Shiller's Subprime Solutions - Forbes.com: "A general bonfire is so great a necessity that unless we can make of it an orderly and good-tempered affair in which no serious injustice is done to anyone, it will, when it comes at last, grow into a conflagration that may destroy much else as well.'
So wrote John Maynard Keynes in 1919 after the disastrous Versailles peace conference. Provocateur par excellence Robert Shiller uses the passage to open his new book on the subprime mortgage crisis, The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do About It...
The analogy is as simple as it is frightening. From the start, Croesus can almost hear the flames crackling...
The social fabric--the trust people have for their institutions and their investments in them; read Citigroup (nyse: C - news - people ), Merrill Lynch (nyse: MER - news - people ), UBS (nyse: UBS - news - people ), Lehman Brothers (nyse: LEH - news - people ), Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people )--is being challenged.
These institutions paid their senior officers more money than they have written off in bad paper on their books. Everyone wanted to emulate them..."
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