Fault Lines : How Hidden Fractures Still Threaten The World Economy
Raghuram G. Rajan was one of a handful of economists who foresaw the massive fi nancial crisis that hit the world in 2008. In Fault Lines, Rajan makes a case for looking beyond the shortsighted blame-game that targets only greedy bankers. There are serious fl aws in the global economy, he writes, and an even more debilitating crisis awaits us if those faults are not addressed right now. Rajan demonstrates how the individual choices-made by bankers, government offi cials and ordinary homeowners-that collectively brought about the economic meltdown were rational responses to a defective global fi nancial order: specifi cally, a mismatch between the incentives and the dangers involved in taking on risks. He traces the deepening fault lines in a world overly dependent on the indebted American consumer to power economic growth and stave off global downturns. In Fault Lines, Rajan outlines the hard choices that all nations must make to ensure greater stability and lasting prosperity. Importantly, he examines how the Indian development experience differs from that of other fast-growing economies. Despite India's recent successes, he argues that the country must act decisively to maintain its people-oriented growth. This unique development path, he contends, will be a compelling role model-a triumph of rapid growth in a fl ourishing democracy.
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