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Berkshire Hathaway Inc. Message Board

  • bobo21029 bobo21029 Jul 21, 2002 2:15 PM Flag

    Plunge Protection Team....

    .....I expect the PPT has been in touch with each other this weekend laying out contingencies for the coming week...

    << Plunge Protection Team

    By Brett D. Fromson
    Washington Post Staff Writer
    Sunday, February 23, 1997; Page H01

    It is 2 o'clock on a hypothetical Monday afternoon, and the Dow Jones industrial
    average has plummeted 664 points, on top of a 847-point slide the previous week.

    The chairman of the New York Stock Exchange has called the White House chief
    of staff and asked permission to close the world's most important stock market. By
    law, only the president can authorize a shutdown of U.S. financial markets.

    In the Oval Office, the president confers with the members of his Working Group
    on Financial Markets -- the secretary of the treasury and the chairmen of the
    Federal Reserve Board, the Securities and Exchange Commission and the
    Commodity Futures Trading Commission.

    The officials conclude that a presidential order to close the NYSE would only add
    to the market's panic, so they decide to ride out the storm. The Working Group
    struggles to keep financial markets open so that trading can continue. By the closing
    bell, a modest rally is underway.

    This is one of the nightmare scenarios that Washington's top financial policymakers
    have reviewed since Oct. 19, 1987, when the Dow Jones industrial average
    dropped 508 points, or 22.6 percent, in the biggest one-day loss in history. Like
    defense planners in the Cold War period, central bankers and financial regulators
    have been thinking carefully about how they would respond to the unthinkable.

    An outline of the government's plans emerges in interviews with more than a dozen
    current and former officials who have participated in meetings of the Working
    Group. The group, established after the 1987 stock drop, is the government's
    high-level forum for discussion of financial policy.
    <SNIP>
    ..."We all have everybody's home and weekend numbers," said a former Working
    Group staff member.

    The Working Group's main goal, officials say, would be to keep the markets
    operating in the event of a sudden, stomach-churning plunge in stock prices -- and
    to prevent a panicky run on banks, brokerage firms and mutual funds. Officials
    worry that if investors all tried to head for the exit at the same time, there wouldn't
    be enough room -- or in financial terms, liquidity -- for them all to get through. In
    that event, the smoothly running global financial machine would begin to lock up.>>

    the beat goes on...
    Bobo
    PS.....it would be interesting to see the TV ratings for the financial channels Monday.....CNBC could have their best market share ever IMHO...

 
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