Fault Lines: How Hidden Fractures Still Threaten the World Economy

Fault Lines How Hidden Fractures Still Threaten the World Economy Raghuram Rajan was one of the few economists who warned of the global financial crisis before it hit Now as the world struggles to recover it s tempting to blame what happened on just a few greedy b

  • Title: Fault Lines: How Hidden Fractures Still Threaten the World Economy
  • Author: Raghuram G. Rajan
  • ISBN: 9780691152639
  • Page: 254
  • Format: Paperback
  • Raghuram Rajan was one of the few economists who warned of the global financial crisis before it hit Now, as the world struggles to recover, it s tempting to blame what happened on just a few greedy bankers who took irrational risks and left the rest of us to foot the bill In Fault Lines, Rajan argues that serious flaws in the economy are also to blame, and warns thatRaghuram Rajan was one of the few economists who warned of the global financial crisis before it hit Now, as the world struggles to recover, it s tempting to blame what happened on just a few greedy bankers who took irrational risks and left the rest of us to foot the bill In Fault Lines, Rajan argues that serious flaws in the economy are also to blame, and warns that a potentially devastating crisis awaits us if they aren t fixed.Rajan shows how the individual choices that collectively brought about the economic meltdown made by bankers, government officials, and ordinary homeowners were rational responses to a flawed global financial order in which the incentives to take on risk are incredibly out of step with the dangers those risks pose He traces the deepening fault lines in a world overly dependent on the indebted American consumer to power global economic growth and stave off global downturns He exposes a system where America s growing inequality and thin social safety net create tremendous political pressure to encourage easy credit and keep job creation robust, no matter what the consequences to the economy s long term health and where the U.S financial sector, with its skewed incentives, is the critical but unstable link between an overstimulated America and an underconsuming world.In Fault Lines, Rajan demonstrates how unequal access to education and health care in the United States puts us all in deeper financial peril, even as the economic choices of countries like Germany, Japan, and China place an undue burden on America to get its policies right He outlines the hard choices we need to make to ensure a stable world economy and restore lasting prosperity.

    One thought on “Fault Lines: How Hidden Fractures Still Threaten the World Economy”

    1. A very nice synopsis of the world economy following the latest financial crisis and directions on where we may be headed. Some key points I took away:*Three Major "Fault" lines where tensions create the possibility of future crises:1) Domestic Political Stresses (need to deal with growing inequality)2) Trade imbalances (America has been the economic engine by over consuming the rest of the world's output; the developing world needs to consume some of its own output)3) Different types of financia [...]

    2. Rajan does an exceptional job of distilling the factors leading to the 2008 financial sector meltdown, linking the actions of government (both US and world governments) and the private sector, and dispassionately describing the various ways they contributed to the creation and bursting of the bubble. He also makes some very cogent and disturbing points about the lack of correction (and in some cases, exacerbation) of the "fault lines' he identifies in the world economy, which threaten to push us [...]

    3. Very well articulated, Prof Rajan had not hesitated from making his opinion on most aspects quite clear. Hence the book is not just another case of fiscal and monetary policy levers explained, it takes a stand and from what I see 7 years later in 2017, quite a prophetic stand at that. Provides for an insight into the paths countries use to develop, asset pricing and the role Central Bank needs to play in asset price regulation and where the government should draw a line when deciding on economic [...]

    4. Rajan raises some very good points that are sources of concern - fault lines as he calls them, namely: 1. Income stratification leads to loss of the belief that hard work will payoff2. Education system (also see stagnating college graduation rates) > more low-income3. Cheap credit (quick fix)4. Lack of social safety net (unemployment insurance and health coverage) I agree with the fundamental message (he financial sector was at the center of the last ciris, but it simply responded to implicit [...]

    5. Economist Raghuram Rajan was one of the prescient ones: at a central bankers' conference (honoring Alan Greenspan no less) in 2005, he delivered a paper asking "Has Financial Development Made the World Riskier?" His answer was yes. Events proved him correct.Here, he uses a wide-angle lens to examine the causes of the 2008 financial crisis, and why we're nowhere near out of danger. A stint as chief economist at the IMF means his perspective is global; understanding growth patterns and rates in de [...]

    6. India's new RBI chief has a lot of expectations on his shoulders, and this book shows why. His analysis is holistic, comprehensive, convincing and rational. He traces the roots of the crisis to at least 40 to 50 years before, and takes it from there on. For a person who hasn't actually studied economics, it will prove to be a terribly difficult read because 1) in terms of writing style, he's not exactly a Rushdie and 2) For the prevalence of many complex terms. This book isn't for the casual rea [...]

    7. In the year 2005, the annual Jackson Hole Conference - a prestigious event where there is an assorted convergence of highly reputed bankers, economists and financial journalists - was supposed to be a swansong bash celebrating the achievements of the Federal Reserve Board Chairman, Alan Greenspan. Speaker after speaker showered adulation and sang praises of the man who stymied all efforts to regulate the spawning of esoteric financial instruments and who also ironically coined the now legendary [...]

    8. Great reading which covers events outside the US as well highlights the hidden faultlines in the global economy. This could be described as Rajan's pitch for the CEA/RBI guv role given the wide ranging problems highlighted and solutions proposed. Cash transfers to the poor are proposed and land acquisition issues as an impediment to growth are currently highlighted given this was written 5-6 years ago. The aside on India personally was of great interest to me but even the piece on China was quit [...]

    9. This is one of the books on the 2007 financial crisis that is ostensibly worth reading due to the CV of the author-- former IMF Chief Economist, later in charge of Indian monetary policy as Governor of the Reserve Bank of India. (Writing this in late 2016, perhaps PM Modi's botched reforms show how much Rajan was missed in opting to return to academia than return as Governor for a second term). Rajan has international gravitas and has thought about poverty and development in multiple ways. I wou [...]

    10. Raghuram Rajan, the rockstar ex-RBI governor was one of the few economists who warned of global financial crisis of 2007-08 before it hit. In Fault lines, Rajan says just like fault lines in tectonic plates run the danger of earthquakes; global economy has some deep fault lines which led to economic crisis in 2007-08, and if not fixed could lead to more devastating crisis. Rajan shows how choices made by bankers, government and homeowners were rational responses to incentives to take on risks br [...]

    11. As an economist and exemplary academician, Rajan has looked beyond the convenience of targeting the government and greed of the finance world as the only reasons for the financial crisis of 2007. He hasn't shied away from holding them responsible, but at the same time has provided a more holistic view to explain the global economic meltdown of 2007. Thoughtful, and beautifully written.

    12. In 2005, the author, at an elite economists gathering honoring the then Fed Reserve governor, Alan Greenspan, made the point that financial development had made the world riskier. He met with scorn and as the documentary 'Inside Job' showed, accusations of being a luddite!This book written in the aftermath of the subprime crisis is a call to understand that until the root of the problems - The Fault Lines that exist are not addressed, any recovery from the economic mess will be short lived. The [...]

    13. (4.0) Good review of US/global economy in 1990s and 2000s, including financial crisisSome of this was thought provoking (please respond to my notes and highlights!). Don't have the energy (now, at least) to attempt a summary.

    14. In 2010 Raghuram Rajan set out to explain how structural instabilities in the global financial system led to the largest crisis in recent memory. With Fault Lines: How Hidden Fractures Still Threaten the World Economy he succeeded.It’s easy to write a partisan manifesto outlining a left or right wing perspective of “what happened” in 2008 someone with no background in economics can understand and enjoy. It’s far trickier to write a balanced and accurate analysis for other economists. It [...]

    15. Brilliant. Simple yet comprehensive. Rajan writes in simple and easy to understand language relating concepts not just from financial economics but also from development, growth and welfare. He takes turn by turn an opportunity to identify each of the players responsible for the 2008 sub prime crisis and provides an unbiased view of what happened and who was to blame, breaking down each concept and how it flowed through the system to cause the ripple effects that it did. A must read for all econ [...]

    16. A genius is one who can convert the HCF (highest common factor) of anything into its LCM (lowest common multiple), be it economics, pure science, emotions, art form, anythingRaghuram Rajan, by this definition , is pure genius. So if you are a layman and want to get some understanding about world economics, then read this simple book on a complex subject. Though a bit outdated (first published almost 7 years ago I think), it still answers and yes it still warns. In a nutshell there are 5 reasons [...]

    17. Começo pela palavra que melhor define o livro: Espetacular. A obra de Raghuram Rajam, ou Raghu para os íntimos que nem eu (porque tietagem é assim, você se sente íntimo de alguém que nem sabe da sua existência) é o melhor trabalho que já li sobre as causas que levaram o mundo a grave crise financeira e a recessão no bloco desenvolvido. De todos que li nenhum conseguiu ser tão abrangente quanto o livro do Raghu.Ele, diferentemente dos outros, vislumbra o sistema financeiro apenas como [...]

    18. One of the better books explaining the crisis and how the fault-lines that caused the crisis are still existent. This book beautifully ties up the various inter-linkages amongst Government, financial sector, regulators and investors. Worth reading

    19. This is a gently persuasive book by a reasonable and well-informed intellectual. It is a commentary on the times that such a thing as this would be remarkable.Raghuram Rajan's writing in Fault Lines is most persuasive as he addresses the events that led to Sept. 18, 2008 - specifically the race in the financial sector to attain "systemic risk" status, so as to tout government intervention in tacit sales pitches to investors. His recommendations for regulatory reform are excellent. His recommenda [...]

    20. This book tries to examine the underlying tensions, trade-offs, and interdependencies that have characterised the recent financial crisis in a holistic manner, and by and large the author has succeeded. Its strength lies in its astute awareness of how the crisis was writ large by US social inequality and the lack of a safety net following the dot-com bust and its associated jobless recovery, which prompted the government to intervene by increasing access to credit as a panacea to inflate asset p [...]

    21. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.As he quotes Adam Smith, we all know today's world economy is based on self interest(capitalism). It might be of a country, a state or an individual. In order to avoid extremism what we face today is the managed capitalism.One of the most brilliant minds of the world, Raghuram Rajan appraises in his book the major causes of 2008 crisis. He debunks people' [...]

    22. Only one word for it- fantastic! If you have the time to read only one book on the financial crisis of 2008, then there cannot be a stronger candidate. Dr. Rajan's systematic dissection of the roles each of the stakeholders involved (mortgage agents, banks, the Fed,the US government) played throws stark light not only on the inadequacies of the then extant conditions in the financial markets but also on their genesis and gestation.The point that the crisis did not unfold overnight but had its or [...]

    23. Amazing text meant for people not well versed with the technical terms of economics.Through his experience in the IMF and other socio-economic bodies, painted a very real picture of the system as looked from the inside. He has not excused himself to familiarize us with conflicts happening on the international forum which keeps the reader hooked. This book was released in 2010 and thus kept US and the 2008 crisis the core issue. Since then, a lot of events have happened in he world and also Raghu [...]

    24. Financial Crisis of 2007-08, in a way, is a case study to understand the underlying factors behind almost all major economic crisis - a cocktail of political motive and over-investment financed by debt. Dr. Raghuram Rajan (RR) unfolds a story, connecting the dots from Asian Banking Crisis, explaining what economies/nations do wrong by following a myopic view. RR does not blame any one institution or country for creating the "fault lines", but emphasizes on the fact that to ensure that these faul [...]

    25. Sober compelling analysis of the 2008 financial meltdown and the hope for the futureThere are no portrayals of ego driven maniacal financiers blindly chasing the carrot as the cliffs rapidly consume their landscape. But we've read and witnessed enough of that, and the sad fact that the very same people will most likely still drive off into the sunset with tanned bodies and full bank accounts. This book takes a higher ground and attempts to provide some guidance toward an economic future that is [...]

    26. It was a tough read. I had gone with expectation of discovering new fault lines across the world economies but what I read were the fault lines in United States of America's economy / social structure / politics. There are other countries as well Governor! Finally, him being a governer of India, I was excited to know his thoughts about the fault lines existing our country's financial / economic system but there was no new insight ( except where he talks about the land reform bill ). There are no [...]

    27. Rajan provides a flawless diagnosis of the financial crisis that shook the American economy and the contagion that rocked the world. Unlike many analysts who indulge only in a theoretical analyses, he suggests a strategy to prevent such a crisis in the future. His prescription appears plausible, "doable". Most of the book relates to the USA. However, there seem to be very little of his prescription happening on the ground. Even the universal health insurance seems to be foundering. The analyses [...]

    28. Honestly I have never read a book on economy! At least not as pleasure reading. But when a friend recommended this book to me I thought I would try it out. I bought the audible version coz I wanted to experience how it is if someone else reads a book to me (I have never been comfortable with this in the past but audible narration was surprisingly good and well paced!)Dr Raghuram Rajan, now the governor of the Reserve Bank of India, starts his book with the recent global financial crisis and expl [...]

    29. It took me a long time to read this book. Not being much into economics, it was not an easy read for me. Nevertheless, the book was a great read. Primarily, it made me look at the world around me through an economist’s lens.Rajan takes us through the various reasons that led to the economic downturn of 2008. He has described these ‘fault lines’ very lucidly and explains each one of them in some detail. Some of it is commonsense and others have their base in economic theory. Although I stru [...]

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