Best-Selling Author Robert Shiller Tells Us How to Get out of This Mortgage Mess in THE SUBPRIME SOLUTION - Originator Times
In THE SUBPRIME SOLUTION: How Today’s Global Financial Crisis Happened, and What to Do about It (publication date September 1, 2008), Shiller reveals the origins of this crisis that has already wreaked havoc on the lives of millions of people and which now threatens to derail the U.S. economy and economies around the world. Shiller 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.
“Robert Shiller is two for two in predicting and identifying bubbles that will burst. This book is a must read for anyone predicting bubbles or charting the course of recovery from our current difficulties.”
― Lawrence H. Summer, Harvard University
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