It appears to be slowing in certain areas and in our District but is nonetheless running at a stout rate. It seems to have come off somewhat but, given the large projects that are planned, the numbers work out to show increasing pressure on the labor that’s available to ...

Yes. But here are some data to put this statement in perspective. The contact from the largest company reports that cancellation rates, which were running at 50 percent in their most stressed markets, particularly in California and Florida, have come back to 20 to 25 percent—relatively good news. One ...

Well, Mr. Chairman, first on our cheaper, more affordable, and perhaps luckier Eleventh District economy, we estimate that employment growth ran at a rate slightly greater than 3.2 percent last year and our output growth exceeded 4 percent. We do see some possible slowing, but there is still very ...

Thank you.

So it’s a gap analysis.

So I would be curious as to what your observation is in terms of trend unit labor costs in our important trading partners.

Just to follow up on your point and go to exhibit 12, about foreign GDP growth rates, which Joe talked about. In terms of any pressures on unit labor costs that you see developing, I didn’t quite catch your statement, or I may have misinterpreted it, but basically I ...

But we’re still working on it.

Bill, if you talk to the producers and the refiners—you’ll find out that I like to do that kind of thing—there has been some concern, although one can’t measure it with any precision, that the so-called city refiners in London or on Wall Street, meaning the ...

You have to put your head down, Bill. [Laughter]

For example, would you consider AAA industrial-grade credits?

We’re bridging.

I heard eleven people argue the case for alternative A. I counted them.

But I asked you that during the question period.

Of course. They can always have their markup, but you can also reverse the argument and say, so why do you want to cut rates? Again, I think we’re pushing on a string here, Mr. Chairman. Forgive me for speaking, but the guts of what we’re doing and ...

The key is paragraph 4 in alternative A—that is what we’re doing.

Mr. Chairman, I can’t support that, and I’ll tell you why. I do feel that we had an elegant solution in alternative A. I firmly believe that if we target 0 to 25 basis points—the effective funds rate we all know is trading at 1/16—it ...

Yes, sir.

Mr. Chairman, I just want to come back to a point I suggested. Is there any sense in transposing paragraphs 3 and 4 to emphasize the new regime?

Mr. Chairman, before I get started, I do think that President Plosser has raised good issues on the governance matter. I hope that we will continue to discuss this, bearing in mind that there may be changes in the composition of the governors with a new President and given the ...

Thank you.

Even though we are not stating a specific target, it would be implicit in the change in the level of the discount rate.

May I ask two questions, please? With regard to alternative A, I am curious, Brian, as to how you think the bankers would respond to that in terms of their pricing behavior and loans and prime. Second, our friend from the New York Desk, how do you think the markets ...

Mr. Chairman, thank you. President Rosengren talked about micro behavior, and at the beginning, First Vice President Cumming talked about the hunkering-down mentality. I have been focused on the microeconomic behavioral responses to our current situation. As one of my CEO contacts outside my region said, we are basically all ...

He just wanted you to know about it, Mr. Chairman.

Nathan, you would probably have been arrested for treason if you had said that in Latvia—literally. The economist who gives a negative forecast is arrested for treason. Stay here. [Laughter]

Thank you, Mr. Chairman.

And what is the order of magnitude?

So December/January?

It might be something to look at next time. Finally, on the inflation table in exhibit 5—and you have talked about the numbers that were released this morning—do you see additional monthly deflationary numbers on the headline CPI, or could you see this happening for a prolonged period ...

I guess my point is that the way in which it works is that it gives people incentives to be even more conservative in the financial management of their operations. On household credit, do we have a sense of how much shift is taking place between credit card usage and ...

Which leads to more-conservative financial management and business management. You do everything you can not to become an A2/P2 borrower, to slip off the A1/P1 ladder.

So the incentive for A1/P1 borrowers is to do everything they can to keep that status, obviously. It is a much more attractive proposition.

I have three questions, Mr. Chairman. One on the commercial paper market. What is the spread between A1/P1 and A2/P2 right now?

But you are saying that we do expect further currency depreciation.

That sort of jibes with the reports that I am hearing back from the CEOs doing business in China. In fact, the cutback has been much more dramatic than they expected. Semiconductor firms, for example, have put ship-stop orders, meaning they are stopping for lack of payment, and the retailers ...

Just a comment on the projections for China—these numbers seem to be less than what they are saying officially. Am I correct?

Mr. Chairman, my colleague Harvey Rosenblum made an interesting point the other day that we’re at risk of being perceived as migrating from the patron saints of Milton Friedman and John Taylor to a new patron saint—Rube Goldberg. [Laughter] By the way, I’m going to give a ...

Yes, sir. I just want to ask a question—again acknowledging that I am the least well educated on this subject matter and not as erudite in my understanding. So this is a tutorial question. What we have been doing is implicitly acknowledging that standard monetary tools are not as ...

Corporate grade became junk in the Great Depression.

Thank you.

It’s not this total?

So for 2009?

Yes.

Then speaking of guarantees, I have just one more question, if I may, Mr. Chairman. In chart 14, are these net of credits that might have some kind of government guarantee?

Is that pretty well understood in the marketplace?

Bill, has the FDIC’s temporary liquidity guarantee program interfered with or added to the confusion in the purchase and sales of fed funds, or has our excluding sales under one month changed the picture?

First, I would like to thank you, Mr. Chairman, for that very thorough and clear elucidation. I meant to mention earlier that I actually agree with President Evans. It’s worthwhile now and then evoking Ronald Reagan. What I mean by that is not his “Where’s the pony?” comment ...

Mr. Chairman, if you had kicked around in the streets of Hong Kong in 1997, then you would have wandered into elementary schools and seen what we called at that time “Quotrons”—children trading stocks on the lunchroom floor. It was the surest indicator that the market was out of ...

Mr. Chairman, if I could just add one other thing. We are hearing more and more about people switching to LIBOR, trying to shift their lending contracts to LIBOR rather aggressively, obviously, because they are higher rates. But I’m wondering if you’re picking that up as well.