A trenchant analysis of the berserk market dynamics that laid low the American economy.
Rickety Wall Street innovations and systemic market failure caused the rise in housing prices and mortgage debt that precipitated the Great Recession of 2008, according to this study.
Georgetown law professor Levitin and Wharton economist Wachter reject prominent explanations of the housing bubble of the 2000s. It was not, they contend, primarily caused by the Community Reinvestment Act’s requirement that lenders make loans to poor borrowers or by loose monetary policy or by a global savings glut. The authors advance their own complex, systematic theory of financial markets gone awry. The problem started, they argue, when the traditional 30-year fixed-rate mortgage—“the hero of our story”—was supplanted with exotic, adjustable-rate mortgages or no-amortization loans that lured borrowers with low initial payments. These mortgages were pooled and sold to investors as “private-label securities” by unregulated lenders who grabbed a market share from the staid, federally regulated corporations Fannie Mae and Freddie Mac. Demand for more mortgages to sell to investors drove lenders to make loans to bad credit risks. These iffy mortgages were packaged in complicated, opaque collateralized debt obligations and sold to still more investors with no serious accounting of their risks. That expansion of cheap credit caused borrowers to bid up housing prices to unsustainable levels on mortgage-backed securities whose risks were not reflected in their prices—with no short-selling mechanism to let the market correct itself. Dysfunctions like these are intrinsic to housing markets, the authors contend, and can only be solved by a sweeping reregulation of housing finance that would entrench traditional fixed-rate mortgages under a more powerful, federally chartered corporation that they dub “Franny Meg.” Levitin and Wachter base their intricate, incisive argument on a close reading of the scholarly literature backed up by careful attention to economic evidence and price data, which they present in illuminating charts. The book is aimed at academics and policymakers, but interested lay readers can also tackle it thanks to the authors’ thorough explanations and prose that’s always lucid and even stylish. (“It took only a very small amount of dumb or conflicted money in CDOs to build an enormous pyramid of leverage in the housing market.”) The result is an indispensable analysis of the crisis and the far-reaching measures needed to prevent a recurrence.
A trenchant analysis of the berserk market dynamics that laid low the American economy.Pub Date: June 9, 2020
ISBN: 978-0-674-97965-9
Page Count: 400
Publisher: Harvard Univ.
Review Posted Online: Jan. 20, 2021
Kirkus Reviews Issue: March 15, 2021
Review Program: Kirkus Indie
Highly instructive for would-be tycoons, with plenty of entertaining interludes.
Well-crafted memoir by the noted media mogul.
Diller’s home life as a youngster was anything but happy; as he writes early on, “The household I grew up in was perfectly dysfunctional.” His mother lived in her own world, his father was knee-deep in business deals, his brother was a heroin addict, and he tried to play by all the rules in order to allay “my fear of the consequences from my incipient homosexuality.” Somehow he fell into the orbit of show business figures like Lew Wasserman (“I was once arrested for joy-riding in Mrs. Wasserman’s Bentley”) and decided that Hollywood offered the right kind of escape. Starting in the proverbial mailroom, he worked his way up to be a junior talent agent, then scrambled up the ladder to become a high-up executive at ABC, head of Paramount and Fox, and an internet pioneer who invested in Match.com and took over a revitalized Ticketmaster. None of that ascent was easy, and Diller documents several key failures along the way, including boardroom betrayals (“What a monumental dope I’d been. They’d taken over the company—in a merger I’d created—with venality and duplicity”) and strategic missteps. It’s no news that the corporate world is rife with misbehavior, but the better part of Diller’s book is his dish on the players: He meets Jack Nicholson at the William Morris Agency, “wandering through the halls, looking for anyone who’d pay attention to him”; hangs out with Warren Beatty, ever on the make; mispronounces Barbra Streisand’s name (“her glare at me as she walked out would have fried a fish”); learns a remedy for prostatitis from Katharine Hepburn (“My father was an expert urological surgeon, and I know what I’m doing”); and much more in one of the better show-biz memoirs to appear in recent years.
Highly instructive for would-be tycoons, with plenty of entertaining interludes.Pub Date: May 20, 2025
ISBN: 9780593317877
Page Count: 352
Publisher: Simon & Schuster
Review Posted Online: May 12, 2025
Kirkus Reviews Issue: June 15, 2025
SEEN & HEARD
SEEN & HEARD
SEEN & HEARD
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.
“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.
It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.Pub Date: Nov. 12, 2019
ISBN: 978-1-61039-950-0
Page Count: 432
Publisher: PublicAffairs
Review Posted Online: Aug. 28, 2019
Kirkus Reviews Issue: Sept. 15, 2019
SEEN & HEARD
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