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The Housing Boom and Bust: Revised Edition…
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The Housing Boom and Bust: Revised Edition (edition 2010)

by Thomas Sowell

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188990,864 (4)6
Member:Rand-McGreal
Title:The Housing Boom and Bust: Revised Edition
Authors:Thomas Sowell
Info:Basic Books (2010), Edition: First Trade Paper Edition, Paperback, 256 pages
Collections:Your library
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Tags:Economics, Politics, monetary theory

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The Housing Boom and Bust by Thomas Sowell

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Showing 1-5 of 9 (next | show all)
Certainly not an impartial account. Economics is messy but this is tied up in a neat little editorialized package. Nobel prize winners in economics famously have completely opposite opinions on this subject, always aligning with their personal politics, interestingly enough. This book is not about the confusing evidence that leads to so many diverging opinions about the 2008 financial crisis. It is a one-sided argument. I saw the author had also written "Basic Economics", which sounded like innocuous fundamentals. Then I saw that blamed all political parties and market players. But having finished the book, he really strongly blames liberal politicians acting on their own self interest, while at times some republicans played along. He does not agree that nobody saw this coming. He argues that conservatives did, and pled for reform to deaf ears (which I assume surely includes their own ears during their years of legislative power in the 1990s and 2000s, leading up to the crisis, though this is not discussed).

Affordable housing programs and environmentalism caused it all. Seriously. He barely mentioned the toxic derivatives created by investment banks or the large real estate investor speculation. He brushed aside bank mortgage fraud. He did not mention the deregulation of investment banking, the creation of unregulated real estate bonds, nor the large scale migration of investment holdings from treasuries (at too-low interest rates) to these new real estate securities (at better returns, and somehow risk free). He did not see market reasons for the bubble, only oppressive government forcing risky mortgage innovations down our throats.

I don't think I share the author's politics. And that shouldn't be a problem if we're just discussing the boring facts. But this is not a book about boring facts. This is a manifesto against government intervention in general. ( )
  richjj | Jan 27, 2016 |
I listened to this on tape. It was very interesting and informational about the housing boom and bust. I enjoyed his thoughts about how helping people get into housing they can't afford doesn't really help them. He discussed failed policies aimed at getting more minorities to own homes by lowering lending standards, which only causes problems when they later find that they can't afford the home. He also discussed how land regulation actually increases housing prices. It seems like there needs to be a happy balance between a lot of the competing factors he discussed such as a balance between need for housing and the need to have open space and homes that aren't too close together. ( )
  mtunquist | Nov 29, 2015 |
I listened to this on tape. It was very interesting and informational about the housing boom and bust. I enjoyed his thoughts about how helping people get into housing they can't afford doesn't really help them. He discussed failed policies aimed at getting more minorities to own homes by lowering lending standards, which only causes problems when they later find that they can't afford the home. He also discussed how land regulation actually increases housing prices. It seems like there needs to be a happy balance between a lot of the competing factors he discussed such as a balance between need for housing and the need to have open space and homes that aren't too close together. ( )
  mtunquist | Nov 29, 2015 |
An extremely concise book recapping the housing collapse of late 2000s. Not mincing words or pulling punches, Dr. Sowell likely refers to President Bush by name more than he did to President Obama. But that is not to say he doesn't squarely place much of the blame for regulatory and economic meddling on those who deserve the "credit."

Most interesting was his lesson of the Great Depression and federal involvement which only worsened, or at least prolonged the misery of unemployment. Dr. Sowell illustrates that is was World War II which ended the lingering effects of horrible economic circumstances of the late 1930's. Yet is was not for the popular reason of "ramped up war production"; rather it was the war effort put an end to the New Deal! Also, consider those serving in the military are not factored into unemployment numbers.

The conclusion of the first chapter sets the tone for the rest of the book (p. 29):
" When it comes to the home mortgage boom and bust, who was to blame? The borrowers? The lenders? The government? The financial markets?

The answer is yes. All were responsible and many were irresponsible.

Economics cannot explain such things. For that, we must turn to the politics of housing." ( )
  HistReader | Dec 20, 2013 |
Thomas Sowell’s The Housing Boom and Bust is a slim but powerful exposition of the 2007-2008 subprime mortgage crisis.

Tellingly, Sowell actually spends very little of this book’s ~150 pages on the events of those two years. Instead, he looks much farther back to the roots of the crisis. He first critiques the idea that there is – or recently has been – any real shortage of ‘affordable housing’ in the USA. He explains how many local communities have driven up the cost of housing by severe restrictions on building, often in the name of environmentalism or ‘preservation’, but always with the aim of keeping out those who are not already in.

He then provides a brilliant chapter on the government’s role in constructing and exacerbating the mortgage crisis itself. The aforementioned ‘shortage’ of housing was posed as a problem only government could step in and solve, especially for ‘the poor’ and racial minorities, with the result a concerted, persistent program of government regulations, threats, and sometimes outright bullying of lenders to force them into extending mortgages to millions of people who would never have qualified for them under traditional lending criteria:

Both the genesis of unaffordable housing in particular local areas and the response with national policies to make buying a home easier were political in origin, and government regulation is what forced lenders to meet arbitrary quotas by eroding traditional mortgage lending safeguards. The facts could not be plainer. Market criteria had long required such things as substantial down payments, as well as income and credit histories that made continuing payments likely. But all that was brushed aside in the political crusade for ‘affordable housing’ and bigger home ownership statistics. p. 44

Once this hothouse environment was in place, disaster was inevitable:

The bedrock question then is: Why did so many monthly mortgage payments stop coming? and the bedrock answer is: Because mortgage loans were made to people whose prospects of repaying them were less than in the past. Nor was this simply a matter of misjudgment by banks and other lenders. The political pressures to meet arbitrary lending quotas, set by officials with the power of economic life and death over banks and over Fannie Mae and Freddie Mac, led to riskier lending practices than in the past. p. 119

Sowell of course doesn’t let Wall Street off the hook entirely, but his book is an essential counterweight to equally excellent books on the subprime crisis such as Michael Lewis’s The Big Short, which focuses exclusively on the perfidies of the big investment banks, and which may mislead the unwary into thinking the subprime crisis can be reduced to a single locus for blame. I read Lewis and Sowell in succession, and recommend doing so to acquire a broad and balanced introduction to this pivotal chapter in American, and indeed global, financial history. ( )
1 vote mrtall | Jun 20, 2011 |
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Let us force lenders
to make dumb loans. Good, now let's
attack them for it.

(Carnophile)

Amazon.com Product Description (ISBN 0465018807, Hardcover)

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.

(retrieved from Amazon Thu, 12 Mar 2015 18:07:29 -0400)

(see all 3 descriptions)

Explains 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 "creative" marketing of financial securities based on these mortgages to countries around the world, are part of the story of how a financial house of cards was built up--and then collapsed.… (more)

(summary from another edition)

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