We have two important pieces of information coming in at 8:30 tomorrow morning. I hope the staff can give us a quick first read to start our meeting. I know that instant analysis is risky, but I ask for it anyway. [Laughter]

Yes.

I guess that it’s a consequence of the interaction between what we’ve been saying and the flow of data. You have to be careful about double-counting here, but the flow of data has perhaps convinced the market that what we were saying is right because the market, I ...

I suspect that it’s a combination. But I also think that a number of us in our speeches have been saying things such as that we think policy is at about the right place. If we repeat that often enough, the markets begin to think that we’re not ...

Thank you, Mr. Chairman. I have to start by saying that it’s hard to compete with my colleague Richard Fisher, with his stable of contacts. I have perhaps just a slight amendment on Wal-Mart. My contact there said that he has observed in recent years a changing pattern of ...

I was astonished when I saw the note—I think it was in the Wall Street Journal a couple of weeks ago—that oil consumption actually fell worldwide in ’06 relative to ’05, which really surprised me. I don’t know quite how to explain that because the economies around ...

Second.

Okay. So the alternate would serve until the next president was in office. That has certainly been the practice; my question was about the wording. Thank you.

Then I was not reading it correctly; but you understand where my confusion came from.

I have a question. It has nothing to do with the changes, but something struck me this morning as I was reviewing this material again. Let me refer you to the FOMC’s Rules of Organization, page 1: “If a member or alternate ceases to be a president or first ...

But when you say the asset-management companies, are they providing at least in principle some liquidity support or something?

And they collapsed?

I didn’t know anything about SIVs before last summer, but I must say when I began to learn something about them, I was astonished because it would seem to me that, in Finance 101, you don’t finance long-term, risky assets with short-dated paper. There’s a maturity mismatch ...

At origination, not afterward. Okay. The other question I have is really a comment. On exhibit 1, the middle panel, it seems to me something that needs to be explored here, given that this is not the first time that banks have made a lot of bad bets, is the ...

I have a question on exhibit 2, the top right corner: Are those AAA examples rated as of January 1?

Just very quickly, given the number of people who have talked about reversals, it seems to me that the minutes need to say something about it because the minutes have to be true to the ultimate transcript as published.

Thank you, Mr. Chairman. I can support alternative B, down 50 basis points, although as I’ll try to argue in a moment, I don’t think it makes a whole lot of difference whether it’s down 50 or down 25. I would support the Plosser recommendation on paragraph ...

It was very much a sharp V.

Like that prompt reversal.

958 was just about like that.

Yes. I am older than Governor Kohn, so I can answer. [Laughter]

Thank you, Mr. Chairman. I am not sure how I got to be first here, but I guess I was being unusually agreeable when Debbie asked me. [Laughter] The general tenor of comments that I hear from our directors and people around the Eighth Federal Reserve District— these are the ...

I guess my question is directed as much to the Chairman as it is to Brian, which you will answer in the testimony.

The reason I raise the question is that it seems to me very important that we have some interpretation as to what we make of all this and what we want the market to make of all this. In particular, let’s say the observation that the projections or the ...

Okay. What are they telling us? [Laughter]

Thank you, Mr. Chairman. Brian, I want to ask you about the projections. Well, it is more than an exercise now—the projections that we are offering are for real. What is the message that comes out of the projections—that is, if I am talking to the press or ...

Very quickly, we should not be surprised that banks like the TAF. It increases the bank’s profits because of the difference between the funding costs. The issue is whether the TAF improves the way the markets are functioning, not whether it’s feeding profits into the banks and whether ...

If I may make a comment about that—I think everyone is aware of my view that the TAF does not change the marginal conditions. It’s entirely an inframarginal operation. What it does is to save banks the spread between what their cost of funds otherwise would be and ...

Bill, could you talk about the role of foreign banking organizations? What fraction roughly are they responsible for?

Thanks, Mr. Chairman. I came here 10 years ago with a boom. I’m going out with a pause. [Laughter]

And you could add this sentence of explanation, “President Poole does not believe that current market conditions justify policy action before the regularly scheduled meeting next week.”

I think the market’s view, then, is going to be that we are responding to the markets abroad. Our own market has been closed. I understand the futures market, but there are a lot of people who don’t understand the futures market or know of its existence. So ...

Yes, if I may. I have a question of fact first and then a further question. Do we know at all what the ECB and the Bank of England are considering given that the markets were open and they are the ones who have seen markets and know what is ...

Thank you. I accept all the discussion about the risks of recession and the risks of the financial markets. All those are relevant to what we do next week. But the key issue for me is what we get by acting now rather than nine days from now. I note ...

Thank you, Mr. Chairman. I put a very high weight on policy regularity, and I believe that improved regularity has had a lot to do with policy success in the last quarter- century. But it is worth discussing this for just a minute because of some of the issues you ...

Not quite after that meeting. It is still a little cold. [Laughter] But my instinct is that we have demonstrated a willingness to act decisively when there is a very good case in the data. So if data come in with very bad employment reports, additional financial distress, and all ...

Thank you, Mr. Chairman. I favor alternative B, including the language, and let me outline how I get there. First, I think that it is important to recognize that the Greenbook outlook already takes account, as best we can or as best the staff can, of a lot of the ...

Well, it is not current production, so it is not an export.

I bought my GPS a long time ago, and I don’t play computer games. But at any rate, flat panel TVs, a lot of stuff like that, suggest that many households are not on the edge of being highly stressed. So I don’t know where to come out ...

Thank you, Mr. Chairman. Just before the meeting I learned something about how we select the order. There are a bunch of us sitting with Debbie, and most people seem to want to go toward the end. Debbie apparently has been in touch with too many econometricians because she said ...

I’m talking particularly about the delinquencies, foreclosures, and business failures because I think that they usually occur on the way down during the contraction phase of the business cycle and ordinarily those measures look their best close to a business cycle peak. That’s what I remember, but I ...

Dave, I want to lump together all the various forms of financial distress here—the mortgage market, auto loans, credit card loans, and maybe even business failures. If my memory serves correctly (and it may well not), if we look at the history of business cycle fluctuations, all those different ...

Okay. As I said in our conference call, foreign central banks have ample amounts of reserves. The swap is, therefore, in my view not necessary. I would like to make one other observation. In the past, the swaps have been most often used in conjunction with operations to intervene in ...

I vote against the swap for the same reason that I did before, which I would like to amplify, if I may, just for a moment.

Thank you, Mr. Chairman. I have an observation, and that is, Bill, that most of your presentation has to do with spreads rather than with the absolute level of rates. Although it is true that spreads remain wide, the absolute level of the high-quality rates in general has come down ...

I would like to say that the bottom line for me is that I do not support the TAF, and I believe that it is unlikely to be effective for reasons I’ve already mentioned. Just suppose it goes in and solves the stigma problem; every dollar we put in ...

But you’re not speaking to my point about what it does to bank funding at the margin.

Yes, if I may. I would like someone to explain what is wrong with the following argument. It is the sort of argument I would use if I were teaching an undergraduate money and banking course. Let’s suppose—I use $20 billion as the example, but pick any number ...

Sure, any way. It’s okay.

Thank you. I have four questions that may illustrate that I really don’t understand this at all. First, if we put $20 billion in through the term auction, aren’t we going to have to take $20 billion out some other way to keep the fed funds rate at ...