Book Review program on ‘Fault Line’ held at Bangladesh Bank Library
Rajib & Apu | Dhaka, 29 September 2018
A book review program on Fault Lines: How Hidden Fractures Still Threaten The World Economy held on 25 September 2018 at projection room of Bangladesh Bank Library. The book was written by Raghuram Rajan, former governor of Reserve Bank of India and becomes very popular around the world.
Dr Md. Kabir Ahmed, General Manager, Financial Stability Department, Bangladesh Bank was the discussant on the book.
Mr Rajan was one of the few economists who warned of the global financial crisis before it hit. Now, as the world struggles to recover, it’s tempting to blame what happened on just a few greedy bankers who took irrational risks and left the rest of us to foot the bill.
In Fault Lines, Rajan argues that serious flaws in the economy are also to blame, and warns that a potentially more devastating crisis awaits us if they aren’t fixed.
He 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 in which the incentives to take on risk are incredibly out of step with the dangers those risks pose. He traces the deepening fault lines in a world overly dependent on the indebted American consumer to power global economic growth and staves off global downturns. He exposes a system where America’s growing inequality and thin social safety net create tremendous political pressure to encourage easy credit and keep job creation robust, no matter what the consequences to the economy’s long-term health; and where the U.S. financial sector, with its skewed incentives, is the critical but unstable link between an overstimulated America and an under consuming world.
Mr Rajan demonstrates how unequal access to education and healthcare in the United States puts us all in deeper financial peril, even as the economic choices of countries like Germany, Japan, and China place an undue burden on America to get its policies right. He outlines the hard choices we need to make to ensure a more stable world economy and restore lasting prosperity.
Mr Md. Mahbubar Rahman, general manager of library chaired the session. Around 40 participants attended the program with lively discussion.