The Housing Boom and Bust

Thomas Sowell, a fine economist and sharp writer, is someone I make every effort to read. His BASIC ECONOMICS is a great volume I wish every student in the country would read! Sowell has now put out a slim but incisive book on the recent housing bust in America, THE HOUSING BOOM AND BUST (Basic Books, 2009), which was recently reviewed by Tim Challies). Although I’ve not yet read it, it looks well worth pursuing. Challies writes…

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In just 148 pages, Sowell explains where this crisis came from and the events that caused it all to come to a head. Along the way he powerfully exposes the cause of rising housing costs and the folly of affordable housing. As he has done repeatedly elsewhere, he exposes the fallacy of racism in lending institutions, showing that much of the blame must be laid at the feet of politicians. “Politicians in Washington set out to solve a national problem that did not exist—a nationwide shortage of ‘affordable housing’—and have now left us with a problem whose existence is as undeniable as it is painful.” Of course Sowell also proposes a way out of the mess and those who know him will not be surprised to learn that he lobbies for laissez-faire, allowing the economy to sort itself out without massive government intervention.

You can read the whole book review at The Discerning Reader site.

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Our financial crisis…

As we all follow the financial crisis in DC, WORLD magazine – HERE – has a pretty good summary article on where this crisis came from.

I would add this to the “step 2” of the article: greedy home owners, seeing their equity value increase, did lots of refinancing to get their hands on that (inflated) value, then they SPENT it. When values dropped, they have more mortgage than house — which banks really don’t like.

Such greed is a sin, and sin always pays out hard wages.

I’m afraid that, at this juncture, our government will need to do something (spoken by a fierce capitalist), but hopefully not a bailout, but something which gains taxpayers some value. (This may just be what those House of Representatives’ Republicans are seeking today too).
We must be praying.

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