Financial Fiasco: How America's Infatuation with Home Ownership and Easy Money Created the Economic Crisis by Johan Norberg

From the Publisher

Financial Fiasco digs deep into the foundation of the economic meltdown, revealing how it was the product of conscious actions by decision makers in companies, government agencies, political institutions, and consumers. An easily accessible work written for general readers, Financial Fiasco tells the compelling story of how rate cutting by the Federal Reserve inflated the real estate market and fueled increased risk-taking in the financial markets; how new government policies to promote home ownership blasted air into the credit bubble; how new financial instruments, credit-rating requirements, and accounting rules intended to prevent cheating backfired; and much more. Financial Fiasco guides readers through a world of irresponsible behavior, warns that many of the solutions being implemented are repeating the mistakes that caused the crisis, and offers guidance on how to move forward.

Library Journal

Norberg (In Defense of Global Capitalism) searches high and low for the culprits who, in his opinion, caused what he calls the "perfect financial storm." He implicates many individuals and institutions, including Wall Street tycoons, credit rating analysts, banking executives, government officials, and, ultimately, the American home-buying public itself. But Norberg allots particular responsibility to the Federal Reserve (both Greenspan and Bernanke) for reckless interest-rate cutting that arguably played a role in creating the real estate bubble and subsequent financial calamities. Norberg has done impressive research, assembling evidence that the crisis was not merely systemic, but he doesn't propose a fitting punishment for the accused. For example, does he want Fannie and Freddie eliminated, scaled back in size, or simply left alone? VERDICT Norberg is a libertarian who sees government intervention of any kind as a "bad thing," but his theses do not convincingly support his conclusions. Consumers wanting a basic introduction to the background of the financial crisis from a purely libertarian perspective might benefit from this book. However, it still has a "first draft" feel, as if published in haste. Readers wanting a more in-depth and balanced analysis would profit from Mark Zandi's newly updated Financial Shock.—Richard Drezen, Brooklyn, NY

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