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« Current Market Perspective -- Our Best Ideas on ETFs | Main | Investor Guide to the S&P Negative Outlook on US Debt »

April 17, 2011


S Vanemmerik

The Y2K anaogy is an appealing one but based on a complelety different situation. JimS is right on the button - it wasn't a problem because a lot of indiviual organisations fixed their own individual problems. QE2 is a totally different issue. For example:
1. It's not a heap of technical software issues that are the resposibility of a lot of different entities. In contrast the QE2 issue is in control of one entity and possible impacts are widely dispersed and out of control of the entities impacted.
2. The impact of things going "wrong" due to QE is highly contentious, likely invovles feedback loops and any impacts could occur over a long and uncertain period of time. In the case of Y2K if things went wrong the problems would be immediate then rapidly fixed. We're not going to turn off QE2 one day and the next day know there are no issues.
3. During the lead up to Y2K period there was a huge boom in interent/IT companies not a fear the stockmarket would be negatively impacted by Y2K. Y2K was not primarily a stock market/investment market based fear. Again nothing like QE2.

I'm not saying winding back QE is going to have a huge impact but simply saying that we can't assume it's like Y2K because it's nothing like Y2K.


The reason Y2K turned out to be No Big Deal was because entities with lots of "legacy" systems collectively spent billions to fix them. Since I was in software and services sales during those years, I was grateful for the mess that had to be cleaned up.

QEII? I haven't a clue.

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