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Past Event

A Global Economy and Development Event

Fault Lines: How Hidden Fractures Still Threaten the World Economy

Global Financial Crisis, Global Economics, Global Finance, Financial Markets, Financial Institutions

Event Summary

In Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton University Press, 2010), Raghuram Rajan shows how the individual choices that collectively brought about the economic meltdown—made by bankers, government officials and ordinary homeowners—were rational responses to a flawed global financial order where incentives for risks are out of step with the dangers of those risks. The book traces the fault lines of the crisis to a world economic system overly dependent on indebted American consumers to power global growth. It outlines the hard choices we need to make to ensure a more stable world economy and restore lasting prosperity.

Event Information

When

Monday, June 21, 2010
2:00 PM to 3:30 PM

Where

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC
Map

Event Materials

Contact: Brookings Office of Communications

Email: events@brookings.edu

Phone: 202.797.6105


On June 21, Global Economy and Development at Brookings hosted a discussion on the global economy with Raghuram Rajan, Charles Dallara, managing director of the Institute for International Finance, and David Wessel, economics editor for the Wall Street Journal. The discussion focused on the main policy conclusions of Professor Rajan’s new book in light of current policy debates, especially social inequality, financial sector reform and the world economy. Brookings Fellow Douglas J. Elliott provided introductory remarks and moderated the discussion.

After the program, the panelists took audience questions.

Transcript

DOUGLAS ELLIOTT: Well, thank you. You’re a very, very good audience, I have to say. You seem to pretty much all be here on time, you’re quiet, you’re ready for us to go, so I think we might as well start in.

So, welcome to the Brookings Institution and thank you all for coming here today. My name is Doug Elliott. I’m a fellow in the economic studies area here and I focus principally on the financial sector and on regulation and legislation surrounding that. And it’s an honor to have the opportunity to introduce Dr. Raghuram Rajan and to moderate this panel. I’m sorry, however, that my opportunity comes at the expense of Eswar Prasad, who, unfortunately, had a family emergency and could not be here today, but he sends his deep regrets.

So, Dr. Rajan, who is generally known as Raghu, is one of the preeminent academic thinkers in the intersection between finance and economics. In addition to teaching at the Booth School of Business at the University of Chicago, he was for several years the chief economist of the IMF and he’s also been an advisor to the prime minister of India, among other roles. We’re here today to discuss his new book called Fault Lines: How Hidden Fractures Still Threaten the World Economy. In the book he explains his view of the origins of the financial crisis and some recommendations for how to revise our economic and financial systems to avoid having such severe problems in the future.

Now, his thoughts on this carry added credibility because he was one of the few voices who was arguing against the complacency that held much of the profession enthralled as the crisis was brewing. His book, as you’ll see, is well conceived and very well written. And I’d like to add my own personal congratulations to the accolades he’s already received.

Participants

Featured Speakers

Raghuram Rajan

Eric J. Gleacher Distinguished Service Professor of Finance
University of Chicago Booth School of Business

Charles Dallara

Managing Director
Institute of International Finance

David Wessel

Economics Editor
Wall Street Journal


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