The future is now. Or at least it was, two Sundays ago, in Japan. That was when computers in 24 satellites reached their built-in time limit and reset their internal clocks to zero.

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For most folks, it was a nonevent. But techies worldwide were holding their collective breath. That is because those satellites serve the Global Positioning System, the navigators in the sky that guide ships, planes and nearly 350,000 automobiles in Japan. There were concerns that some of those things would get lost or bump into other things they normally avoid. Fortunately, nothing bad happened. At least, nothing has been reported.

At 9 a.m. (Japanese time), all GPS systems that hadn’t been repaired (a new chip would do the trick for older models) went blank. In Japan, about 95,000, roughly a quarter of the total, hadn’t been fixed. And that was despite a year of warnings, mailings to registered owners by the GPS manufacturers and the offer of free chip replacements. Those same makers were inundated with phone calls last week.

Some people see that experience as a warmup for Jan. 1, 2000, which is why this space is once again taking up the Y2K problem. It’s time for the nisen-nen mondai update.

First, the good news. The Japanese government has been moving on the problem. Last September, Prime Minister Keizo Obuchi set up a Y2K task force and the Advanced Information and Telecommunications Society Promotion Headquarters (whew!), a MITI offshoot, adopted a Y2K action plan. (Progress reports are available at www.kantei.go.jp/foreign/y2k/imple2.html) The Bank of Japan, the Tokyo Stock Exchange and other financial groups have begun Y2K tests. The TSE and the Japan Institute of Certified Public Accountants require publicly listed companies to publish their progress on Y2K work.

As a result, the Gartner Group, a U.S. IT consultancy, this spring upgraded Japan’s Y2K preparedness rating from 3 to 2. That means that one-third of major companies here can expect a mission-critical computer to fail, instead of 50 percent. (Other countries in the category include Singapore, South Korea, France, Italy, Mexico and Brazil.)

The Y2K Action Plan progress report notes that by December 1998, 73 percent of financial institutions had completed Y2K conversion and 56 percent had completed simulation testing on mission-critical systems. (Last weekend, the Bank of Japan announced that 98 percent of domestic financial institutions have finished testing reprogrammed computer systems for Y2K glitches. Ninety-six percent either found or don’t expect to find problems. I can’t tell if that is encouraging … ) By the end of March, 85 percent of electricity-generating power stations had conducted simulations, 83 percent of gas providers, and 73 percent of petroleum refiners and marketers. By July 1, 95 percent of phone lines were to have been tested and 65 percent of railway control systems should have been tested.

Mind you, it doesn’t announce the results of the tests, nor whether deadlines have been met. (There’s a lot more in the report for those that want it.)

HSBC Securities gives big companies a passing grade in a July report on Y2K. Analysts looked at disclosure by 298 publicly traded companies, and concluded “it is highly unlikely that listed companies will suffer major disruption from problems caused by the Y2K bug.”

Unfortunately, there’s also bad news. First, go back to the Gartner Group rating. Group 2 still means one company in three will have a big problem. The HSBC report identifies 10 that it thinks “are at some danger of experiencing major disruptions from systems failures” in January 2000. They include Nippon Steel, Nintendo and Family Mart.

It goes on to note that the overall level of Y2K expenditures “appears to be too low,” that completion target dates are “worryingly late” and that by the end of August “only 46 percent of companies say that they will be fully Y2K-compliant.”

Still, the report concludes that “it is highly unlikely that Japan will suffer widespread and damaging disruption as a result of Y2K. If major problems arise at all, they will most likely be caused by the public sector (local government offices, hospitals).”

That’s reassuring.

But as I said at the outset, the future is now: We don’t have to wait till Jan. 1 to get a taste of what is coming. Almost half the members of the Information Technology Association of America experienced Y2K-related problems a year ago.

Financial analysts say the recent jitters in Japan’s bond market have been partially caused by Y2K concerns. They think that banks are worried about having enough funds on hand to get through the first few days of the new year. That creates a shortage of buyers. Banks are also reportedly worried that computers will crash and records of who owns which bonds will be lost. “We think that limiting trades to those which are absolutely vital is the best way to deal with the Y2K problem,” said one large Japanese institutional investor quoted in the Financial Times. “We don’t want to risk missing a selling opportunity if bonds get ‘lost.'”

Since banks trade bonds almost all the time, that has caused the bond market to dry up. And it gets better. Because fewer issues are being traded, it takes less action to move markets. So, Y2K is increasing volatility in markets, too. (Reportedly a Y2K premium has been factored into stock prices and some loans.)

Will banks slow lending down around yearend as a result of those same fears? I haven’t seen any evidence, but it seems like a perfectly reasonable strategy.

Prudence is smart. Panic isn’t. The bottom line is that Jan. 1 is bearing down like a freight train. Be prepared. Stock up, be ready for the unexpected. And if someone sends you a manufacturers’ warning card, read it.

(Brad Glosserman)