Fault Lines

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Date Submitted: 02/20/2011 09:21 AM

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Book Review

Alok Singh

Fault Lines- by Raghuram G Rajan

The book “Fault Lines” written by Raghuram G Rajan focuses on the reasons and philosophy which are responsible for recent and latest economic and financial crisis. I say that the book is philosophical because whatever reasons the author of the book has mentioned about crisis can be understood from common sense and the recent financial and economic crisis has motivated the author of the book to once again bring up those reasons and present it to the world in a published form. One thing is sure that the author agrees with the fact that whatever understanding of the growth model the world has today needs to be changed. The author says that the tools of growth which the world is using today whether it is developed countries or developing countries are not faultless. That’s why the author has compared the economic and financial crisis with the purely geographical and scientific concept of movement of tectonic plates.

The author says that the government and the market forces were unable to understand each other and this resulted in confusion regarding their roles. Each assumed that the other will act responsibly. The market forces assumed that the government will frame appropriate policy and the government assumed that the market forces will response sensibly to the situation. The confusion about the roles and ambiguity regarding responsibility and accountability at world level created sufficient space for the economic and financial crisis to expand to whatever extent it expanded. The delayed action aggravated the situation seriously in developed countries. For a common person who do not understands economics and finance felt cheated as those who are to act delayed their action to largest possible extent resulting in a lot of job loss which was the most painful and visible form of the economic and financial crisis.

The author focuses on three important issues which are mainly responsible for the...