Patt Morrison for June 14, 2010

Raghuram G. Rajan on how hidden fractures threaten the world economy

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What exactly should U.S. and world leaders be doing to avoid another recession or depression?

When Raghuram G. Rajan warned a group of bankers in 2005 that the economy was headed for a steep and steady collapse, he was met with critical remarks and skepticism. Now, as the world tries to climb its way out of this deep hole of a recession, Rajan warns us again about another economic crisis: what brought the economy to a sudden halt in 2007 may actually threaten another downfall in the years to come. Rajan fears that the United States’ efforts to avoid economic downturn and the continuation of American over consumption could lead to another “financial earthquake.” What exactly should U.S. and world leaders be doing to avoid another recession or depression?

Guest:

Raghuram G. Rajan, former chief economist at the International Monetary Fund; Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago Booth School of Business and coauthor of Saving Capitalism from the Capitalists. His latest book is Fault Lines: How Hidden Fractures Still Threaten the World Economy.


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