From: Gary [gkuever@dslextreme.com] Sent: Friday, September 29, 2006 7:03 PM To: Bart (nowandfutures) Subject: ppt from http://www.sprott.com/pdf/TheVisibleHand.pdf In a famous statement issued at 8:41a.m. on Tuesday, October 20, 1987, Greenspan said that, "The Federal Reserve, consistent with its responsibilities as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system." See Bob Woodward, "Crash of October 1987 Challenged Fed Chief," The Washington Post (November 13, 2000): http://www.washingtonpost.com/ac2/wp-dyn/A1742-2000Nov11. Excerpted from Bob Woodward, Maestro: Greenspan's Fed and the American Boom. Simon & Schuster, 2000. ============================================================= In a speech given in Leuven, Belgium, in January 1997, Greenspan repeated a statement he made in November 1996,51 declaring that governments, including central banks, have been given certain responsibilities related to their banking and financial systems that must be balanced. We have the responsibility to prevent major financial market disruptions through development and enforcement of prudent regulatory standards and, if necessary in rare circumstances, through direct intervention in market events. But we also have the responsibility to ensure that private sector institutions have the capacity to take prudent and appropriate risks, even though such risks will sometimes result in unanticipated bank losses or even bank failures. Remarks by Chairman Alan Greenspan at the Catholic University Leuven, Leuven, 1997): http://www.federalreserve.gov/boarddocs/speeches/1997/19970114.htm. ============================================================== In February 1994, for instance, after the Fed made its first move to raise rates, the Dow dropped nearly 5% to about 3800. "We partially broke the back of an emerging speculation in equities," Mr. Greenspan contentedly told his colleagues in a conference call the afternoon of Feb. 28, according to transcripts. "We had a desirable effect." Jacob M. Schlesinger, "Change Agent: How Alan Greenspan Finally Came to Terms With the Stock Market - As Investors Became More, Well, Exuberant, He Saw A Logic in Their Methods - Worried by a 'Wealth Effect,'" The Wall Street Journal (May 8, 2000). =============================================================== http://www.archives.gov/federal-register/codification/executive-order/12631.html =============================================================== Well, what I just want to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets. You reported just a while ago that the Fed has lowered the overnight interest rates, will put about $80 billion into the market. In addition, the SEC, the Securities and Exchange Commission, has relaxed the rules for companies on whether or not they can buy back their stock in case they start to fall. And dozens of companies, including big companies like Intel and Cisco have announced that they would buy back their stock if necessary. Third, there will be some trading curbs in effect today. If the market drops by about 1,100 points, they will probably suspend trading for a while. And perhaps most important, there's been - the Fed in 1989 created what is called a plunge protection team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges, and there - they have been meeting informally so far, and they have kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. Transcript of ABC News "Good Morning America. "Newscast: SEC relaxing rules to help stock exchanges; Banks agreeing to help if market gets in trouble." September 17, 2001. ----------------------------------------------- Mr. Stephanopoulos served in the Clinton administration as the senior advisor to the president for policy and strategy. He was a key strategist in both Clinton presidential campaigns and was involved in the development of virtually all major policy initiatives during President Clinton's first term in office. ABC Media Net, Biography of George Stephanopoulos: http://www.abcmedianet.com/shows03/news/correspondents/stephanopoulos.shtml =============================================================== March 13, 2003 Haruhiko Kuroda, adviser to Japanese Prime Minister Junichiro Koizumi's cabinet, will visit the United States from Thursday to discuss how to stabilize financial markets amid the crisis over Iraq. During his three-day visit, Kuroda, former vice finance minister for international affairs, will meet with Federal Reserve Chairman Alan Greenspan, Treasury Undersecretary for International Affairs John Taylor and other U.S. officials. They are expected to discuss monetary policy and measures to cope with possible stock market tumbles in the event of a war in Iraq. Japan to Send Cabinet Adviser Kuroda to U.S.," Jiji Press (March 13, 2003). --------------------------------------------------------------- about a week later: Japan and the United States have agreed to cooperate to take action in financial markets if a crisis occurs, Chief Cabinet Secretary Yasuo Fukuda said Wednesday as a war in Iraq appeared just days away. The agreement was reached when former vice minister of finance for international affairs Haruhiko Kuroda travelled to the United States last week to meet key economic figures, including Federal Reserve chairman Alan Greenspan. "There was an agreement between Japan and the U.S. to take action cooperatively in foreign exchange, stocks and other markets if the markets face a crisis," Fukuda told a news conference. States agree to cooperate to keep markets stable: Fukuda," Agence France-Presse (March 19, 2003). =============================================================== a senior Fed official who attended the meeting said the reference to "unconventional means" was "commonly understood by academics." The official, who asked not to be named, would not elaborate but mentioned "buying U.S. equities" as an example of such possible measures, and later said the Fed "could theoretically buy anything to pump money into the system" including "state and local debt, real estate and gold mines - any asset." Peronet Despeignes, "Fed considered emergency measures to save economy," Financial Times (March 25, 2002). =============================================================== =============================================================== =============================================================== ===============================================================