Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram G. Rajan

Apr 04, 2011 Jim rated it 4 of 5 stars · review of another edition

Shelves: economics, non-fiction, politics

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...more

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Sep 17, 2012 Kevin Tharayil rated it 5 of 5 stars · review of another edition

Shelves: library

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...more

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Jul 04, 2012 Eric rated it 4 of 5 stars · review of another edition

Rajan goes to great lengths to maintain a non-partisan tone while describing what he calls "fault lines." These fault lines are problems inherent in economic systems, both global and national (with emphasis on the United States), that contribute to the magnitude and frequency of economic catastrophes like the credit crisis of 2008. This is an easy read for an armchair economist (someone like myself, who has had no Economics classes and doesn't know any of the jargon) despite being a scholarly wo...more

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Jun 12, 2011 Amber rated it 5 of 5 stars · review of another edition

This is a wonderful book about the causes of the 2007 financial crisis and Great Recession, and the extent to which they could resurface in the future. The author writes very clearly, and while the topic is a little dry, almost every page features interesting insights. (I learned relatively quickly that reading this book required my full attention.)

Interesting things I learned: US house prices were more volatile at the low end than the high end (in contrast with other countries that saw a housin...more This is a wonderful book about the causes of the 2007 financial crisis and Great Recession, and the extent to which they could resurface in the future. The author writes very clearly, and while the topic is a little dry, almost every page features interesting insights. (I learned relatively quickly that reading this book required my full attention.)

Interesting things I learned: US house prices were more volatile at the low end than the high end (in contrast with other countries that saw a housing bubble), likely due to the explicit and implicit, bipartisan government support of aggressive lending to low-income people--likely to paper over the real problem, stagnant wages; other countries around the world tend to stimulate less, because they know the US, with its weak social safety net, will do more than its share and they will reap the benefits of spillover effects.

He also has some good insights: that stimulus and unemployment insurance more generally should be more formulaic, since otherwise the party in power will politicize stimulus to achieve its prior goals. He suggests, and I tend to agree, that the US model of a very flexible labor market, leading to short-lived recessions, and with short-lived unemployment benefits, is probably no longer applicable. And that the signals of good performance in the financial sector are broken. Sometimes federal policy is made with the implicit assumption that private-sector incentives are the same as government's, when obviously they are not. Over-savers were just as culpable in the recent crisis as over-spenders.

Some of his suggested reforms I agree wholeheartedly with: improving education and access for low-income students; better and more affordable access to health care, to improve economic efficiency; government should stop supporting the housing market. Others are less conventional, and I'll have to think about a bit more: phasing out deposit insurance; making the Fed responsible for asset price bubbles in addition to inflation, and possibly also to global market conditions; that the Fed should not cut interest rates so severely unless the risk of deflation is imminent (since doing so drives money to riskier assets and thus depresses their risk premia), and that if such cuts are necessary, rate increases during recovery should be faster, to head off bubbles. I'm also not sure about the extent to which the IMF and World Bank could engender popular agreement about global economic policy, but agree with the author that it's worth a shot.

I would (and will) recommend this book to anyone with an interest in the global economy. (less)

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Oct 10, 2010 getAbstract rated it 5 of 5 stars · review of another edition

Provocative economic analysis

Dismissing the 2008 recession as an inevitable free market setback might seem simple, but economist Raghuram G. Rajan doesn't take the easy path. He makes a compelling case that the weak links in the global economy remain both visible and fixable. In a provocative analysis unhindered by ideological boundaries, Rajan argues against such government interventions as propping up the U.S. housing market. Yet he urges Americans to create a more generous safety net for unem...more

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May 03, 2011 Zahwil rated it 4 of 5 stars · review of another edition

Former Chief Economist of the IMF and Professor at the University of Chicago Booth School of Business, Raghuram Rajan qualifies as a heavy-weight in his field. This is the first book I've read about the Financial Crisis of 2007, so I can't compare it to others of its kind.

The book's title, "Fault Lines", is appropriate because the level at which Rajan discusses the financial crisis is deep and structural. Instead of glossing over superficial or obvious factors in the crisis like greedy bankers...more

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Sep 14, 2011 Ssjustice rated it 4 of 5 stars · review of another edition

Raghuram Rajan was formerly chief economist at the IMF, and that probably explains his global grasp of our current economic problems. He identifies multiple fractures in the world economy and convincingly explains how and why the fractures intersect. Since the early 90s, for example, America's recoveries from recessions have been increasingly jobless. That's because technological advances have decreased employment opportunities for workers without a college degree. Our politicians chose to handl...more

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Aug 01, 2011 Liam rated it 5 of 5 stars · review of another edition

"Politicians are coming to terms with something Aristotle pointed out: that although quarrels are more likely in an unequal society, striving to rectify the inequality may precipitate the very conflict that the citizenry wants to avoid. Politicians have therefore looked for other ways to improve the lives of their voters. Since the early 1980s, the most seductive answer has been easier credit." (31)

"[T]he reason for their rising trade surpluses is not that East Asian households cut back dramatic...more

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Dec 24, 2010 Raghu rated it 3 of 5 stars · review of another edition

Dr.Rajan's book is an important contribution to the understanding of the 2008 global financial crisis, its origins, its causes and the ways to reduce the chances of such nasty 'surprises' in future. Rajan does not blame the bankers and hedge fund managers for their greed and high-risk investment behavior as the root cause of this crisis. He talks about serious imbalances in the global economy, political pressure to make easy credit available in the US and also the weak social security safety net...more Dr.Rajan's book is an important contribution to the understanding of the 2008 global financial crisis, its origins, its causes and the ways to reduce the chances of such nasty 'surprises' in future. Rajan does not blame the bankers and hedge fund managers for their greed and high-risk investment behavior as the root cause of this crisis. He talks about serious imbalances in the global economy, political pressure to make easy credit available in the US and also the weak social security safety net in the US as contributing factors to the current crisis.
Dr.Rajan identifies three fault lines in the global economy which affect the financial sector.
The first one is the domestic political stress in the US. Globalization over the past thirty odd years has caused income imbalances in the US with the well-educated sections seeing their incomes rising rapidly while those with only high-school level education or less experiencing stagnant living standards. Many of the jobs for the less educated have gone overseas leaving these people in the US unemployed with little long-term unemployment protection. The only way to close this chasm is to increase the levels of skills and education in the US population to take advantage of the newly created jobs. But this is a process that will take decades and politicians cannot wait that long as their voting public would throw them out. Consequently, providing access to easy and cheap credit is a way of distributing money to the economically downtrodden classes as it shows immediate results to their constituencies. This makes politicians formulate rules to relax the conditions under which credit is provided to the less able even though they may not have the wherewithal to repay the debt. This pressure for easy credit is the first fault line.

The second set of fault lines emanates from trade imbalances between countries stemming from prior patterns of growth. Export-oriented economies like China, Germany, South Korea et al fuel the spending spree of the debt-ridden developed nations like the US, UK etc.. Managed capitalist economies like China buys dollars of its exporters and gives them renminbi to prevent it from appreciating. To avoid inflation, it issues its own debt to "sterilize" the excess renminbi. Thus, holding a huge dollar reserve, it looks to invest in the United States where interest rates are low. This forces low interest rates on domestic renminbi, pushing up asset prices and eventually traversing oceans to create trade imbalances.

The last fault line occurs in the interaction of different types of financial systems and when they come into contact with one another to deal with trade imbalances. Highly-transparent financial systems like that of the US, UK etc and the less transparent, relationship-based banking systems of countries like Japan, China etc work on different principles and have different forms of government interventions. Such contradictions inherently have a tendency to distort each other's functioning when they come into close contact with one another in globalized commerce.

I found these fault lines as the main contributions of the book. Dr.Rajan does give a number of remedies in the later chapters. But I felt them to be somewhat general. Also, I am not a specialist on the subject and so it was difficult for me to evaluate the solutions. He has an interesting final chapter on India. In this chapter, he outlines how India's development model is different from the other fast-emerging economies. He opines that if India acts with sure decisions in certain areas of its inclusive, people-oriented growth philosophy, then it can be a role model for rapid economic growth with a flourishing democracy. Dr.Rajan must be entitled to talk on this confidently as he is an economic advisor to the prime-minister of India.

All in all, it is a good book for those interested in the subject of the current global financial crisis, its root causes and remedies.
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Oct 02, 2011 Bart rated it 4 of 5 stars · review of another edition

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...more 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 recommendations for how to address America's disparity of wealth are considerably less so.

After providing a realistic view of what happens whenever a sophisticated and amoral free-market system competes for government funds, Rajan lays out interesting ideas about regulations. They must be temporary in nature and triggered by events, Rajan posits, else financial institutions will commit massive resources to navigating around them. And because they are temporary and triggered - regulations that take effect in emergencies, in other words - the shortsighted financial industry is unlikely to protest them. Surely, their thinking will go, this sort of thing will never happen.

Rajan's most inventive idea is to require a living will from financial institutions that fancy themselves too big to fail. Since most of free-market capitalism, anymore, is a matter of federal-funds-capture, the government should have lots of leverage with banks in demanding this. "Provide a way to dissolve your company over a weekend, in the event of a catastrophe," the requirement would go, "or receive no federal protection."

All this wisdom and innovative thought by Rajan, though, leads a reader to expect more when the subject turns to remedying America's accelerating wealth disparity. Unfortunately, Professor Rajan offers little more than education as remedy. Send everyone to college!

While this might work in individual instances - a lad who acquires a master's degree wins better compensation than his dropout peer - it is a nonstarter for a country. The disparity, unless addressed, will remain; education is a fairly arbitrary way of establishing compensation to begin with - and what makes Rajan think that, on the day every American has a master's degree, some other arbitrary justification for inequality won't be hatched?

All in all, this book is worth the read, though. Rajan deserves praise for his gentle presentation at least.(less)

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Nov 03, 2010 Joshua rated it 4 of 5 stars · review of another edition

Shelves: finance

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...more

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Jan 09, 2013 Julie rated it 4 of 5 stars · review of another edition

This paragraph, in my humble opinion, says it all:

Education plays a far greater role than simply improving an individual's income and career prospects: it has intrinsic worth of its own, allowing us to make use of our finer faculties. In addition, studies show that the educated typically take better care of their own health, are less prone to indulging in criminal activities, and are more likely to participate in civic and political activities. Moreover, they influence their children to do the s...more

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Jan 15, 2012 Ken rated it 2 of 5 stars · review of another edition

This was a disappointing book overall. On the areas that Rajan knows well, international economics, the book is pretty interesting. When he tries to move into other areas, however, his analysis and conclusions are very weak. For example, Chapter 1 discusses government efforts to promote homeownership among low-income individuals, as reflected in the Community Reinvestment Act and the Affordable Housing Goals of the Government Sponsored Entities (Fannie Mae and Freddie Mac). The analysis largely...more

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Sep 19, 2011 Lobstergirl rated it 4 of 5 stars · review of another edition Recommends it for: Esther Fenchel

Shelves: business-finance, economics

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...more 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 developing countries, and financial crises such as the Asian meltdown of 1997, help us understand what's happening in the U.S.

He argues that interest rates were kept very low - credit very loose - in order to help the lower class get a leg up. Since their income had stagnated, and since better education to pull them into the middle and upper classes is a very long-term solution and thus extremely difficult to achieve politically, policymakers helped low-income Americans achieve a higher standard of living by allowing them to buy homes and pull equity out of their homes. Needless to say, this went on too long, and the real estate bubble was created. Americans overconsumed, took on onerous debt, and thus enabled the countries we were buying from, mainly Germany, Japan, and China, to shortchange their own economies by relying too much on growth from exports.

If we had a stronger safety net in the U.S., Rajan argues, we wouldn't need to rely on fiscal and monetary policies to provide stimulus to the poor and/or unemployed. When the Fed, the Treasury, and politicians use stimulus this way during jobless recoveries, whether by keeping interest rates extremely low or passing legislation to pump billions into the economy, it has unintended and damaging consequences: it creates bubbles, it advantages debtors and disadvantages savers, it's a gigantic giveaway to the banks, it artificially props up the housing market and housing prices, and it warps incentives in the financial sector.

Rajan urges reforms in two areas: the financial sector, and the safety net. In the financial sector, incentives are dangerously aligned with taking on risk. Wall Street assumes that certain institutions will be bailed out if they fail, and they are correct in this. Rajan uses the phrase "too systemic to fail" rather than "too big to fail," because it's not size but interconnectedness that determines when government will step in and rescue. Government rescues must stop, because they distort the entire financial sector. Financial institutions should know what their risk exposures are, and this information should be made available to the markets on a regular basis; during the financial crisis, many companies had no idea how much risk they had taken on. If this information is widely known, it can be used to prevent institutions from becoming "systemic." He proposes that financial institutions have a "living will:" in the event that they are going to fail, such a "will" would involve regulators in quickly winding down (resolving) the company without massive, systemic damage. In order to more properly align individual risk-taking with compensation, he proposes holding a significant chunk of a financial company's bonuses in escrow, to be paid out only after it is clear that trading positions have been profitable. He also suggests phasing out bank deposit insurance, since a money-market fund invested in Treasury bills is just as safe as guaranteed bank deposits.

Reforming the safety net needs to be another top priority. Recessions have changed, in that the last few recoveries have been jobless, and our current system of unemployment benefits is inadequate in the face of extended periods of joblessness. Politicians respond to the needs of the unemployed in ad hoc ways, and as we've seen recently, they have held benefit extensions hostage to the passage of other, unrelated legislation. Rajan suggests that we tie benefits to a formula which would take into account the extent of overall job losses, "the proportion of jobs created to jobs lost, and the time elapsed since the recession began." He also proposes a system of universal healthcare, given that job loss nearly always comes with a loss of health insurance as well.

I enjoyed Fault Lines. I found it highly readable. There are some areas where, although clearly informed, Rajan seems a little out of his element (the discussion of healthcare, perhaps). He also is overly wedded to the notion that Fannie and Freddie and the affordable housing mandate are to blame for most of the mortgage crisis: "It is difficult to reach any other conclusion than that this was a market driven largely by government, or government-influenced, money." Indubitably Fannie and Freddie have to take some of the blame, but as others have demonstrated, it was Wall Street which created the intense and insatiable demand for subprime mortgages; Fannie and Freddie were actually latecomers to the subprime frenzy. As Bethany McLean and Joe Nocera showed in All the Devils Are Here: The Hidden History of the Financial Crisis, Fannie and Freddie raced to get involved in subprime mortgages because they feared being left behind by their private sector competition.(less)

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Aug 07, 2012 Andrew rated it 5 of 5 stars · review of another edition

... probably the best book I've read so far about the 2008 financial crisis. Gives an adequate explanation of inequality, excessive risk, and the financial debacle. And well written to boot.

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Feb 12, 2013 Ecoute Sauvage rated it 4 of 5 stars · review of another edition

Prof. Rajan is one of the best financial economists around. His main fault line is one that only gets deeper by the day and consists of blithely assuming that people making $4,000/year (say, China) will forever subsidize people making $40,000/year (say, US) by buying up the treasury bonds we trade in exchange for their manufactures. Beads and trinkets were exchanged for lands in the new continents and as long as the primitive tribes accepted them all went well - but what happened on the day they...more

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Sep 15, 2012 Sanjeev Kotnala rated it 4 of 5 stars · review of another edition

FAULT LINES by Raghuram G Rajan
You don’t review a much reviewed and acclaimed book if the subject is not your area of expertise. More so when the author who has just taken over as the CHEIF ECONOMIC ADVISOR of your country and could very well be a Governor of Reserve Bank of India one day. And more so you are full 2 year behind others in reading the book- that has been authored by your batch mate. It’s different that you are not in touch and in last 25 years have only met twice.

more http://rivr....more

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Aug 17, 2011 Ray rated it 5 of 5 stars · review of another edition

Shelves: political-economy

Unlike far too many contemporary political economists, Rajan (credentials impeccable) examines the background and the potential development weaknesses of the modern economy. He's aware that solutions are both tentative and crucial. While the days of Keynes, Marx and the Microeconomic Traditionalists may be numbered (with a small number too), Rajan may shed light and some noise on the nature of problems that are those of political economy, not of economics or political science. One of a very few...more

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Apr 09, 2013 John Griffin rated it 4 of 5 stars · review of another edition

Great analysis of how domestic political pressures lead to macro-economic instabilities in the United States and abroad. Less insightful into why income disparities are a root cause, and even less convincing are Rajan's recommendations that academics might harness multilateral institutions to solve the problems he identifies.

But let's stick with the book's strength: how regulatory shortfalls, political pressures and highly incentivized financial institutions combined to create the 2008 collapse,...more

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Oct 30, 2011 Jason rated it 3 of 5 stars · review of another edition

Shelves: nonfiction, economics

Raghuram Rajan is the hands down co-winner of the best title for any economics book in recent years: Saving Capitalism from the Capitalists. It was also a very good book.

Relative to this stellar predecessor, Fault Lines was a disappointment. The thesis is that a number of fault lines contributed to the financial crisis and continue to leave us vulnerable. In Rajan's view these include: (i) inequality which led to encouraging over-borrowing as a palliative; (ii) a system without automatic stabili...more

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Jul 20, 2011 Praveen rated it 4 of 5 stars · review of another edition

Shelves: economics, favorites

The book is ten chapters long and also includes a rather lengthy introduction by the author which serves as an abstract of sorts to the main prose. However I found myself speeding through the chapters thanks in part to the thoroughly engrossing narrative - Rajan takes you through a chronological as well as a thematic survey of the events leading up to the recent financial crisis - and in part to the highly engaging academic discussion which focuses on the forces that shaped the crisis and how to...more The book is ten chapters long and also includes a rather lengthy introduction by the author which serves as an abstract of sorts to the main prose. However I found myself speeding through the chapters thanks in part to the thoroughly engrossing narrative - Rajan takes you through a chronological as well as a thematic survey of the events leading up to the recent financial crisis - and in part to the highly engaging academic discussion which focuses on the forces that shaped the crisis and how to overcome the problem. The book reads like a well formulated research paper with just the right amount of pacing and buildup (Rajan's famous paper during the early days of the financial crisis circa. 2007 essentially predicted the impending catastrophe and warned the financial institutions of the world during a now famous IMF summit).

But it would be erroneous to claim that this book is aimed at a technical audience well versed in financial economics and econometrics. Rajan spends adequate time explaining the key concepts in layman's terms in a very accessible way. I have some background in financial and business economics so I may be biased in my characterization but the theme of the book is easy enough to grasp to anyone with an interest in global finance and politics.

Rajan makes some very interesting claims, claims the are thoroughly developed and substantiated with detailed notes, references and bibliography. His research acumen shines in his terse yet cogent delivery of the material that he has worked on for years. The claim that education and the lack of it (esp. the discrepancy between jobs that require a highly technical college degree and the inability of a large amount of people to obtain such a degree) caused a measurable shift in the income of the middle class (stagnation and even a reduction in income) during the latter part of the last century which forced governments around the world (especially in the US) to address the income disparity by palliative myopic methods aimed at securing votes startled me. I was convinced more and more as Rajan continued to develop this idea in the first half of the book.

I have a lot more to read and probably reflect on. Will post a full review once I'm done. In the meantime do pick it up! If you 'enjoyed' the documentary Inside Job (Rajan is featured in it, along with many other prominent figures) you will definitely appreciate the attempt that Rajan is making in terms of illuminating the general public to the kind of short sighted, asinine, greedy and (probably) spiteful policies implemented by the US government (and many other governments) while in bed with the financial services industry. However Hanlon's Razor comes to mind immediately when reading the first half of the book: "Never attribute to malice what you can adequately explain by stupidity" ! (less)

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Apr 03, 2011 Marks54 rated it 4 of 5 stars · review of another edition

An interesting set of essays on the fundamental conflicts and tensions in international economics and finance that led to the recent financial meltdown and how many of those fundamental tensions - or fault lines - are still present and remain unresolved. For example the tension between the use of consumer debt as a policy response to increasing income inequality and the potential for a meltdown that comes when debt bubbles are allowed to grow unchecked. Other issues covered include the formal ve...more

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Feb 15, 2013 Nikhil Kumar rated it 5 of 5 stars · review of another edition

Rajan presents an analysis sufficiently detailed for a student of economics, yet accessible enough for a well-informed layman in a very thoughtful, balanced way. Although a noted proponent of the free markets, he doesn't subscribe to the political hackery of today's "pundits" and "experts". Rather, he describes realistic faults with the status-quo from an academic's vantage point-- the American conception of the safety net increases uncertainty in times of unemployment, which may not be suited f...more

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Apr 11, 2013 Dhiraj Sharma rated it 5 of 5 stars · review of another edition

Shelves: favorites

A must read book for those interested in the seeds of the Econmomic crisis of 2008, how it unfolded in the US and engulfed the whole world in the process.

Along with Fault Lines I would also recommend the movie "Inside Job" to get a bird's eye view of the whole economic sham wherein the Investment banks, Mortgage agencies, Credit rating agencies, renowed Universities and the US Govt worked in tandem to dupe the ordinary investor of his hard earned money....thus leading to the economic meltdown.

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Jun 14, 2011 Phil rated it 5 of 5 stars · review of another edition

As with most excellent books written in the aftermath of the current financial panic, Rajan looks beyond the immediate loud noise in order to find the deeper pressure buildups and where they clash, his "fault lines." One has to appreciate a U Chicago professor calling for expanding America's social safety nets and an economist from the IMF calling for increased transparency in international organizations. Rajan accomplishes both with humility.

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Mar 08, 2011 Prakash rated it 4 of 5 stars · review of another edition

Not an easy Book to read especially for someone not used to reading - financial and economic stuff.
but very informative book. Explains the fundamentals of the forces at work in the World finance and economy.

Takes a some effort to understand the nomenclatures used - but i intend to read it again after a month or so to get a better understanding of how the decisions of bankers and financiers affect the day to life of people.

Great book!!

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Jan 29, 2013 Jon added it · review of another edition

Rajan takes a worldwide view of the financial crisis—factoring everything from global trade to education to government intervention to health care to Wall Street. While I felt that it was sometimes so expansive as to be disjointed, I didn't find much to fault in Rajan's assertions. Most analyses of the crisis are narrow in their scope, aiming for a coherent narrative, but Rajan's expansive take is probably more accurate.

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Jun 19, 2012 John Seno rated it 4 of 5 stars · review of another edition

Rajan makes a strong case for the deep structural problems of the world economy that made the 2008 crisis possible. He highlights trade imbalances, weak domestic demand in Japan & Germany, over dependence on exports, the American politicians incentive to provide cheap credit to make up for weak safety nets, growing inequality and the skewed incentive systems of the banking industry as some of the underlying problems in the global economy. He puts forth some very sensible solutions but apprec...more

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Apr 30, 2011 Aaron Terrazas rated it 5 of 5 stars · review of another edition

Fascinating macro-look at the global financial crisis, its causes and consequences. Rajan gets beneath the pithy headlines and now-tired aphorisms such as "systemic risk" and "too big to fail"; he is a master at drawing interconnections between seemingly disparate issues and pointing to the unavoidable human traits that make market volatility inevitable. I liked this book so much that I have started reading Rajan's blog.

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May 14, 2012 David rated it 5 of 5 stars · review of another edition

Finally finishing this up after sitting on my shelf for months. This is an outstanding book, ostensibly about the 2008 financial crisis, but really about the bigger picture of difficulties in the global financial system. A truly fair and balanced look at the causes of the problems, and provides some very centrist and moderate long-term solutions. If you care about the US economy, read this book.

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