Thursday, September 16, 2010

Ragu Rajan on the the cause of the financial crisis and Paul Krugman

Ragu Rajan is a very well respected finance professor at the University of Chicago. He recently wrote a book called "Fault Lines" which details his views on what caused the financial crisis.

In this article he rebuffs many of the criticisms levied against his analysis by Paul Krugman. (Krugman won the Nobel prize for economics in 2008).

Rajan argues that the financial crisis can be attributed to a range of factors coming together to create almost a perfect storm. Not least of which was the encouragement of subprime lending by Fannie and Freddie.

Overall, this is a great read.