Both Clinton and Carter are his heroes.

But I think this particular problem of overemphasizing the financial industry is larger than the Fed alone. Everyone from politicians to the press (both financial and non-financial) tends to emphasize the finance industry as *the* barometer of the economy as a whole. Heck, if you ask your neighbor how’s the economy doing these days, he’s liable to reply that the S&P is down so the economy must suck.

Despite the large number of people who are nominally “stock holders” (mainly due to the expansion of IRAs as retirement vehicles), I’d wager that the vast majority of 90% of people’s net worth in the USA is tied to their house, and the vast majority of their income is wages, not investment income.

To oversimplify, that means that the overall financial health of the average American depends much more on housing prices, inflation, wage growth, consumer debt interest rates, and unemployment risk. NOT corporate profits, the S&P 500, or Dollar/Euro/Yen exchange rates (although of course there are links between all those numbers). Yet guess which set of numbers gets more attention from the press?

These past few years, we saw this disconnect when the press would trumpet record corporate profits and stock indices while wondering why the average American still felt the economy was lousy. But now, we’re witnessing the opposite: the press screams that the sky is falling, and pedestrians in NYC and London watch out for hedge fund managers jumping out windows (not to mention Cramer and his infamous meltdown) while life goes on for 90% of Americans (although I don’t wish to minimize the paper losses on their houses that many people will soon face).

IMHO, in the current mess, I’d rate the following issues for regulators to deal with in order of importance to the financial health of the average American:
1) Mortgage markets (*not* necessarily stability of house prices)
2) Consumer debt markets (given how many people are dependent on credit card debt)
3) Pension funds (who seem like they’ve bought a ton of stuff they should never have been allowed to buy)
4) FDIC-insured banks / accounts (It’s sobering to see how much money Americans put in checking / savings / money market / CD accounts)

Heck, most Americans would gladly burn all of Wall Street in exchange for a 5% increase in their house prices. And it would probably be the right choice for their financial health.

Buiter think Greenspan did a lousy job at the Fed, so he means Greenspan may also be the worst Fed chair ever. He said nice things about Bernanke in the post.