Just finished this book. A very complete history and examination of the housing bubble from one of my favorite authors. Also a very good case study in big government politics. If this doesn’t get worked-up, nothing will.
A better book is Posner’s “A Failure of Capitalism.” He’s honest.
[quote]dhickey wrote:
Just finished this book. A very complete history and examination of the housing bubble from one of my favorite authors. Also a very good case study in big government politics. If this doesn’t get worked-up, nothing will.
Yep. When I was your age, it required a 20% down payment to buy. This gradually got lower and lower, which inflated the bubble and exposed the lender to more and more risk. The buyer also had less incentive to stay with the property – classic setup for collapse.
I read somewhere that this bubble was actually the biggest bubble in history, equal to all the wealth in the world. Popping that = bad…very bad.
Many start with banks making risky loans using non-standard financing, and the packaging of these loans into investment vehicles. They will claim that capitalism just woke up one day as said “I think I’ll start lending to people that can’t pay me back” or “you know, we’ve been requiring a substantial down payments and proof of income for 100 years. Let’s try something different”
Few have the honesty or intellect to ask a few very simple questions.
Why did banks start making risky loans with non-standard lending products?
Why were home prices increasing 100% over a few years in some areas?
The answer to both is gov’t intervention and bullying.
This is not that hard to understand. We have discussed it here in detail. This book is the very best summary that I have seen so far.