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The Housing Boom and Bust: Revised Edition
Scary headlines and scarier statistics tell the story of a financial crisis on a scale not seen in decadescertainly not within the lifetime of most Americans. Moreover, this is a worldwide financial crisis. Financial institutions on both sides of the Atlantic have either collapsed or have been saved from collapse by government bailouts, as a result of buying securities bas...more
Paperback, 256 pages
Published
February 23rd 2010
by Basic Books
(first published 2009)
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In his latest effort, Thomas Sowell outlines the origins of the American housing boom and bust in the first decade of the new millennium. The current economic downturn began with the decline in real estate prices and the increase in payment delinquencies and foreclosures. Few people understand the details behind this real estate collapse, which led to a consumption slowdown, which led to the stock market collapse and relatively high unemployment. Sowell draws on his economic background, conserva...more
I've not had a sure sense of what made the financial crisis happen. I've read news accounts, and was vaguely aware of what was a kind of mass mania in the financial markets.
But what under-girded this mania is what Thomas Sowell details in economical prose, competently marshaled facts, and concise and plainly written explanations of key economic indicators.
Sowell's thesis is this: Government policy was the cause of the housing bust. Specifically, its implicit guarantee o...more
But what under-girded this mania is what Thomas Sowell details in economical prose, competently marshaled facts, and concise and plainly written explanations of key economic indicators.
Sowell's thesis is this: Government policy was the cause of the housing bust. Specifically, its implicit guarantee o...more
The global economic crisis that started in the late 2008 is considered to be one of the worst ones in decades, perhaps the worst one since the Great Depression. It has started in the United States, but its ramifications have been felt globally, reminding us once again that we live in a very interconnected world. The source of the crisis seems to be rather obscure, and involves many hard to understand factors. Indeed, there is no single effect that can be blamed for the entire crisis, but one fac...more
Thomas Sowell, a conservative economist, columnist, and writer lays out the relevant factors in the recent housing boom and bust in his matter of fact tone. In pointing out that there were many factors involved in the housing crisis, Sowell systematically and logically discusses each point in a way that is easy to understand.
A few of the causes Sowell discusses includes: the originator of loans had little incentive to make sure borrowers were qualified because the loans would be packaged u...more
A few of the causes Sowell discusses includes: the originator of loans had little incentive to make sure borrowers were qualified because the loans would be packaged u...more
While I agree with many of Sowell's assertions in regards to systemic problems in the housing market, his bias clearly shows as he somehow manages to portray Wall Street and the bankers as innocent victims of government tyranny. I won't dispute that government has culpability in the problem but please....to act as if private greed didn't play any role is simply ridiculous.
Further, he is convenient in his arguments regarding land use restriction. He is accurate that restrictions im...more
Further, he is convenient in his arguments regarding land use restriction. He is accurate that restrictions im...more
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from the library
c2009
I like the part which teaches me how the system works. I don't share many of author's views.
from the library computer:
fromBook News
Sowell (scholar in residence, Hoover Institution, Stanford U.) provides a blunt, straight-talking account of the housing boom and bust that rocked the American economy and the economies of other countries around the world. The author delves into "creative" home mortgage financing and the even more cre...more
c2009
I like the part which teaches me how the system works. I don't share many of author's views.
from the library computer:
fromBook News
Sowell (scholar in residence, Hoover Institution, Stanford U.) provides a blunt, straight-talking account of the housing boom and bust that rocked the American economy and the economies of other countries around the world. The author delves into "creative" home mortgage financing and the even more cre...more
This book about the housing bust was a quick read. The author had an obvious theory that governmental intervention was the cause of the housing bust. He had only two main assertions to back up the claim. He states that land use restrictions imposed by the government artificially cause prices to go up. Another main assertion is that politicians want "affordable housing" for the masses, which was the cause for people to be approved for houses that they could not otherwise afford. He...more
This book provides an account of the ongoing financial crisis from a free market perspective. According to the author, much of the blame for the crisis lies in the lap of government - at the national, state and local levels. Sowell focuses on the negative impact of regulatory actions intended to correct alleged housing discrimination by pressuring banks to issue mortgage loans to persons with inferior credit ratings. (Additionally, he argues that the need for such policies has been exaggerated b...more
A quick and easy read for anyone wanting to understand how we got into the current economic mess we have all been affected by! Not need to have a prior understanding of economics.
My favorite passage from the book:
"Despite differences of personalities and of the times, the underlying vision of the New Deal and that of the current administration are fundamentally similar. However that vision is conceived or articulated by those who believe in it, it is a vision of the feder...more
My favorite passage from the book:
"Despite differences of personalities and of the times, the underlying vision of the New Deal and that of the current administration are fundamentally similar. However that vision is conceived or articulated by those who believe in it, it is a vision of the feder...more
Sowell's arguments are more complex than this, but if you want the general idea of the book, here it is:
Housing became unaffordable in many cities due to laws that restricted land use and sale.
Fewer people could afford the more expensive homes so government, to promote higher home ownership and end ostensibly racist lending practices, imposed regulations that encouraged, and in some cases, forced lenders to offer loans to under-qualified applicants.
People who coul...more
Housing became unaffordable in many cities due to laws that restricted land use and sale.
Fewer people could afford the more expensive homes so government, to promote higher home ownership and end ostensibly racist lending practices, imposed regulations that encouraged, and in some cases, forced lenders to offer loans to under-qualified applicants.
People who coul...more
Thomas Sowell is always a good read, and this is a good summary of the financial crisis, although it is one sided. However, when the latest polls indicate the 79% blame Wall Street for the financial crisis, someone needs to write a short, simple one-sided narrative explaining government’s substantial role in the crisis. This is it.
The best thing Sowell does is to point us to the obvious. The underlying cause was the fact that people were overextended in their home mortgages. That...more
The best thing Sowell does is to point us to the obvious. The underlying cause was the fact that people were overextended in their home mortgages. That...more
As he always does, Dr Sowell has written the most straight forward, well researched, and honest explanation for the housing and financial situation that we find ourselves in. I work in the mortgage industry and being an economics student, I have found myself reading many books and articles on this subject. This one is by far the best read for an expert and the layman, which would be someone who doesnt fully grasp MBS's and the many new financial instruments that use mortgages as collateral. The ...more
A previous round of regulations brought on this mess we are now trying to fix with current regulations. Sowell does such a good job of explaining how markets, land costs and regulations work, this almost doubles as a primer in basic economics. He points out that only 6% of the US covered by urban areas, and more land is covered by trees than all developed land combined. Why is land, and therefore cost of living, so expensive in major urban areas? Because of so called "smart growth" and...more
Wonderful book.
The housing bubble was concentrated in a few metropolitan areas. In those areas, home buyers were spending a lager percentage of their income on housing. Banks were strong armed into lending to sub prime borrowers. Obstinate in the face of empiricism, politicians continued to push home ownership. Ill conceived financial products were created to make home ownership possible where it was not feasible. Now we are being offered 'solutions' to these problems. He ends with t...more
The housing bubble was concentrated in a few metropolitan areas. In those areas, home buyers were spending a lager percentage of their income on housing. Banks were strong armed into lending to sub prime borrowers. Obstinate in the face of empiricism, politicians continued to push home ownership. Ill conceived financial products were created to make home ownership possible where it was not feasible. Now we are being offered 'solutions' to these problems. He ends with t...more
This was a quick read, but very helpful to me in explaining what happened in the housing market and lending institutions. I felt sick to my stomach as I finished the last chapter, because I do feel like our country is going down the wrong path and I can't understand why our leaders seem so eager to rush headlong into disaster. Sowell talks about the current administration's desire to rush legislation through without allowing for thoughtful discussion: "From the standpoint of those who se...more
In this read-it-in-a-weekend book, Sowell articulates the general causes of and policies that led up to the current economic crisis and the general flaws that tend to plague government intervention during economic hard times. Sowell's explanation of the mortgage/housing crisis brings together factors reported elsewhere individually, such as the role of "affordable housing" being brought to lower-income neighborhoods starting with the Community Reinvestment Act of 1977 and continuing s...more
I expected this to be a dull read. What a surprise! Thomas Sowell does a great job of explaining the politics behind the subprime mortgage mess and how seemingly good ideas ("affordable housing," open space, land use restrictions) contributed to the current economic disaster.
I was surprised to find myself agreeing with many of the author's assertions despite our clear divide in political leanings. While I am still not 100% convinced that free markets would self-regulate to...more
I was surprised to find myself agreeing with many of the author's assertions despite our clear divide in political leanings. While I am still not 100% convinced that free markets would self-regulate to...more
Thomas Sowell’s book, The Housing Boom and Bust, explores the economics behind the many causes of the recent housing bust. In essence, it’s an accurate account of how we all participated in the housing crisis. Lenders, government entities Fannie Mae and Freddie Mac, builders, local government regulations, local homeowners, government regulators (HUD and bank authorities), the Congress, and presidents each played a part. Sowell rightly points out that the crisis was namely a result of misinformed...more
Sowell's The Housing Boom and Bust is a thorough and scathing analysis of government interference in the housing and lending market, from land-use restrictions to the corrupt influence of Congress over federal regulators to the Community Reinvestment Act to the artificially low interest rates of the Federal Reserve. Sowell convincingly demonstrates that ever-increasing levels of government meddling converted the US home mortgage market -- which had been the most reliably profitable business anyw...more
Warning - If you believe that FDR saved the country from the Depression, don't read this book. Or maybe you should because you'll find out that his policies made it worse.
Sowell is writing about the causes of the housing boom, and he spares no Democratic policy in his caustic analysis of the situation. Sowell is Rose and Milton Friedman Chair of Economics at Stanford, which will tell you all you need to know about his economic bent.
This book is a must-read for anyone who wants to ...more
Sowell is writing about the causes of the housing boom, and he spares no Democratic policy in his caustic analysis of the situation. Sowell is Rose and Milton Friedman Chair of Economics at Stanford, which will tell you all you need to know about his economic bent.
This book is a must-read for anyone who wants to ...more
Conventional wisdom on the US housing market crash and its subsequent impact on subprime mortgages and hence, global financial markets suggests that this is a case of capitalism gone wrong where the solution is greater government regulation to rein in the excesses of Wall Street. Sowell's book turns this assumption on its head, arguing that it was inappropriate and too much government regulation that was amongst the factors leading to the housing market crash. Local regulations in areas such a...more
A good read and overview of the gov't policies that lead to the bust/economic downturn. Would have given it 4 stars but felt Sowell paid lip service to the greed of the private sector when it came to the bust. And I do think it is a good policy to put limits on executive pay and allow shareholders to vote on their packages as part of the bailout packages or in general practice (even though I'm against bailing out companies that made poor/greedy decisions that lead to their demise, good riddance)...more
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"Many in politics have acted as if predatory lenders are what caused the housing crisis-a view especially common among those who themselves had a major role in bringing the crisis."
"While some Congressional Democrats have proposed a moratorium on mortgage foreclosures or allowing judges to change the terms of mortgage contracts, Senate Republicans have proposed 'providing government-backed, 4% fixed mortgages to any credit-worthy borrower.' What these proposals from p...more
"While some Congressional Democrats have proposed a moratorium on mortgage foreclosures or allowing judges to change the terms of mortgage contracts, Senate Republicans have proposed 'providing government-backed, 4% fixed mortgages to any credit-worthy borrower.' What these proposals from p...more
Sowell's writing is smooth and easy to follow, but this book felt a lot like something rushed out the door before it was actually finished to make more money. Its incredibly short for one thing; 150 pages of the largest font I've ever seen outside of either the children's or large-print sections. All the arguments and ideas he puts forward are lacking in support (the book is cited very very oddly) and a little under developed. The opening chapter, which I would like to see as something of an int...more
Sowell is a libertarian (Hoover Institute) economic scholar who writes with great clarity. Here, he writes a hard-hitting book that attacks a wide range of players involved in the economic crisis. I think it’s safe to wager that this book is probably not on Chris Dodd's or Barney Frank’s favorite-book list.
Broadly speaking, Sowell argues that poor regulation--not a lack of regulation--is responsible for the housing boom and bust and subsequent economic difficulties.
...more
Broadly speaking, Sowell argues that poor regulation--not a lack of regulation--is responsible for the housing boom and bust and subsequent economic difficulties.
...more
Easy to read, and as usual with Sowell, amazingly illuminating. Sowell convincingly answers many questions. Here are just a few:
* The fact that there was no single cause made it easy to pass blame around.
* Reselling loans to places like Freddie and Fannie gives the initial lender fewer incentives to check closely into borrower qualifications.
* The assumption, proven correct that the government would bail out Freddie and Fannie if they got into trouble meant that bank pr...more
* The fact that there was no single cause made it easy to pass blame around.
* Reselling loans to places like Freddie and Fannie gives the initial lender fewer incentives to check closely into borrower qualifications.
* The assumption, proven correct that the government would bail out Freddie and Fannie if they got into trouble meant that bank pr...more
Have to rate anything written by Thomas Sowell a five. Excellent explanation of ALL factors leading to the housing crisis, including pseudo-environmentalist causes that drive up land prices, silly political crusades for the meaningless political idea of "affordable housing," and judicial and legislative intrusions banking and lending practices. That more would listen to people like Sowell instead of the rhetoric we are getting from Washington....
Government was the root of today's financial meltdown, and master economist Thomas Sowell articulates it best. This book is another sobering analysis, applauded by the economically-educated and maligned only by those unwilling to accept the inconvenient truth: that the forceful economic decisions of a few--fueled by allegiance to voting constituents and their own present-day power--nearly always result in catastrophic consequences for the future of the nation's (and consequently the world's) ec...more
In a nutshell, Sowell blames land use regulations and Janet Reno for the housing bust and then he talks crap about FDR (saying he prolonged the depression).
He has some good stuff to say, but he ignores a lot the pieces to the puzzle... as far as FDR, he totally ignores the increase in GDP throughout his presidency (he bases his opinion on a single book- FDR's Folly- which has a lot of problems on its own)
He has some good stuff to say, but he ignores a lot the pieces to the puzzle... as far as FDR, he totally ignores the increase in GDP throughout his presidency (he bases his opinion on a single book- FDR's Folly- which has a lot of problems on its own)
So far what I've learned is that environmentalists have had a huge impact on housing costs in coastal California, i.e. the Bay area, by locking down large swaths of land from development.
This constricts supply which drives up demand in terms of expensive housing. Making housing accessible in the Bay area requires risky mortgage instruments like ARMs and "liar loans." Sowell is setting up this as one of the driving causes of the collapse.
This constricts supply which drives up demand in terms of expensive housing. Making housing accessible in the Bay area requires risky mortgage instruments like ARMs and "liar loans." Sowell is setting up this as one of the driving causes of the collapse.
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Thomas Sowell is an American economist, social commentator, and author of dozens of books. He often writes from an economically laissez-faire perspective. He is currently a senior fellow of the Hoover Institution at Stanford University. In 1990, he won the Francis Boyer Award, presented by the American Enterprise Institute. In 2002 he was awarded the National Humanities Medal for prolific scholars...more
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