A friend recommended a book that was recently published titled “The Housing Boom and Bust” by economist Thomas Sowell.
Sowell is a member of the Hoover Institute at Stanford University.
As the book jacket explains, “this is a plain English explanation of how we got into the current economic disaster that developed out of economics and politics ...”
Sowell writes like an economist, however, if the book was written with the flair of Michael Crichton, it would likely be a best-selling novel that only he could have dreamed up.
With so many important points in the book it is not possible to cover them all in a brief column, however, just like a movie trailer, the aim is to entice you to read this factual account of who caused this situation and why they did it.
The author documents no shortage of warnings delivered well before the housing financial meltdown.
The warnings were made to the congressional powers informing them that we may be headed for disaster with arbitrary and capricious home lending policies.
Congressional leaders, while getting their own loans on favorable terms, strong-armed government-regulated lenders to make loans that were imprudent.
Why did elected officials want these loans made? Simple ... to buy votes.
According to the author, these government officials who relaxed lending rules and encouraged sub-prime loans are the same ones who now blame the lending institutions and are calling for increased government regulation.
It would appear that the old saying “I am from the government and here to help you” holds true as the depressing tale unravels.
The book goes on to reveal the past mistakes of government intervention from the Great Depression, to increased government largess and to the complex housing/financial situation we find ourselves in today.
Sowell cites that only through history can we learn to not repeat past mistakes.
Unfortunately, he points out, that politicians who must run for re-election every two years are far more interested in quick, vote-getting fixes with little eye to the past or distant future and to the repercussions of their actions.
Sowell refers to the 1,000-page economic recovery bill that Congress passed in two days without deliberation.
Lastly, he leaves us with two statements by Rahm Emanuel, the president’s chief of staff.
“You never want a serious crisis to go to waste,” and then added “What I mean by that is that it’s an opportunity to do things you could not do before.”
It is an interesting and factual read that will make your blood boil.
Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.