Search and Recovery (First of a series)

You know we’re at some kind of inflection point when two former chairs of the Federal Reserve come out in the same week with warnings about risks in financial markets.

First, in an interview with the Financial Times, Paul Volcker spoke about systemic risks: “There’s a lot of leverage going on now, a lot of debt . . . interest rates are very low.” He also worries about “chicanery” from players trying to loosen regulation designed to protect against excessive behavior.

As he prepares to launch his new book, Keeping At It, Mr. Volcker weighed in for a similar WSJ piece. He said, “These financial markets are going wild…There’s so much confusion, risk-taking, leveraging, debt increases – but who’s minding the store?”

Minding the store, in an FT profile, was a forthright Janet Yellen. This ex-Fed chair highlighted various trapdoors awaiting investors. Echoing her predecessor, Ms. Yellen said lower quality, higher leveraged issuers could add to systemic risk: “There are a lot of holes. We should not feel the financial stability glass is half full.”