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Financial Fiasco: How America's Infatuation with Home Ownership and Easy Money Created the Economic Crisis Hardcover – September 16, 2009


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Product Details

  • Hardcover: 208 pages
  • Publisher: Cato Institute (September 16, 2009)
  • Language: English
  • ISBN-10: 1935308130
  • ISBN-13: 978-1935308133
  • Product Dimensions: 9.4 x 6.2 x 0.8 inches
  • Shipping Weight: 14.4 ounces (View shipping rates and policies)
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (21 customer reviews)
  • Amazon Best Sellers Rank: #522,011 in Books (See Top 100 in Books)

Editorial Reviews

Review

Johan Norberg exposes the abiding hypocrisies of policy that generated this crisis far better than an American insider could. A masterwork in miniature. (Amity Shlaes, Senior Fellow in economic history, Council on Foreign Relations)

The subtitle of Johan Norberg's book, Financial Fiasco, is 'How America's Infatuation with Homeownership and Easy Money Created the Economic Crisis,' which captures the root causes of today's financial crisis. This highly readable book, by a historian, gives an unbiased explanation of the various factors leading to the financial meltdown, and says that if we're looking for scapegoats, we need only to take a look in the mirror. Norberg has done a yeoman's job in economic diagnostics. Whether the American people want to take the necessary treatment is another question. (Walter E. Williams, George Mason University)

Financial Fiasco, by Johan Norberg, is a penetrating and frightening analysis of the causes and consequences of the 2008 Financial Panic. Norberg lays out with precision and detail how a perfect storm of misguided government policies and private sector exuberance combined to create the worst economic downturn since World War II. This is essential reading for everyone who cares about our economic future, but especially for those who are still not sure what caused the crisis. As Norberg makes clear, private forces jumped willingly on a runaway train, but it was government that built the train and drove it off a cliff. (Professor Jeff Miron Harvard University)

Essential reading for everyone who cares about our economic future, but especially for those who are still not sure what caused the crisis. As Norberg makes clear,private forces jumped willingly on a runaway train, but it was government that built the train and drove it off a cliff. (Jeffrey Miron, Senior Lecturer in Economics, Harvard University)

From the Back Cover

"The merit of the book does not lie in apportioning blame or defending the thesis that government interventionism, not unbridled markets, was the principal cause of the tragic events whose consequences still haunt us. Norberg's book does a good job of bringing the arguments together and providing us with a full canvas. What is especially compelling is the evidence that this bubble was in essence no different from previous ones and, more eerily, that various governments are busy incubating the next one." --ALVARO VARGAS LLOSA, DESERET NEWS

More About the Author

Johan Norberg is a senior fellow at the Cato Institute and a writer who focuses on globalization, entrepreneurship, and individual liberty. Norberg is the author and editor of several books exploring liberal themes, including a history of liberal pioneers in Swedish history. His book "In Defense of Global Capitalism", originally published in Swedish in 2001, has since been published in over twenty different countries. He is also the author of "Nar manniskan skapade varlden", 2006 (When Mankind Created the World), the coauthor of "Ett annat Sverige ar mojligt", 2006 (Another Sweden is Possible) and "Global rattvisa ar mojlig", 2001 (Global Justice Is Possible), and the coeditor of "Frihetens klassiker", 2003 (The Classics of Freedom), all of which are available only in Swedish at this time. His personal website is http://www.johannorberg.net/.

Norberg's articles and opinion pieces appear regularly in both Swedish and international newspapers, and he is a regular commentator and contributor on television and radio around the world discussing globalization and free trade. Prior to joining Cato, Norberg was head of political ideas at Timbro, a Swedish free-market think tank, from 2003 to 2005. He then served as a senior fellow for the Brussels-based Centre for a New Europe during 2006. Norberg received his master's degree from Stockholm University in the history of ideas.

Customer Reviews

4.5 out of 5 stars
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See all 21 customer reviews
Easy to read, logical, clear, comprehensive, insightful.
Anssi Porttikivi
The book argues that it is the short-termism of both the politicians as well as that of the investment bankers that have played a major role in creating this crisis.
H-C
Norberg's book is an early attempt to explain the history behind the financial crisis of 2007 which has since then spread throughout the world.
Antonis

Most Helpful Customer Reviews

27 of 27 people found the following review helpful By H-C on September 6, 2009
Format: Hardcover
Having read the Swedish version of this book I have to say that it is one of the most complete and convincing books on the financial crisis that I have read.

It covers the role that both the state and the market play in this crisis.

On the behalf of the state in the form of the Federal Reserve pumping out liquidity at an incredibly low interest rate as well as in the form of the failed mortgage institutes Fannie Mae and Freddie Mac issuing loans to people with doubtful payment ability.

And on the behalf of the market in the form of the investmenk banks such as Bear Sterns, Lehman Brothers and Merrill Lynch in investing tremendous sums of money in complex products based on these mortgages that turned foul.

The book argues that it is the short-termism of both the politicians as well as that of the investment bankers that have played a major role in creating this crisis. It also argues that many of the actions implemented by american politicians to save the banks are short-term, have a rather small effect on the economy, costs a lot of money and send the wrong signals to investors in the future.

The book covers a lot more than what I have been able to summarize here, and feel free to add further information on this book, but all in all it is an entertaining and enlightening read that I advice everyone wanting to understand this financial crisis to read.
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20 of 20 people found the following review helpful By S. A. Trapani on October 16, 2009
Format: Hardcover Verified Purchase
Just finished this book and cannot describe how good it is...truly fantastic. I have been in the bank regulatory, banking and investment management fields for 25+ years and this book summarizes where we stand in the US and global economies. The insights provided should shock most readers but I can attest to the fact that Mr. Norberg is spot on. He outlines the formation of the current "crisis" starting with the Hoover administration and ties in CRA, Basel I/II, MTM accounting, quant risk management, and most importantly, the regulatory environment that spawned this mess. Would give it 6 stars if I could...it's that good!!
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15 of 15 people found the following review helpful By HVeinott on September 27, 2009
Format: Hardcover Verified Purchase
This book includes some of the best writing on the financial crisis I have seen yet. It is less than 200 pages, yet I feel I have gained the knowledge of a 1,000 page book. Despite its short length it manages to cover all angles. A major focus is the role of federal reserve policy in creating the artificial boom. Also covered are developments in international accounting standards, explanations of derivatives, discussion of the global savings glut, analysis of US housing policy, and critiques of the bailout and stimulus packages. One bonus is that this book offers a much more international perspective than many American authors provide (the author is Swedish). This book is a must read and a great resource to own. I'm sure I will be referring back to it many times in the future. I couldn't recommend it more.
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17 of 19 people found the following review helpful By D. W. MacKenzie on September 17, 2009
Format: Hardcover
There is much confusion over the Subprime Boom and Crash. Politicians and pundits alike blame the recent crisis on greedy bankers and investors, who were set loose by deregulation. Norberg exposes a critical weakness in the aforementioned 'blame deregulation' mantra: it is more mythological than factual.

Norberg makes it easy to fathom fairly complicated issues. This book goes into a fair amount of detail, without being dry or ponderous. More importantly, it makes it the role of Federal policies in creating this boom-bust cycle clear. This book focuses heavily on how various regulations drove the Subprime Boom and Bust. Federal Authorities set targets for mortgage lending, regulated accounting procedures, and influenced credit rating. Local authorities set restrictions on new home construction. The Federal Reserve provided financing. It all ended in disaster.

I would have liked to have seen a little more explained on how the Fed financed the Subprime Boom. There was also little mention of Federal Deficits in the past decade. However, its explanation of micro-regulation in the Subprime Boom is excellent.

Norberg does not let private industry off the hook. Mistakes were made, especially by greedy persons at AIG, Bear Sterns, and Lehman. Yet we must realize that Federal Authorities stoked this greed with easy money channeled through regulations. The sad truth is that many people simply accept the 'blame deregulation' mythology advanced by persons like Naomi Klein, Michael Moore, and Barack Obama. Financial Fiasco is a good antidote to all the misinformation in circulation. Unfortunately, too few people will read this book.
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3 of 3 people found the following review helpful By Insightful Observer on September 25, 2010
Format: Hardcover
This is a fantastic book. Very readable. Norberg explains the background and details of the meltdown extremely well. Here is my take: I have read a number of books on the meltdown and I feel the reason it happened: mixing socialism with capitalism. The politicians really pushed mortgages for low income people through the Community Investment Act and Fannie and Freddie. Fannie and Freddie guaranteed and/or securitized nearly half of the mortgages in the country by 2005. Everyone wants to blame Wall Street; however, I feel it played a secondary or smaller role. After all there is nothing inherently wrong with securitizing mortgages (in fact it is something very desirable). Also, there is nothing inherently wrong with credit default swaps which are just insurance and play a very useful role. The main underlying culprit is the fact that banks were issuing mortgages without down payments, without income verifications, interest only, etc. And this happened with millions of mortgages, not thousands. Add to this the fiasco of the rating agencies and even a 10 year kid can figure out that something like this will create disaster. However, no one seems to be talking about the real reasons for the meltdown. It is always those horrible, greedy Wall Street bankers. For some reason these people don't even know how to defend themselves.

Also, there is one thing that I don't seem to understand - perhaps someone can try and explain it to me: why would interest rate cutting lead to irresponsible lending. It is like saying if gas prices are lowered then people will drive more irresponsibly. If the interest rate gets lowered then more people can get mortgages. Now as long as those mortgages are given with responsible lending practices like income verification, proper down payments etc.
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