The Housing Boom and Bust: Revised Edition [Paperback]

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Item Description...
Describes how the granting of subprime mortgages and the packaging of these loans into investment vehicles sold around the world played a significant role in the current worldwide financial crisis, and analyzes new policies.

Publishers Description
Scary headlines and scarier statistics tell the story of a financial crisis on a scale not seen in decades--certainly 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 based on American housing values that eroded or evaporated.

Now completely revised in paperback, "The Housing Boom and Bust" is designed to unravel the tangled threads of that story. It also attempts to determine whether what is being done to deal with the problem is more likely to make things better or worse.

Item Specifications...

Pages   244
Est. Packaging Dimensions:   Length: 0.75" Width: 6.5" Height: 9.5"
Weight:   0.7 lbs.
Binding  Softcover
Release Date   Feb 23, 2010
Publisher   Basic Books
Age  18
ISBN  0465019862  
EAN  9780465019861  

Availability  0 units.

More About Thomas Sowell

Register your artisan biography and upload your photo! Thomas Sowell is the Rose and Milton Friedman Senior Fellow at the Hoover Institution, and has taught economics at Cornell, UCLA, Amherst, and other academic institutions. He is the author of Intellectuals and Society, Dismantling America, Economic Facts and Fallacies, and the classic Basic Economics, which has been translated into six languages. Sowell has published in both academic journals and in such popular media as the Wall Street Journal, Forbes magazine, and Fortune, and he writes a syndicated column that appears in newspapers across the country. He lives in Stanford, California.

Thomas Sowell was born in 1930.

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Reviews - What do our customers think?
another brilliant entree from a great man  Jan 6, 2010
Sowell is an unacknowledged American treasure.

The other commentators have said it all.
A Must Read  Jan 4, 2010
This book is a must read for anyone who wants to understand, in plain english, the origins of the current financial crisis. You don't need a degree in economics to understand any complicated jargon. Dr. Sowell, who does hold a PhD in economics, explains from the very beginning how we got to where we are now and where we are headed. It is pleasingly short and delightfully informative.
Good Book on Good Intentions Gone Bad  Dec 20, 2009
It began with land use policies in places like California, New York and Florida, which drove up the cost of housing by artificially depressing the availability or restricting the possible uses of land. Housing costs took a greater and greater share of family income in these areas than it did in areas like Dallas or Houston. Sowell backs his assertion with the statistic that 23 of 26 urban areas around the world where housing prices are rate "severely unaffordable" have severe land use restrictions in place, often called "smart growth" policies. Left unexplored is the fact that these locations are often the most geographically desirable.

This unaffordability led to pressure for political solutions. Exacerbating the problem was the perception of racial bias in lending. Statistics showing this bias were often uncorrected for the basic creditworthiness of the borrow. Pressure from the bank regulators, combined with enabling from quasi-government financing sources like Fannie Mae and Freddy Mac led to the creation of an enormous market for "subprime" mortgages. The demands were also fueled by easy money from the Federal Reserve, who had kept interest rates low for years.

The bust was triggered by the Fed's raising those rates, which triggered many defaults and sent housing prices into decline. Sowell does not describe much of the secondary mortgage market, credit default insurance, or the freeze-up of the banking system or credit markets, and while though those traps were themselves created and sprung by the housing market, they were secondary to the housing boom and bust. Still, this book offers little on those phenomenon.

Demonstrating the unintentional secondary consequences of well-meaning government policies is the overtone of the book. Sowell offers his view of how similar unintended consequences both deepened and prolonged the Great Depression, and what policies in particular related to war manufacturing help bring the country out.

In all, an excellent study of how government policies, however well intended, went awry and more than any other single factor lead to the housing boom and bust that played a major role in the financial meltdown of 2008.
Sowell does it again  Dec 17, 2009
Thomas Sowell continues to provide a clear and understandable approach to why the housing sector is in the shape that its in now. This is one of the more readable books from Prof. Sowell, similar to Basic Economics in its' approach and vocabulary. I would recommend this book to anyone interested in learning about why mortgage backed securities were all the rave during the past 5 years.
The truth behind the housing bust.  Dec 12, 2009
The "ex post facto" explanations of the housing bust that we hear and read about are that it was due to lack of regulations, the malfeasance of banks, and free-market capitalism. These served up causes by the mainstream press and awry commentators are easily recognizable as thoroughly insufficient--they simply do not fit neatly into our understanding of a world where incentives drive actions. How is it that one of the most regulated industries in the U.S. (and even more so in Europe) suddenly finds itself stumbling due to "lack of regulation?" Why would banks knowingly create the destructive forces that would lead to their own downfall? What incentives could have possibly driven a formidable politician like Barney Frank to defend Fannie Mae's orchestrated implosion? In his own words in 2003, Frank chided: Critics "exaggerate a threat of safety" and "conjure up the possibility of serious financial losses to the Treasury, which I do not see."

Like a skillful marksman, Thomas Sowell hits all the relevant points and more regarding the housing bubble and debacle. Under every misconstrued feel-good policy hatched by politicians (aided and collaborated with by aggressive "affordable housing" activists) to bolster "affordable housing" and hence the possibility for re-election, is the ticking time bomb that results in the current housing collapse and the financial strain we live through today. Perverse incentives generated as a means to an end to serve a few created the unintentional consequences that like an opened floodgate, carried the American economy to dire ends. If you understand Public Choice theory, then the actions of the politicians involved will not be a great surprise. In fact, it will underscore the solid foundation of Public Choice theory in which it rests. But Sowell adroitly connects the dots--the events, the political vision, the qualitative statistics, the rarely mentioned facts by the media--with clear and concise prose of how it all came to pass. An added bonus is Sowell's concrete and rigorous assessment of past and present folly's of government driven intervention into a private economy during times of duress, particularly during the New Deal era.

This book was a quick read but it has a wealth of insights and information. I highly recommend this book.

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