The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It
Author: Robert J. Shiller
Publisher: Princeton University Press
"His short, snappy and surprisingly far-reaching book on the subprime crisis is as interesting and indispensable as you would expect." --Clive Cook, Financial Times, September 8th, 2008
"In the aftermath, Shiller's recommendation to policy-makers is "Mend it, Don't End It." --Kevin G. Hall, The Modesto Bee, August 22nd, 2008
"Is this a wise bail-out? The best statement I have read on this question comes from Professor Robert Shiller of Yale University in his fascinating new book on the housing bubble." --Martin Wolf, Financial Times, September 9th 2008
"Robert Shiller is financial forecasting's dean of doom. But he has ideas for fixing markets too." --Justin Fox, Time Magazine, September 15th, 2008
"Robert Shiller is someone who should be taken seriously." --Andrew Leonard, Slate.com
"What sets Shiller apart--brilliantly apart--from other analysts of the housing bubble are the sharpness of his diagnoses and the creativity of his solutions. These are the core of his excellent new book, The Subprime Solution: How Today's Global Financial Crisis Happened and What to Do About It." --Arvind Subramanian, Forbes.com, September 15th 2008
"Why listen to Shiller at all? He remains a rare breed -- an academic who has transformed economic theory into useful real world solutions. As a renowned professor of economics at Yale University, he remains the expert on U.S. housing markets." --John Fout, The Street.com, August 20th, 2008
- Product Description:
The subprime mortgage crisis has already wreaked havoc on the lives of millions of people and now it threatens to derail the U.S. economy and economies around the world. In this trenchant book, best-selling economist Robert Shiller reveals the origins of this crisis and puts forward bold measures to solve it. He calls for an aggressive response--a restructuring of the institutional foundations of the financial system that will not only allow people once again to buy and sell homes with confidence, but will create the conditions for greater prosperity in America and throughout the deeply interconnected world economy.
Shiller blames the subprime crisis on the irrational exuberance that drove the economy's two most recent bubbles--in stocks in the 1990s and in housing between 2000 and 2007. He shows how these bubbles led to the dangerous overextension of credit now resulting in foreclosures, bankruptcies, and write-offs, as well as a global credit crunch. To restore confidence in the markets, Shiller argues, bailouts are needed in the short run. But he insists that these bailouts must be targeted at low-income victims of subprime deals. In the longer term, the subprime solution will require leaders to revamp the financial framework by deploying an ambitious package of initiatives to inhibit the formation of bubbles and limit risks, including better financial information; simplified legal contracts and regulations; expanded markets for managing risks; home equity insurance policies; income-linked home loans; and new measures to protect consumers against hidden inflationary effects.
This powerful book is essential reading for anyone who wants to understand how we got into the subprime mess--and how we can get out.