It must be pretty hard to be a Financial Stability Oversight Council. Or easy? Two key facts about the FSOC are that (1) its job is to prevent a crisis in the U.S. financial industry1 and (2) it was established a year or so after a once-in-a-generation-or-lifetime-or-whatever crisis in the U.S. financial industry. So if you work there now you’ll probably retire with a warm but statistically-indistinguishable-from-chance feeling of success even if you spend your career playing video games.2

To their credit, though, they’re not, instead producing an annual report that is I guess intended to be a list of things that might cause the next financial crisis? Really, what are your odds on that? Especially if, as is true of the actual FSOC 2013 annual report, you omit possibilities like “asteroids” or “sudden recurrence of tulip mania” or “Ben Bernanke is actually an alien sent from the future to destroy mankind.” The swan will always be the color you least expect.

But while I would have just listed things in order of increasing implausibility, the actual report is instead a mix of: Read more »