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 enlarge | Author: Mark Zandi
Publisher: FT Press
Category: Book
List Price: $24.99
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Rating:  89 reviews
Sales Rank: 2912
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 288
Shipping Weight (lbs): 1.7
Dimensions (in): 9.1 x 6.1 x 0.9
ISBN: 0137142900
Dewey Decimal Number: 332.7220973
EAN: 9780137142903
ASIN: 0137142900
Publication Date: July 19, 2008
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| Customer Reviews:
 Excellent work, with some serious shortcomings September 14, 2008
I'm about 75% through with Mark Zandi's book; I've read enough to be very impressed. The "Subprime Mortgage Implosion" was and is a milestone in investing and real estate history. Mr. Zandi makes it easy to understand. Anyone who is interested in staying informed in investing and/or real estate issues should read this excellent book. That's the good news, and the good news is very good.
Here's the bad news: Some concepts that Mr. Zandi discusses are complicated and need diagrams or tables for clarity. In my opinion, it is tragic that his excellent verbal descriptions are compromised by many poor visual aids. Here are **some** examples: Figure 4.3 is self-contradictory - the line graph labels conflict with the vertical and horizontal labels. The use of shading in Figures 2.1 and 3.5 is actually misleading: the depth of the shading in the legend (light, medium, dark) should agree with the data in the display (less than, between low and high, more than). It does not, and therefore in my opinion, these figures confuse -- they do not clarify. Speaking of shading, Figure 10.4 has five boxes in the legend that define the meanings of the different shading intensities. Unfortunately, Box 2 and 5 look the same. So do Box 3 and 4. The labels in Figure 7.3 (a block diagram) are less than one millimeter in height and are therefore very hard to read without magnification. Figure 10.5 is far too small and also contains shading errors as I've described above. Remember that these are just a few examples. I haven't actually done a tally, but my impression is that there are more bad diagrams than good ones.
I recommend this book. I hope that Mr. Zandi is able to convince his publisher that it should be reprinted with improved visual aids.
I'm certain that I'll be reading Mr. Zandi's other books.
Enjoyable read for a non-finance person September 12, 2008
1 out of 1 found this review helpful
Ten years ago I would never have thought to pick up a book like this. Today, I find it a fascinating read, esp. being a lay person unschooled in economics and finance. What happened to the housing market and how that affected the world wide financial markets is something that will be discussed for a long time. Mr. Zandi has written a book that plainly and systematically lays out what happened and suggests, for investors and policymakers, ways to avoid this type of meltdown in the future.
Back story: About 8.5 years ago, in 2000, I obtained my first mortgage. I was young and didn't know much about anything. With the help of family, I obtained a modest mortgage - a 30 year fixed with 20% down. The hurdles and the paperwork to obtain this was stressful, demanding and put me and my family under a financial microscope. A year later, I refinanced for a lower rate, and even though we had a 30 year fixed with 20% down, the mortgage broker kept pushing an ARM on us, pointing out the "low" payments (at that time around 4% interest). Two years later, I noticed that other people, whom I knew were not even as qualified as I was, were obtaining mortgages twice the amount that I had, with a lot less effort. By 2004, I noticed that prices were rising far faster than area wages (even two wage households) could afford. I kept wondering "Who are these people with all this money to buy these properties at these prices?!? With 20% down?!!?" I was angry and felt that, somehow, everyone must be getting paid a hell of a lot more than me! But I was suspicious of my own emotional assumptions, and kept an eye on the government data on wages, which seemed to back up that area wages were not in fact going anywhere, just like my own paycheck. Something didn't seem right about this "bubble".
Mr. Zandi does an excellent job explaining just what did happen and why. It is an important lesson for anyone looking to create a secure future for themselves and an enjoyable read.
Clear Insight September 11, 2008
2 out of 2 found this review helpful
First of all, what this book is not: It is not a self-help book. It does not tell you how to profit from or stay safe in the financial markets. It is also not political. It does not set out to place blame.
Instead it is a clear and concise history of what is still going on around us: a slow-motion collapse of a substantial part of our economy. The book is surprisingly up to the minute, including information up to the middle of 2008. Unfortunately for Mr. Zandi, the crisis isn't over yet. No matter how up to the minute, it cannot explain to us the significance of this week's announcement that Fannie Mae and Freddie Mac have been de-privitized (or nationalized.) But with that news in the background, I can't help but think that perhaps even this book is overly optimistic about what it is that we are in the midst of.
Zandi isn't kidding when he talks about how serious the credit meltdown is. He states: "Watching a financial crisis feels much like watching a natural disaster." And "The sub-prime shock was as serious a financial earthquake as any nation had seen since World War 2" (which in reality means, since the Great Depression.) He mentions other events such as the S & L crisis and the internet stock bubble and calls them 5 or 6 on the Richter scale while the current crisis is "off the scale." (In much of the book, the use of past tense is a little disorienting. He says this crisis "*was* off the Richter scale", but as the newspaper indicates, it isn't over yet.)
If you want to be able to read the economic news coming at you day after day with some kind of intelligence, and to understand how bad mortgages happened and how such a thing could threaten our economic system, this book is an excellent place to start. The message that I have taken away from it is that the root problem is that Americans have been living on borrowed time--actually borrowed wealth--for a considerable period of time now. We aren't building real wealth, we are putting up a facade, much like the old Victorian stories in which a rich family has lost its money but tries to maintain its lifestyle to hide its secret shame.
At the end of the book Zandi has 10 policy suggestions, most of which involve tighter regulation of financial markets. There is only one personal suggestion: Save more and "diversify *away* from whatever is appreciating quickly." Not an easy prescription and perhaps an impossible one, but it makes sense in terms of his opening line: "If it is growing like a weed, it's probably a weed." Is there actually any way for investors to escape the manic-depressive behavior of speculation followed by bursting bubbles?
Excellent Insight Into The Housing Bust September 10, 2008
1 out of 1 found this review helpful
This book is incredible. It is very informative, if not a little scary. It tells how greed and irresponsibility all the way from the average home buyers to foreign investors played a role in the current housing collapse. It explains how the industry relaxed lending standards and practically gave mortgages to anyone, often to people who couldn't afford the ridiculous terms. So many bogus deals were made with a simple "Relax, you can always refinance when rates go lower" attitude. Everything was about living for today and no one cared about tomorrow. Reading about how so many people ignored the many warning signs gives insight to our consumerism self-destructive behavior. I was one of the housing "victims". I purchased my home in 2006 at the height of the boom, only to watch it lose substantial value two short years later. Although I have a tradition mortgage and not one of the subprime or exotic examples described in the book, I still wanted answers since I got burned along with everyone else. This book provided answers in plain everyday language. He adequately explained complex financial terms and descriptions and I never found myself confused by financial buzz words and cryptic accountant language. I also learned a lot about the different securities and financial markets out there, foreign investors, and how they affect everything around us. I highly recommend this book to anyone looking for a thorough look into how we ended up in this mess. Hopefully as many people as possible will read it and learn from our mistakes. It certainly opened my eyes.
understandable explanations September 10, 2008
2 out of 2 found this review helpful
For several years, before the current real estate bust became apparent, Zandi was warning of it. In this book, he explains the reasons why with undoubtedly some satisfaction. The timbre is readable to a general reader, who might lack a strong background in finance or economics.
The gist is that 2 things happened. Housing prices simply got too unaffordable for most people, especially those on modest incomes and with perhaps low credit scores. Such folks traditionally had problems buying a home anyway, and so rented. The other problem was that people who already had a home, and how even might have had good credit scores, cashed out a lot of equity in the form of a second mortgage (or the equivalent).
To "address" the first problem, financial firms got ever more lax in furnishing mortgages, often with little verification of the borrower's income. The second problem was met with banks offering equity loans. In both cases, the loans were then aggregated and sold off in tranches, as low risk financial instruments.
The book tells how this was fun for all for a few years. But eventually the US had a national fall in home prices. A fall that is still proceeding...
It's an easy read.
Though marred slightly by the first paragraph of the Introduction, where Zandi suggests that Long Term Capital Management's collapse was contributed to by "debt-swollen households ... soon filing for bankruptcy at a record rate". Most accounts of LTCM's demise say that it was due to massively wrong modelling and hedging based on that. The author is overreaching, and he did not have to do that.
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