Yet the yield on Treasury notes maturing a decade from now remain at low levels. Nor are we experiencing inordinate household financial pressures as a consequence of record high household debt as a percent of income. *** Has something fundamental happened to the U.S. economy and, by extension, U.S. banking, that enables us to disregard all the time-tested criteria of imbalance and economic danger?
Regrettably, the answer is no. The free lunch has still to be invented. We do, however, seem to be undergoing what is likely, in the end, to be a one-time shift in the degree of globalization and innovation that has temporarily altered the specific calibrations of those criteria.