Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In August 2005 the theme of the conference was not the crisis brewing in the US housing market but a celebration in honor of the outgoing Fed chairman, Alan Greenspan. Most of the presentations were appropriately upbeat. But one rang an off note. It was given by Raghuram G. Rajan, an Indian by birth but a fully paid-up member of the American economics elite, professor at the Chicago Booth business school and chief economist at the IMF. His paper bore the heretical title “Has Financial Development Made the World Riskier?”57 Rajan worried that the dramatic expansion of modern financial intermediation was building up a dangerous new appetite for risk. At Greenspan’s farewell party, the message was not welcome. Rajan was slapped down by Larry Summers. Wielding