The Housing Boom and Bust
This is a plain-English explanation of how we got into the current economic disaster that developed out of the economics and politics of the housing boom and bust. The creative” financing of home mortgages and the even more creative” marketing of financial securities based on American mortgages to countries around the world, are part of the story of how a financial house o...more
That's what it felt like to read this book.
I wanted to learn more about the housing boom and bust of the 2000s, as part of a larger attempt to understand what it means to own real es ...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 profit remain privatized wh ...more
But as with most writers on this subject, Sowell is so focused on the one issue that he fails to see a few important points.
The first is that The Government did not force banks to make bad loans. Yes, government policies put tremendous pressure on chartered banks to lower lending standards, ...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 of Freddie Mac and Fannie ...more
- Land use laws that drove up housing prices
- The "affordable housing" campaign that did attempted to counter high prices by government ...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 couldn't otherwise afford to buy h ...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 federal government exercisin ...more
[Note: Review transitioned from Barnes & Noble website]
This is a very well written book by the conservative economist Thomas Sowell. That being said, I noticed a little bit of bias in the last two chapters of the book.
What is worth mentioning, from the last chapter, the author felt it necessary, and justifiably, to compare the New Deal to that of the Great Recession in the last chapter. I felt the author leaned continuously on the right in his explanation of why Herbert Hoover ini ...more
Further, he is convenient in his arguments regarding land use restriction. He is accurate that restrictions impact housing p ...more
The Housing Boom and Bust makes clear that, at least in the U.S., housing is an in ...more
I found the entire work extremely fascinating. I'd never read anything by Thomas Sowell before, but you can bet I'll be running to the library for ...more
The basic thrust of the book is this: the causes generally cited for the housing bust were only immediate causes. If you go a bit d ...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.
He begins by attacking “smar ...more
I’ve been meaning to read this since I bought it the year it was published in 2009. At the time, I was dealing with my own economic problems, trying to find a job outside the collapsing newspaper industry...that's another story, though not much has changed....alas, this got put on the back burner.
Now that I've finished, I am happy to report that although Obama had just taken office when this was published, ...more
I like the part which teaches me how the system works. I don't share many of author's views.
from the library computer:
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 creative selling of financial securities based on ...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 up and ...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 the benefit of all, S ...more