Many of us disagree with the bloviated, self-congratulatory notion that the Federal Reserve and the U.S. Treasury saved the U.S. economy, capitalism and everything else in 2008-09 up to and including the Central Bank of Mars and the bat guano futures market.
That said, I found myself in agreement with Timothy Geithner’s recent assessment of systemic risk and the limits of regulation published in Foreign Affairs magazine: Are We Safe Yet? How to Manage Financial Crises (subscription/registration required)
Geithner starts with some refreshingly straight talk: financial systems are inherently fragile and prone to panics and runs. This echoes what Alan Greenspan wrote in the pages of his own analysis of inherent financial fragility in Foreign Affairs Never Saw It Coming: Why the Financial Crisis Took Economists By Surprise.