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Gold/Mining/Energy : Gold Price Monitor
GDXJ 96.06-1.4%Nov 17 4:00 PM EST
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To: Abner Hosmer who wrote (7036)2/1/1998 7:21:00 AM
From: Abner Hosmer  Read Replies (1) of 116762
 
Greenspan's Jan 30 testimony before the House Banking Committee has been posted at the FRB website:

bog.frb.fed.us

>>As I testified before this Committee three years ago, the then emerging Mexican crisis was the first such episode associated with our new high-tech international financial system. The current Asian crisis is the second.

We do not as yet fully understand the new system's dynamics. We are learning fast..

...bank runs have occurred in several countries and reached crisis proportions in Indonesia. Uncertainty and retrenchment have escalated. The state of confidence so necessary to the functioning of any economy has been torn asunder. Vicious cycles of ever rising and reinforcing fears have become contagious. Some exchange rates have fallen to levels that are understandable only in the context of a veritable collapse of confidence in the functioning of an economy.

...These two recent crisis episodes have afforded us increasing insights into the dynamics of the evolving international financial system, though there is much we do not yet understand.

...With the new more sophisticated financial markets punishing errant government policy behavior far more profoundly than in the past, vicious cycles are evidently emerging more often. For once they are triggered, damage control is difficult.

...The belief that local currencies could, virtually without risk of loss, be converted into dollars at any time was shattered.

..These virulent episodes appear to be at the root of our most recent breakdowns in Mexico and Asia. Their increased prevalence may, in fact, be a defining characteristic of the new high-tech international financial system.<<

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