Feeds:
Posts
Comments

Archive for January 20th, 2014

The Housing Boom and Bust

 (Available on Amazon)

I learn tremendously every time I read the works of economist Thomas Sowell. This book is no exception. Here Sowell examines the recent housing boom and bust that happened in the late 2000s. Contrary to the opinions of liberal lawmakers and liberal pundits, the burst of the housing bubble is not a case of capitalism left unchecked; the book demonstrate that the boom and bust of the housing market is the result of government regulation and intervention. Sowell begins by documenting how zoning laws, open space laws and other host of regulations has the effect of rising costs of housing; the more ordinances a place has the more the cost goes up while places that has less arbitrary regulations tend to have lower costs of buying a home. The book also examine fiscal policies and government intrusion that forces financial institutions to make risky sub-prime loans; Sowell argues that this does no good to anyone, not to the ones who are borrowing (loses the house, ruining their credit, declaring bankruptcy), the lender (banks are not in the business of maintaining foreclosed homes), the market, other home buyers (the burden of costly risks of sub-prime borrowers end up being distributed to them) and tax payers. The book does a good job explaining the complexity of the market in clear to understand term. This book does a good job documenting how politicians doesn’t help and often the ones who are railing against business and banks for the housing bubble burst are themselves unknowingly the ones who are responsible for policies that led to the fiasco. Highly recommended!

Read Full Post »