Book in brief: Fault Lines
by Raghuram G Rajan
Princeton Press, £18.95
Raghuram G Rajan was one of the few economists who warned of the global financial crisis before it hit.
The book, which won the 2010 Financial Times and Goldman Sachs Business Book of the Year Award, argues that the causes of the initial breakdown were stagnant wages and rising inequality.
Here is a brief synopsis of his argument:
1. The crisis was the result of a collection of individual decisions, which together created the financial meltdown.
2. Bankers, government officials and ordinary homeowners made these decisions in response to a flawed global financial order.
3. That global financial order provided incentives to take risks which were out of step with the dangers those risks posed.
4. Unequal access to education and healthcare in the US creates financial peril.
5. Even the economic choices of countries such as Germany, Japan and China place an undue burden on America to get its policies right.
6. We need to make hard choices to ensure a more stable world economy and to restore lasting prosperity.