Over in Perfect World, Janet Yellen was a sharp regulator who knows how to avoid market meltdowns smartly. In Perfect World, everyone noticed the Federal Reserve chairman’s speech on July 2, where Yellen said she prefers not to raise interest rates as markets grow heated and bubbles start to appear in asset prices. A better approach, she argued, would be stronger regulation along the way to manage asset prices before bubbles get out of hand.
Nobody in Perfect World was scared when Yellen used words like “macroprudential approach” to discuss financial risks, even though that could have big implications for compliance and risks officers across the country. People knew that the stock market was reaching new highs on Wall Street even as revenue growth poked along like a slug, wage growth sputtered, and all the jobs getting created were part-time. Everyone could see that home prices had been soaring, the bond market was brisk, and even risky markets Spain and Greece were courting investors again.
