Alan Greenspan, the chairman of the Federal Reserve Board, claimed victory on Saturday in the Fed's three-year battle to limit the damage from the 1990s stock market bubble.
Speaking to an annual conference of economists, Greenspan suggested that the current economic recovery had vindicated the Fed's decision not to try to prevent the bubble but rather to react to its aftermath.
"There appears to be enough evidence, at least tentatively, to conclude that our strategy of addressing the bubble's consequences, rather than the bubble itself, has been successful," Green-span told the American Economic Association's annual meeting.
"Despite the stock market plunge," he said, "terrorist attacks, corporate scandals and wars in Afghanistan and Iraq, we experienced an exceptionally mild recession, even milder than that of a decade earlier."
The remarks served as further evidence that many Fed officials believe that the economy is stronger than it has been at any point since it fell into recession in early 2001.
Although the economy has grown rapidly in recent months, the Fed's benchmark short-term interest rate remains at an an almost 50-year low of 1 percent, and analysts expect it to rise this year.
Though economists widely praise the Fed's aggressive cutting of the rate since January 2001, Greenspan's sunny views are not universally held.
Some economists note that while the recent recession caused only a slight decline in economic output, the loss of jobs was the worst in 20 years.
These economists say that even without raising the benchmark rate more than the Fed did in the late 1990s, Greenspan might have been able to restrain the bubble and its painful aftermath by speaking about it more forcefully than he did or by tightening borrowing requirements for investors.
The Fed's rate directly affects the rates on many credit cards as well as small business and other loans and indirectly changes mortgage rates. By reducing its rate, the Fed makes borrowing less expensive and encourages spending by households and businesses.
It raises the rate when officials worry that the economy is growing rapidly enough to cause inflation to accelerate.
In his remarks, which reviewed the Fed's monetary policy since the 1980s, Greenspan acknowledged that the Fed had not been infallible in recent years.
Some Fed officials had argued for even quicker rate cuts than Greenspan had wanted in 2002 and early last year.
Those officials said that the economic excesses of the 1990s were still weighing on the economy.
The setting of interest rates is "an especially humbling activity," Greenspan said. "Uncertainty characterized virtually every meeting of the Fed's policy committee."
He added that from time to time, the committee "made decisions, some to move, some not to move, that we came to regret."
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The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
Tropical Storm Usagi strengthened to a typhoon yesterday morning and remains on track to brush past southeastern Taiwan from tomorrow to Sunday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, the storm was approximately 950km east-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, the CWA said. It is expected to enter the Bashi Channel and then turn north, moving into waters southeast of Taiwan, it said. The agency said it could issue a sea warning in the early hours of today and a land warning in the afternoon. As of 2pm yesterday, the storm was moving at
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