"Robert J. Shiller, Co-Winner of the 2013 Nobel Prize in Economics" "Winner of the 2009 Bronze Medal in Finance/Investment/Economics, Independent Publisher Book Awards" "Honorable Mention for the 2008 Award for Excellence in Business, Finance and Management, Association of American Publishers" Robert J. Shiller is a Nobel Prize–winning economist and the author of the New York Times bestseller Irrational Exuberance (Princeton), among many other books. He is Sterling Professor of Economics at Yale University and a regular contributor to the New York Times.
An essential account of the historic subprime mortgage crisis, from the Nobel Prize–winning economist and bestselling author of Irrational Exuberance
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. "One man who does have some ideas is the Yale economist Robert Shiller, who would merit attention if only for the fact that he predicting the bursting of the Internet bubble, in 2000, with his book Irrational Exuberance, then discussed at length the dangers of systematic risk in his next, The New Financial Order. Now, in The Subprime Solution-published in August, after the start of the meltdown, but before the full scale of the disaster had become manifest-he comes up with a set of startlingly counterintuitive suggestions about what to do next."---John Lanchester, The New Yorker "With The Subprime Solution, Robert J. Shiller offers his formula to protect us from repeating such disasters: more financial engineering. It would be easy to sneer at this idea, but Mr. Shiller, an economics professor at Yale University, always deserves a hearing. . . . In what he describes as a 'brief manifesto,' Mr. Shiller argues that bailouts of distressed borrowers are inevitable to avoid wrecking our economy and shredding our social fabric-even though bailouts may punish the prudent (say, through higher taxes) while comforting those who gambled on real estate and lost."---James R. Hagerty, Wall Street Journal "Irrational exuberance, or the 'social contagion of boom thinking,' is . . . the subject of Shiller's new book, The Subprime Solution, a slim but valuable addition to the growing literature on the ongoing collapse of the housing market."---Max Fraser, The Nation "[The Subprime Solution is] a lucid primer on how we sl
