The Subprime Solution

The Subprime Solution

Full Name
The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It

The subprime mortgage crisis has already devastated the lives of millions and now it threatens to derail economies around the world. In this incisive book, respected economist Robert Shiller divulges the roots of this crisis and proposes bold measures to solve it. He calls for a vigorous response--a reorganization of the institutional foundations of the financial system that will allow people once again to buy and sell homes with confidence, but will establish the conditions for greater prosperity throughout the deeply interconnected world economy.

"Winner of the 2009 Bronze Medal in Finance/Investment/Economics, Independent Publisher Book Awards"

"Honorable Mention for the 2008 PROSE Award in Business, Finance, and Management, Association of American Publishers"

"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 slipped into this money pit and what it might take to clamber out of it. . . . Shiller is sometimes called a Cassandra, and his prophesies about the dot-com and housing bubbles did come true. Yet in these pages he sounds more like a visionary optimist who considers today's emergency to be a grand opportunity."

⁠— James Pressley, Bloomberg News

"In The Subprime Solution, [Shiller] briskly sketches out his views on both short-term and long-term strategies for dealing with a housing meltdown that's left millions of Americans a lot less wealthy--and an unfortunate number at risk for losing their homes. . . . The book's most compelling discussion centers on the long-term opportunities that lie in this crisis. Shiller describes how key parts of America's financial system--the Federal Reserve, the Securities and Exchange Commission, and the FDIC, to name only three--were created in the reforms after earlier bank crises or the Great Depression. . . . Shiller suggests that political leaders should look at the current crisis as an opportunity to rethink the homebuying process and add new protections to keep homeowners from getting in over their heads during a future bubble."

⁠— Daniel McGinn,

"What sets Shiller apart--brilliantly apart--from other analysts of the housing bubble are the sharpness of his diagnoses and the creativity of his solutions. These are the core of his excellent new book, The Subprime Solution. . . . [A] brilliant and radical--but not implausible--perspective on putting the Humpty Dumpty that is American finance together again."

⁠— Arvind Subramanian,

"Yale University's Robert Shiller is one of the world's outstanding economic thinkers and intellectual innovators, with a record of foresight that is the envy of his profession. . . . His short, snappy and surprisingly far-reaching book on the subprime crisis is as interesting and indispensible as you would expect. . . . The Subprime Solution is an ambitious little volume. . . . It covers a remarkable amount of ground in less than 200 pages. . . . . [T]he book's broad framing of the issues is novel and valuable, and its arguments are always stimulating. . . . Shiller . . . is an ardent financial-technology optimist, and his book is a torrent of fascinating ideas. Anybody interested in the subject must profit from reading it."

⁠— Clive Crook, Financial Times