ippr's Thinking on Thursdays
Events
The Sub-Prime Solution
27 November 2008
12:30pm-2:00 pm
30- 32 Southampton Street, London WC2E 7RA
Professor Robert Shiller, Yale University with John McFall MP, Chair of the Treasury Select Committee, and Chris Giles, Economics Editor, Financial Times.
NEW: Download the podcast from this event here. (Bloomberg News)
The roots of the current global financial crisis lie in the US sub-prime mortgage market, and the trillions of dollars worth of unsustainable loans that were made under the veil of securitisation. To provide a unique and insight into how the bubble burst and what should now be done, ippr was delighted to be joined by perhaps the most eminent and considered examiner of modern investment bubbles, Professor Robert Shiller of Yale Unversity. Prof Shiller accurately predicted that the crisis would be much more acute and on a larger scale than many thought, and anticipated the bailouts on both sides of the Atlantic. He talked about his new book, Sub-Prime Solution, which offers a solution to the crisis, radically different from much current thinking. We were also be joined by John McFall MP, chair of the Common’s Treasury Select Committee, who gave a view on the implications of Shiller’s proposals, for UK housing and financial markets.
Rigorous, innovative, and accessible... Robert Shiller is uniquely qualified to analyze the recent unprecedented problems in the mortgage and housing markets, and the way they have spilled over into the wider credit markets. He has again proven his ability to communicate complex ideas and evidence about financial markets.
(Diane Coyle, author of "The Soulful Science").
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, Forbes.com )
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 )
Robert J. Shiller's clear-eyed look at what happened in the U.S. housing market - and what might be done about it - is not keen to attribute blame to the actors in the drama. He explains that the development of subprime mortgages in the Nineties was welcomed as a way of extending home ownership to those once locked out of the market, and it was not the dishonesty of the mortgage lenders, or the greed of bankers, that led to the bubble. There was dishonesty and greed, but these were the result of the bubble, not its cause.
(Tim Worstall, The Telegraph )
Speakers
Described as “one of the world's outstanding economic thinkers and intellectual innovators”, Robert J. Shiller is Arthur M. Okun Professor of Economics at Yale University, and Professor of Finance and Fellow at the International Center for Finance, Yale School of Management. Shiller is a leading thinker on financial markets, financial innovation, behavioural economics, macroeconomics, real estate, statistical methods, and on public attitudes, opinions, and moral judgments regarding markets. Irrational Exuberance (2nd edition Princeton 2005) was hailed as an instant classic on speculative bubbles in the stock market and real estate, and was followed by The New Financial Order: Risk in the 21st Century (Princeton University Press, 2003, 2004) looking at the expanding role of finance, insurance, and public finance. Subprime Solution: How the Global Financial Crisis Happened and What to Do about It, was published in September 2008 by Princeton University Press. Prof Shiller also developed America’s most widely used index of housing prices, the Standard & Poor’s/Case Shiller Home Price Indices. Prof. Shiller has been a research associate with the National Bureau of Economic Research since 1980, and co-organiser of NBER workshops on behavioural finance with Richard Thaler since 1991, and on macroeconomics and individual decision making with George Akerlof since 1994. He also writes the "Economic View" column for The New York Times.
Rt. Hon. John McFall is Member of Parliament for West Dumbartonshire. From 1989 to 1997 he was on the Opposition front bench, and from 1998 he was Parliamentary Under Secretary of State in the Northern Ireland Office. In July 2001 he was elected as Chairman of the Treasury Select Committee of the House of Commons, and was re-elected to this post in October 2005. Mr McFall holds degrees from Paisley University, Strathclyde University and the Open University. He is a Visiting Professor at Strathclyde University Business School and the University of Glasgow. He also plays an active role in regeneration companies in Clydeside and Strathleven.
Chris Giles has been at the Financial Times since 2000, and economics editor since 2004. He writes on micro and macroeconomic issues affecting the UK and other leading economies. Before joining the FT, Mr Giles was an economics correspondent at the BBC. He started his career in research, spending seven years as an economist for the Institute for Fiscal Studies.
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