Readers of this maddening, sharp report will rightly wonder why Fannie Mae and Freddie Mac have been allowed to survive and...

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SHAKY GROUND

THE STRANGE SAGA OF THE U.S. MORTGAGE GIANTS

The housing sector is a house of cards.

So economics writer McLean (co-author: All the Devils Are Here: The Hidden History of the Financial Crisis, 2010, etc.)—who, having covered Enron in The Smartest Guys in the Room and the financial meltdown of 2008, knows a thing or two about such constructs—reveals in this report from the trenches. One conclusion comes early on in this latest book, a brief exposé: namely, that we have it all backward by privatizing health care and socializing mortgages, the reverse of most countries. “Most of the mortgage market in this country,” writes McLean, “is now supported by government agencies, more so than it was before the financial crisis.” Fannie Mae, Freddie Mac, and other government-sponsored enterprises may have helped precipitate the crisis—as the author notes, by 2006, almost three-quarters of all mortgages issued in the U.S. were less than prime—but they weren’t the only causes. Furthermore, though the surviving banks are pretty much back to normal, the mortgage market is not, retaining its old vulnerabilities while layering on bureaucracy. The result: when the next crisis comes, McLean suggests evenhandedly, the mortgage sector will lead the decline. The author charts the situation in vigorous prose whose arguments are often announced in her chapter titles (“The $9 Billion Accounting Fraud,” “Mr. Hedge Fund Goes to Washington”). What is clear is that the mortgage market requires reform of various kinds, particularly to rein in its tendency to value profit over fundamentals. What is less clear is just how to effect such reform, with recent efforts amounting to a roundabout way “to rebuild a system that, in a key way, would have been similar to what we had”—and that would still leave taxpayers with the burden of paying for the mistakes of the private sector.

Readers of this maddening, sharp report will rightly wonder why Fannie Mae and Freddie Mac have been allowed to survive and why we can’t do better.

Pub Date: Sept. 14, 2015

ISBN: 978-0-9909763-0-1

Page Count: 160

Publisher: Columbia Global Reports

Review Posted Online: July 15, 2015

Kirkus Reviews Issue: Aug. 1, 2015

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

THINKING, FAST AND SLOW

A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to...

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CAPITAL IN THE TWENTY-FIRST CENTURY

A French academic serves up a long, rigorous critique, dense with historical data, of American-style predatory capitalism—and offers remedies that Karl Marx might applaud.

Economist Piketty considers capital, in the monetary sense, from the vantage of what he considers the capital of the world, namely Paris; at times, his discussions of how capital works, and especially public capital, befit Locke-ian France and not Hobbesian America, a source of some controversy in the wide discussion surrounding his book. At heart, though, his argument turns on well-founded economic principles, notably r > g, meaning that the “rate of return on capital significantly exceeds the growth rate of the economy,” in Piketty’s gloss. It logically follows that when such conditions prevail, then wealth will accumulate in a few hands faster than it can be broadly distributed. By the author’s reckoning, the United States is one of the leading nations in the “high inequality” camp, though it was not always so. In the colonial era, Piketty likens the inequality quotient in New England to be about that of Scandinavia today, with few abject poor and few mega-rich. The difference is that the rich now—who are mostly the “supermanagers” of business rather than the “superstars” of sports and entertainment—have surrounded themselves with political shields that keep them safe from the specter of paying more in taxes and adding to the fund of public wealth. The author’s data is unassailable. His policy recommendations are considerably more controversial, including his call for a global tax on wealth. From start to finish, the discussion is written in plainspoken prose that, though punctuated by formulas, also draws on a wide range of cultural references.

Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to work explaining the most complex of ideas, foremost among them the fact that economic inequality is at an all-time high—and is only bound to grow worse.

Pub Date: March 10, 2014

ISBN: 978-0-674-43000-6

Page Count: 640

Publisher: Belknap/Harvard Univ.

Review Posted Online: April 30, 2014

Kirkus Reviews Issue: May 15, 2014

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