Fault Lines: How Hidden Fractures Still Threaten The World Economy

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 is tempting to blame just a few greedy bankers who took irrational risks and left the rest of the world to foot the bill. In Fault Lines, Rajan argues that serious flaws in the global economy are also to blame, and warns that a potentially more devastating crisis awaits if they are not fixed. Rajan shows how the individual choices — made by bankers, government officials, and ordinary homeowners — that collectively brought about the economic meltdown were rational responses to a flawed global financial order in which the incentives to take on risk are incredibly out of step with the dangers those risks pose. 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. Alongside, America's growing inequality and thin social safety net create tremendous