Fault Lines: How Hidden Fractures Still Threaten the World Economy Summary

The SQUEEZE: In Fault Lines: How Hidden Fractures Still Threaten the World Economy, Raghuram G. Rajan suggests that there are flaws in the economy, warning that a potentially devastating crisis awaits us. In the book, Rajan outlines the individual choices that brought about the economic meltdown. These choices came from bankers, government officials, and homeowners. The financial system was flawed in that it continued to take on risk in light of serious dangers the risks potentially posed. Rajan traces the “fault lines” that reveal much about the dependence of Americans on debt and the continued political pressure that encourages easy credit, two issues that contribute to economic instability. Rajan concludes that there are some hard decisions that we need to make to ensure and restore lasting prosperity.

Notable Endorsement: “The final intense debate among the seven judges came down to a choice between Fault Lines and Too Big to Fail, Andrew Ross Sorkin's acclaimed minute-by-minute analysis of the collapse of Lehman Brothers. The book identifies the flaws that helped cripple the world financial system, prescribes potential remedies, but also warns that unless policymakers push through painful reforms, the world could be plunged into renewed turmoil.”—Financial Times


Common Q’s Answered by this Book:

  • What is the link between an overstimulated America and an underconsuming world?
  • What are examples of steps that we (country) need to take in order to reach economic balance?
  • What are the risks and consequences of an economic meltdown?


About the Author: Raghuram Govind Rajan is an Indian economist. Rajan serves as the Chief Economist Adviser to the Government of India. Rajan also serves as the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business housed on the University of Chicago campus. Rajan is a visiting professor for the World Bank, the Federal Reserve Board, and the Swedish Parliamentary Commission. Rajan completed studies at MIT, receiving a Ph.D. in management. For more information, visit: http://en.wikipedia.org/wiki/Raghuram_Rajan.


Book Vitals:

  • Publisher: Princeton University Press (August 2011)

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