Eating Credit

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Of course, the politicians have it all figured out. The current economic recession, that is.

The Democrats know that it was the greedy Wall Street bankers, Goldman Sachs in particular.

And the Republicans know that it was the government?s fault, meaning Fannie Mae and Freddie Mac.

The Libertarians think we need to just stop all of the ?Big? government, of course.

And the Tea Partiers??.well, no comment.

But what if it is not so simple. What if it was all those things and more? With all of the bankers, traders, politicians and even the subprime borrowers playing their part in the tragedy?

In a new book ?Fault Lines: How Hidden Fractures Still Threaten the World Economy? by Raghuram G. Rajan, an economist at the University of Chicago?s Booth School of Business, outlines how all of these factors played a part and how ultimately the problem was the widening gap between the rich and the poor and the use of the credit markets and unrestrained credit to bolster the people on the lower end of the income spectrum caused the widespread financial calamity that we are in now. In a catch phrase from the book ?Let them eat credit?.

You can read an Interview with Raghuram G. Rajan here.