The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It by Robert J. Shiller
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(Hardcover)
- Pub. Date: August 2008
- 208pp
- Sales Rank: 48,998
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Product Details
- Pub. Date: August 2008
- Publisher: Princeton University Press
- Format: Hardcover, 208pp
- Sales Rank: 48,998
- ISBN-13: 9780691139296
- ISBN: 0691139296
Synopsis
"Robert Shiller is two for two in predicting and identifying bubbles that will burst. This book is a must read for anyone predicting future bubbles or charting the course of recovery from our current difficulties."--Lawrence H. Summers, Harvard University"The subprime crisis has visited ruin on thousands of Americans, and it threatens the health of the global economy. In this timely and fascinating book, Robert Shiller, an expert on irrational behavior in financial markets, conducts a postmortem. How could so many smart people have been so wrong? Shiller concludes that unchecked financial innovation works poorly in asset markets, and he describes the institutions needed to prevent future bubbles."--Gregory Clark, author of A Farewell to Alms"Reading this exciting book is like watching a skilled surgeon at work. The diagnosis of the subprime mortgage mess is biting in its intensity--the best I have seen--and encompasses the human tragedy as well as the economic and financial crisis. The recommended therapy develops logically from Shiller's analysis and is unique in concept as well as powerful in application. The crystal-clear writing style makes his manifesto a pleasure to read."--Peter L. Bernstein, author of Capital Ideas: The Improbable Origins of Modern Wall Street and Capital Ideas Evolving"Robert Shiller is a visionary."--Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable"Rigorous, innovative, and accessible, The Subprime Solution is a wonderful book that will appeal to a wide audience. Robert Shiller is uniquely qualified to analyze the recent unprecedented problems in the mortgage and housing markets, and the way they have spilled overinto the wider credit markets. He has again proven his ability to communicate complex ideas and evidence about financial markets."--Diane Coyle, author of The Soulful Science
More Reviews and RecommendationsBiography
Robert J. Shiller is the best-selling author of "Irrational Exuberance" and "The New Financial Order" (both Princeton), among other books. He is the Arthur M. Okun Professor of Economics at Yale University.
Customer Reviews
Provocative analysis of the credit crunchby Willp
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February 23, 2009: Robert Shiller, Professor of Economics at Yale University, has written an intriguing book about the financial crisis.
He writes of the US housing slump in the 1980s, "All this could have been prevented if people had simply adopted inflation-linked mortgages, but the public seemed unable to grasp the concept." He seems to be blaming the public, for having imperfect information. But if markets only work when everyone has perfect information, then markets don't work.Excessive lending and speculation in housing created the house price boom of the early 2000s. Shiller blames 'the contagion of market psychology', a contagion without borders because of capitalism's global nature. But the cause was not 'market psychology', but the globalised financial system which provided the opportunities and incentives for speculators. The system created the psychology, not vice versa.Shiller proposes to revamp the financial system: improve the provision of financial information, extend the scope of financial markets to cover a wider array of economic risks, and create retail financial instruments to provide greater security to consumers. He defends the top executives in the financial sector and calls for extending and developing financial markets. But even more opportunities and incentives to speculate would lead to an even bigger crisis next time.Yet he does make some sensible proposals, like improving insurance against unemployment and illness. He says that to restore confidence, capitalism must bail out the low-income victims of sub prime mortgage deals and support homeowners, to prevent mass evictions. He opposes bailouts to maintain high values in the housing market, stock market, land market or any other speculative market.He points out that unfair land use restrictions benefit landowners by keeping land prices high, preventing new construction. We need cheaper land, so that we can build more homes.But of course if capitalism could do all these good things, it wouldn't be capitalism.I Also Recommend: The Great Crash 1929, The Gods That Failed.
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