Goodreads helps you keep track of books you want to read.
Start by marking “Fault Lines: How Hidden Fractures Still Threaten the World Economy” as Want to Read:
Fault Lines: How Hidden Fractures Still Threaten the World Economy
Enlarge cover
Rate this book
Clear rating
Open Preview

Fault Lines: How Hidden Fractures Still Threaten the World Economy

4.10  ·  Rating details ·  4,404 ratings  ·  263 reviews
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 that ...more
Hardcover, 260 pages
Published May 1st 2010 by Princeton University Press
More Details... Edit Details

Friend Reviews

To see what your friends thought of this book, please sign up.

Reader Q&A

To ask other readers questions about Fault Lines, please sign up.
Popular Answered Questions
Varun Rajda None at all. Dr Rajan can explain economic concepts to ten year olds in a way they'd understand.

Community Reviews

Showing 1-30
Average rating 4.10  · 
Rating details
 ·  4,404 ratings  ·  263 reviews

More filters
Sort order
Start your review of Fault Lines: How Hidden Fractures Still Threaten the World Economy
Oct 18, 2010 rated it really liked it
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
Feb 24, 2011 rated it really liked it
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
Anushree Rastogi
Jan 31, 2016 rated it it was amazing
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
Aug 19, 2011 rated it really liked it
Recommends it for: Esther Fenchel
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
Dec 15, 2017 rated it liked it
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 payoff
2. Education system (also see stagnating college graduation rates) > more low-income
3. 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
Mar 06, 2016 rated it it was amazing
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 ...more
Fateh Mann
Aug 26, 2013 rated it it was amazing
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 ...more
Jul 09, 2016 rated it really liked it  ·  review of another edition
Shelves: economics
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 ...more
Oct 01, 2018 rated it it was amazing
I'm glad to have finished my 31st book for the year 2018 and it turned out to be really insightful one. Having seen so many news about how greed of bankers is blamed for crisis vs ineptitude of government regulations, finally someone who provided a view of systematic fault lines that could cause one more such crisis if not addressed to early.

The explanation of fault lines along with economic lessons in each chapter really makes you think if there is a better topic than macro economics and
Anand Iyer
Feb 06, 2019 rated it really liked it
Shelves: finance
Fault Lines provide a flawless albiet a theoretical analysis of Financial Markets, Governments and their interfaces. While issues he raised relèvent, solutions are more academic in nature which he concedes as a platform for initial discussion than a panacea. While some after thoughts of the crises is mired in its myopic observations, others especially views on developing economies and multi national organisations prescient and accurate.
Any aspiring Financial or Economic graduate must have this
Jan 01, 2016 rated it it was amazing
One if the best book for understanding recent economic crises and what may be in store for future!!
Justin Tapp
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 ...more
Sep 27, 2017 rated it it was amazing
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 ...more
Samridhi Khurana
May 12, 2017 rated it really liked it
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.
Kevin Tharayil
Sep 17, 2012 rated it it was amazing
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
Jan 30, 2012 rated it really liked it  ·  review of another edition
Shelves: grbpp, on-kindle
(4.0) Good review of US/global economy in 1990s and 2000s, including financial crisis

Some of this was thought provoking (please respond to my notes and highlights!). Don't have the energy (now, at least) to attempt a summary.
Jake Meyer
Aug 05, 2016 rated it it was amazing
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’s
Jun 27, 2018 rated it it was amazing  ·  review of another edition
Why should you and I care about the rising economic inequality in the society? In addition to the moral reason, Raghuram Rajan logically argues how economic inequality is one of the root causes of financial crisis and can ultimately make everybody (including you and I) worse off. His argument goes as follows.

When there is rising economic inequality, the poor demand higher standards of living. To politically appease them, the government provides short-term solutions, in this case, easy credit
Ashutosh Dwivedi
Aug 01, 2017 rated it it was amazing
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
Parag Nawani
Jun 17, 2019 rated it really liked it
Shelves: finance, economics
A nice read to understand the intricacies involved in the 2008 financial crisis in US and some other financial crises across the world. Not only the financial sector is to be blamed, but other critical players contribute towards these crises!
Wenshi Gao
Jan 06, 2020 rated it it was amazing
An adequate Education fix a crash derived from joblessness .Read in Blinkist.
Manognya Deepthi G
Oct 22, 2018 rated it liked it
Unbiased book with a lot of insights. Definitely not an easy read for ones without a strong background in Economics.
Raj Sinha
Sep 05, 2017 rated it it was amazing
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, anything...
Raghuram 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
Adarsh Appaiah
Mar 01, 2017 rated it it was amazing
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
Sep 19, 2011 rated it really liked it
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
Adrian Lee
Jun 23, 2013 rated it liked it
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 ...more
Shivam Dixit
Feb 08, 2016 rated it liked it
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
Jul 06, 2014 rated it it was amazing
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 ...more
Abhishek Dalmia
Mar 01, 2017 rated it it was amazing
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
Apr 27, 2014 rated it really liked it  ·  review of another edition
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
« previous 1 3 4 5 6 7 8 9 next »
There are no discussion topics on this book yet. Be the first to start one »

Readers also enjoyed

  • Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
  • This Time Is Different: Eight Centuries of Financial Folly
  • Lords of Finance: The Bankers Who Broke the World
  • Freefall: America, Free Markets, and the Sinking of the World Economy
  • 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
  • Currency Wars: The Making of the Next Global Crisis
  • The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History
  • Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty
  • The Return of Depression Economics and the Crisis of 2008
  • More Money Than God: Hedge Funds and the Making of a New Elite
  • Breakout Nations: In Pursuit of the Next Economic Miracles
  • End This Depression Now!
  • All the Devils are Here: The Hidden History of the Financial Crisis
  • Irrational Exuberance
  • The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
  • How Markets Fail: The Logic of Economic Calamities
  • Manias, Panics, and Crashes: A History of Financial Crises
  • Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
See similar books…
Raghuram Govind Rajan is a world-class Indian economist who has also served as the twenty-third Governor of the Reserve Bank of India. He also serves as Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. Rajan is also a visiting professor for the World Bank, Federal Reserve Board, and Swedish Parliamentary Commission. He ...more
“Not taking risks one doesn't understand is often the best form of risk management.” 18 likes
“And more than the quality of its institutions, what distinguishes a developed country from a developing one is the degree of consensus in its politics, and thus its ability to take actions to secure a better future despite short-term pain.” 13 likes
More quotes…