Fault Lines
How Hidden Fractures Still Threaten the World Economy
The deeper causes of the financial crisis: inequality, export dependence, and a financial sector asked to paper over both.
Raghuram Rajan warned about the risks building in the financial system at Jackson Hole in 2005 and was largely dismissed. This is the fuller argument. The fault lines are American inequality papered over with cheap credit and a political consensus for expanded home ownership, export-driven surpluses in Asia that never rebalance, and financial sectors caught between the two. Rajan’s point is that the pressures were political before they were financial.
Recommended by 2 People
Francis Fukuyama
The other thing that I found interesting about that book is that Rajan is a former chief economist of the International Monetary Fund. He is quite aware – and gives quite a lot of evidence in the book – that ultimately one of the big causes of this crisis was Asia, and all the surplus countries that have been following this export-driven growth model. He says that that growth model is destabilising and is not sustainable for the countries that engage in it.
Interview · January 2017
Robert J. Shiller
I admire this book because it’s not superficial. It goes for the ultimate causes of the economic crisis we’ve been through. Most people tend to focus in on something approximate.
Interview · January 2018
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