Word: two
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Dates: during 1970-1979
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...wanted and called a mid-morning meeting of the board's governors in the Fed's second-floor boardroom. There, against a backdrop of silk wall coverings and an enormous blue-and-gold map of the U.S., the governors mulled over their chairman's proposals for one hour, then two, then through lunch and on into the afternoon...
...first two items?an increase in the discount rate and the setting up of reserve requirements for offshore bank borrowings?went through smoothly enough, but the third presented a procedural problem. As a revolutionary change in Fed operations, the plan to focus day-to-day attention on actual money creation required not only board approval (which was given unanimously) but the support of the Open Market Committee, which comprises not only the board's governors but also five other representatives from the Fed's twelve regional banks. Just after lunch a conference call was arranged, unanimous support from the governors...
...estate boom was centered in Florida, had created millionaires and seemed to prove, then as now, that one rarely loses money buying land. Even President Carter's insistence last week that the U.S. had a "good solid economy" stirred echoes of Herbert Hoover, another engineer President, who said two days after the Black Thursday of 1929 that the "fundamental business of the country is sound...
Builders are in trouble too. On construction loans, they generally pay 2 points above the prime interest rate that banks charge their top corporate customers. That means builders are paying 16½% interest, vs. 15½% only two weeks ago. Various charges may bring the effective interest rate to a towering 20% by the end of the year. Builders will start fewer houses and charge more for them. The National Association of Home Builders figures that the average price of a new house, now $64,000, will go up $1,000 by Dec. 31, and the combination of price increases...
...Thus when the mammoth computer corporation decided to raise $1 billion, half of it in 25-year debentures, some Wall Street underwriters anticipated a field day. To be sure, interest rates were expected to go up another notch in late October, but by moving up the launching date two weeks, IBM and its principal underwriters, Salomon Brothers and Merrill Lynch, were confident that the timing was right. It was hideously wrong. The bond issue turned out to be perhaps the greatest underwriting fiasco in Wall Street history...