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Prescience — always welcome, usually unanticipated

September 3, 2012

In May 2006, Dino Kos, the then-Executive Vice President of the Markets Group at the New York Fed, finished a speech about volatility in foreign exchange markets with the near-prescient words:

… we should be extremely skeptical of risk measures based on the status quo assumption that volatility will remain low. This is precisely because the events that we should be most concerned about are those that have the ability to turn the status quo on its head.

I’d not heard of Mr. Kos before reading this transcript, but at the time of his speech, US unemployment was a mere 4.5 percent and was to go even lower before the beginning of the recession in late 2007.


So I’m impressed by his caution and sobriety, especially considering the Panglossian views of the Fed Chairman at the time.

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