barrel; exchange rate 7,000 rupiah/dollar; GDP growth 2% to 4%; inflation 3% to 5%
• Bank recapitalization is expected to be about 4% of GDP, i.e. about 10% of the budget
• Revenue sharing with provinces (a new thing) is expected to reduce income from natural resources.
• There is some question how fast fuel and power subsidies can be cut. The initial plan (openly not necessarily feasible) is an increase in 35% for electricity costs for large consumers, a premium fuel price increase of 10%, and a diesel price increase of 31%. Overall fuel price increases are expected to be 20%, slashing fuel subsidies down to 18.3 trillion rupiah in April 2000-Dec. 2000 from 27 trillion rupiah in "the year-to-end March 2000". I'm not certain how to interpret this numerically.
• Privatization is expected to raise 5.9 trillion rupiah; IBRA is expected to raise 28.5 trillion by asset sales.
• While public official pay raises are being considered "to reduce corruption", the exact extent seems to be in question for top-level officials.
• Import taxes on rice (30%) and white sugar (25%) are expected to remain in place.
• There is a commitment to auditing the military (this is not necessarily a good thing). It should be noted that part of the military's funding is from several military-controlled conglomerates.
• Thailand's largest corporate debtor, Thai Petrochemical Industries, PCL, has finally agreed to declare bankruptcy.
• Thai Petrochemical Industries, PCL, is the lendee for 5% of Thailand's non-performing loans....
• Three other large South African banks have made their Zimbabwe policy clear.
• Standard Bank and ABSA have greatly reduced their exposure. They are definitely favoring long-term customers, and are proceeding on a case-by-case basis.
• NedBank is requiring transactions to be self-liquidating or otherwise have controlled risk.

• First National Bank of South Africa suspended all credit lines to Zimbabwe on Jan. 15, 2000. This was driven by the shortage of hard currency in Zimbabwe, combined with the Zimbabwe government's continued alienation of the IMF, World Bank, etc.
• At least one local commentator is on record that Mugabe's seeking of quick fixes (relief from Libya and Malaysia) will not be effective.

• Camdessus (of the IMF) has commented that the pressure for higher interest rates in the U.S. and Europe would be a topic of discussion at the G7 conference. [Remember, the interest rate differential between the U.S. and Japan is what is making the yen strengthen against the U.S.$ -- which could snuff off Japan's import-export macroeconomy.] He also believes that France's effort to reduce unemployment by slashing the workweek to 35 hours from 39 is misguided.

• Zimbabwe's unemployment rate was reported at 55%. According to a study sponsored by Zimbabwe, 76% of Zimbabwe's population of 12 million is in poverty.
• U.S. Treasury Secretary Lawrence Summers has again stated that the U.S. cannot continue to be the sole economy in the G7 that has internally-driven growth.

January 12, 2000 [MyCNN]

• Zimbabwe's December 1998-December 1999 inflation rate was 56.9%. This is being blamed on technical considerations (namely, a 1.9% rise in prices in December 1999 compared to a 4.7% rise in prices in December 1998).
• The Indonesian Bank Restructuring Agency [IBRA] chief has been replaced, due to problems with Bank Bali's accounting relative to the Golkar party. Glenn Yusuf was replaced by Cacuk Sudarijanto. However, political infighting continues to endanger IBRA.
• A rise in oil prices was not enough to break the deflationary trend in Japan for December, prompting predictions that the Bank of Japan will continue its zero-interest-rate monetary policy.

• More details of Mahuad's attempt to dollarize Ecuador's currency have appeared.
• A currency peg of 25,000 sucres/U.S.$1 is in force. The changeover is expected to take about a year. However, the exchange of sucres for U.S.$ has already been started.
• At least one political faction views this as defining the leader of the U.S. Federal Reserve being the president of Ecuador.
• By analogy with Panama, the after-dollarization inflation rate is expected to be around 10%. Panama dollarized its currency some time ago.
• Salaries and financial/trade deals must be converted to U.S.$.
• Mahuad's entire cabinet resigned, apparently to give maneuvering room for Mahuad to acquire votes.
• This is Reuters. Xinhua, on January 12, 2000, seemed to think that this mass resignation was not accepted by Mahuad. ???
• IMF negotiations have to be restarted from scratch -- but this was already necessary.
• The IMF has agreed to support Ecuador's dollarization move.

January 9, 2000 [CNNfn]

• A power struggle between Ecuador's President Jamil Mahuad and Ecuador's Central Bank may be imminent. President Mahuad has announced his intention to force a (U.S.) dollarization of Ecuador, essentially eradicating the Ecuadorean sucre as a currency. Mahuad's initially proposed conversion rate for the annihilation of the Ecuadorean sucre is 25,000 sucre to U.S.$1. President Mahuad did not announce a timetable.

• Ecuador's military has explicitly refused to conduct a coup, in the face of multiple organizations requesting the coup.

• Petroecuador has announced an indefinite length strike starting Jan. 17, 2000 to apply more pressure to force Ecuador's President Jamil Mahuad to resign. Ecuador's Central Bank reiterated that it will stick to a free-floating exchange regime that has been imposed since late February, 1999. Of course, this regime resulted in a 67% decline for 1999, combined with a 17% decline through Jan. 7, 2000....

• Ecuador's President Jamil Mahuad declared a state of emergency in order to get resources to suppress the union protest scheduled for today.
• There may have been justification: apparently, information leaks gave the government the locations of Molotov cocktails and other bombs.
• Tear gas was required to prevent 800 protesters from reaching the presidential palace.
• There are questions whether the Jamil government controls Ecuador's Central Bank adequately. The Central Bank has indicated it plans support measures for the Ecuadorean sucre on January 7. The IMF has indicated this would immediately annihilate all Ecuador-IMF negotiations to date...and the Jamil government says no such support measures will be occurring.
• Apparently, another protest is scheduled for January 12, 2000.

• Ecuador's President Jamil Mahuad has referred to the growing public demand for his immediate resignation as being driven by a conspiracy to overthrow the government.
• A group of Ecuadorean Indians (Indians are 40% of Ecuador's population) is planning a protest on January 15, 2000 that would include roadblocks and a march to Quito to demand Mahuad's resignation.
• Construction workers are planning a protest on Thursday (January 6).

• Video was broadcast depicting Ecuadorian soldiers looting homes in a volcano-induced evacuation zone around the town of Banos that probably will exist for years (provided Ecuador continues to exist). It seems several thousand townspeople have taken this as justification for physically interfering with the military patrols in the area.
• First Merchant Bank (where??) has published an economic summary report about Zimbabwe. I won't go into details here, but I will mention the key question of the report: can Zimbabwe become 'IMF-compliant'?