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The Housing Boom and Bust |  | Author: Thomas Sowell
Publisher: Basic Books
Category: eBooks
This item is no longer available
Rating:  120 reviews
Sales Rank: 71115
Format: Kindle Book
Media: Kindle Edition
Edition: 1
Pages: 192
Number Of Items: 1
Dewey Decimal Number: 650
ASIN: B0028P9BDC
Publication Date: May 6, 2009
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Product Description
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 of cards was built up-and then suddenly collapsed. The politics behind all this is another story full of strange twists. No punches are pulled when discussing politicians of either party, the financial dangers they created, or the distractions they created later to escape their own responsibility for what happened when the financial house of cards in the financial markets collapsed. What to do, now that we are in the midst of an economic disaster, is yet another story-one whose ending we do not yet know, but one whose outlines and implications are explored to reveal some surprising and sobering lessons.
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Showing reviews 1-5 of 120
 Know the real reasons why it happened July 28, 2010
C. Lucas (USA)
Thomas Sowell does an excellent job spelling out how exactly the housing boom and bust happened. This book is well researched,full of facts, and presented in an easy to read manner.
It explores the economic and political reasons of why it happened. It give quotes of the key players before, during , and after the bubble. It can really open your eyes as to how something that was supposed to be good turned out to be very bad, with it's dire effects spreading everywhere even beyond the housing market. The ultimate theme being of why it is very unwise when 3rd parties-those who think they know better-try to tinker with the activities of business and everyday people in the hopes of making life more "fair".
If anyone wants to know the reasons for the housing mess, this book is a must read.
Clarity July 25, 2010
Neil McLeod (Sierra Vista, Arizona, US)
Thomas Sowell explains the current crisis clearly and in easily read layman's terms. It should be a must read for all Americans so we don't keep repeating these mistakes.
Political Pressure: Creating a Housing Bust and Deep Recession June 27, 2010
Thomas M. Loarie (Danville, CA USA)
Author, economist, and historian Thomas Sowell is always a must read for me. His "The Housing Boom and Bust" provides a thorough review of the economics of housing coupled with a history of housing booms and busts. This is a great book for those who want to understand what preceded and led to the housing bust of 2007/2008.
Sowell provides a detailed and apolitical review of the underlying systemic problems and the incentives for exploitation, as well as the key players, that led to the meltdown that we are still working our way through...and, possibly, will for several years to come.
Politics played a key role with the political mileage that comes with promoting home ownership. While there is plenty of blame to go around, accountability is lacking, with all involved pointing fingers to avoid blame.
The 2008 meltdown, while the worst in recent history, was not the first. Booms and busts have occurred over many years. Who in California remembers the busts of the early 80s and the early 90s? I do and suffered through both. This is a call for greater vigilance of our political system and those who have or have tried to insulate themselves from the consequences of their actions.
 It was a Mandate May 23, 2010
Henry H. Bradley, Jr. (Seattle, WA United States)
Dr. Sowell's throrough analysis of the housing bubble is a reasoned antidote to the populist media descriptions of Senator Dodds' so-called Financial Reform Bill. Said media descriptions stereotype the financial firms of Wall Street as greedy loose cannons long overdue for calling to heel by a wise Government, and Dodds rises nobly to the occasion as he serves the last few months before an election in which his ethical record would prevent his return for another Senate term.
Sowell meticulously documents the genesis of the Government-mandated solution to the lack of housing ownership among low-income citizens. In a nutshell, it was the liberal solution to all perceived social problems, whereby an advocacy group perceives a societal flaw, announces its discovery, and insists that someone else shall now finance some solution to be provided by others, preferably with a new addition to the existing bureaucracy.
In the case of housing, this involved government muscle. The solution to that lack of ownership was that through legislation, bank A would be coerced into lending depositor B's money to client C (who might well not qualify for a large housing loan, by the standards of fiduciary responsibility for B's deposits), all at the urging and benefit of political party D, which certainly was happy to take the credit for this questionable but socially conscious use of B's dollars.
A stream of questionable mortgages, involving abnormally low down payments, was generated by this process. The government solved the problem of their high-risk saleability too, by mandating that the privately-owned Fannie Mae and Freddie Mac must purchase them on a quota system. They did so, and developed 'mortgage-backed' securities for sale worldwide, in which the poisoned instruments were mixed with normal ones. Bond-rating agencies curiously assigned those securities triple-A status, and the stage was set for a bubble, enhanced by the booming economy and low prime interest rates of the 1990s and early 2000s.
Fannie and Freddie became so successful at their purchase and sale of these poisoned mortgages that their business boomed and their politically-appointed executives were awarded spectacular bonuses, which they enhanced further by cooking their books. Banks and lending agencies, who would never have held such mortgages to term, cheerfully jumped into the scam with outrageously flimsy 'creative financing' schemes, and as long as housing prices continued to rise, risky mortgages became the foundation of vast fortunes among individual house-flippers and every sort of lender. Until arrived the peak and downturn of home prices, and then the crash of 2008, and the current government solution assigning the taxpayers the onerous chore of covering the losses.
Comes now Senator Dodd, whose bill shall wreak vengeance and more government intrusions and mandates against the crudely stereotyped Wall Street. All that's missing in this righteous bill is any mention whatever of Fannie and Freddie, now government-owned and hugely in the hole, the enablers of the whole boom and bust. Their losses continue unabated, on the taxpayers' tab.
Who is intellectually dishonest? May 11, 2010
Fishstick
2 out of 2 found this review helpful
C. Matthiessen in his review accuses Thomas Sowell of intellectual dishonesty. Specifically, he claims that Sowell intentionally misquotes Barney Frank and takes his (Frank's) remarks out of context. So which was it? Did Frank say "Load the dice" or "Roll the dice"? And what was the context?
At issue during the hearing was whether Fannie and Freddie should be subject to the same kinds of strict regulation as National banks, who are regulated by the Office of the Comptroller of the Currency (OCC), and thrifts, who are regulated by the Office of Thrift Supervision, or OTS. Frank argued that they should not. Here is the actual quote, retrieved from the transcript of the House Committee on Financial Services (I can't provide the link in an Amazon.com review, but you can easily locate it if you care to look it up):
Frank: "So I guess that may sum up to me why some of us have some differences on this. I do not want Fannie and Freddie to be just another bank. If they were not going to do more than another bank would because they have so many advantages, then we do not need them.
And so therefore, I do think I do not want the same kind of focus on safety and soundness that we have in OCC and OTS. I want to roll the dice a little bit more in this situation towards subsidized housing."
Anyone with intellectual honesty will read the transcript of that hearing and conclude that Frank was arguing (as he has done on many occasions and in many contexts) for relaxed standards of regulation with respect to Fannie and Freddie, with the goal of promoting home ownership among minority communities. Now, whether or not you think that is a good thing, that's what he was arguing for. It is possible to disagree with Sowell's thesis that perverse incentives, created by Congress, were partly to blame for the crisis. But to accuse Mr. Sowell of deliberately altering the text of Mr. Frank's remarks for personal gain, or to suggest that Sowell has written a dishonest work in order to recoup personal real estate losses, is contemptible, potentially libelous, and hardly an example of moral or intellectual seriousness. If Mr. Matthiessen can prove that his version of Frank's words, and not the official congressional transcript, is correct, he should do so. If not, he owes Mr. Sowell an apology.
Incidentally Mr. Matthiessen, the difference between rolling the dice and loading the dice is the difference between gambling and cheating. Whichever it was, it's not what a U.S. Congressman should be doing with the taxpayers' money.
Showing reviews 1-5 of 120
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