Days like these are trying for those of us who lived through the financial crisis and particularly those of us who have taken it upon ourselves to act as financial shepherds for others. The echoes of 2008-2009 are too clear. We like to believe that banking regulation has gotten better, but nothing is ever perfect, the risks of any given situation only become evident when they have broken the wrong way, but mostly none of us can keep our eyes on all of it so we are essentially outsourcing monitoring of if to others: bank regulators, the press, and other market participants.
In a lightning round, I'd give the Fed a B+ for recent years, an A for not letting itself get pushed around by Trump* but a B for failing to see that inflation was less transitory and supply chain-driven than it was earlier in 2021. But not worse than a B. The financial press in general has shown itself to have backbone through these years of its vilification. It's not perfect, but the core financial press organs (Journal, Financial Times, Economist, Barron's etc). keep on ticking and doing their jobs. The rest of the market is a trickier question. I have to wonder if the focus on costs and the rise of passive vehicles and scorecard-driven ETFs rather than having more people continually digging into balance sheets weakens our ability to see things coming. In some sense it's a tragedy of the commons situation.
*Although backing down from interest rate hikes in the fall of 2018 because of market volatility and Trump's hectoring wasn't Powell's strongest moment, he mostly just ignored Trump and did his job
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