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Hidden in Plain Sight: What Really Caused the World’s Worst Financial Crisis—and Why It Could Happen Again

The 2008 financial crisis—like the Great Depression—was a world-historical event. What caused it will be debated for years, if not generations. The conventional narrative is that the financial crisis was caused by Wall Street greed and insufficient regulation of the financial system. That narrative produced the Dodd-Frank Act, the mostcomprehensive financial-system regulation since the New

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(as of January 21, 2018 10:08 pm GMT - Details)

The 2008 financial crisis—like the Great Depression—was a world-historical event. What caused it will be debated for years, if not generations. The conventional narrative is that the financial crisis was caused by Wall Street greed and insufficient regulation of the financial system. That narrative produced the Dodd-Frank Act, the most
comprehensive financial-system regulation since the New Deal. There is evidence, however, that the Dodd-Frank Act has slowed the recovery from the recession. If insufficient regulation caused the financial crisis, then the Dodd-Frank Act will never be modified or repealed; proponents will argue that doing so will cause another crisis.

A competing narrative about what caused the financial crisis has received little attention. This view, which is accepted by almost all Republicans in Congress and most conservatives, contends that the crisis was caused by government housing policies. This book extensively documents this view. For example, it shows that in June 2008, before the crisis, 58 percent of all US mortgages were subprime or other low-quality mortgages. Of these, 76 percent were on the books of government agencies such as Fannie Mae and Freddie Mac. When these mortgages defaulted in 2007 and 2008, they drove down housing prices and weakened banks and other mortgage holders, causing the crisis.

After this book is published, no one will be able to claim that the financial crisis was caused by insufficient regulation, or defend Dodd-Frank, without coming to terms with the data this book contains.

Comments

David L. Bahnsen says:

You’ll Understand More, But You Won’t Understand it Completely The lion’s work of my multi-year project reviewing all of the post-financial crisis books which I felt warranted review is long past, and my focus now is on my own work on the subject, targeting a 2017 release. The high volume of post-2008 books came between 2009 and 2011, and a few relevant stragglers entered the fray since then. Certainly the most noteworthy of the “latecomer” books on the crisis are the 2015 work of Peter Wallison, Hidden in Plain Sight: What Really Caused the World’s…

Neil B. says:

HEAR NO EVIL, SEE NO EVIL, SPEAK NO EVIL I saw Peter Wallison on a business channel one afternoon discussing this book and found the subject quite interesting. As a result, I researched the reviews on Amazon and was intrigued that 50% of the reviewers awarded five stars and 50% one star, with virtually nothing in between. I read the one star reviews and concluded that an effort was underway to discourage people from purchasing the book, which intensified my interest in the subject. What about the financial crisis could be so…

Edna Nelson says:

A hard book to read, but very worth it!! This book is a careful study of the cause of the financial crisis of 2008. The author makes clear that although all factors were contributory, not all factors were necessary. Only one factor was necessary to build the crisis. Very thorough, scholarly analysis that will amaze with its precision and documentation.

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