Fault Lines

Posted by Rich Crowley in books

A great read, although the author is an academic in the dismal science so it’s a bit dry. With all the bluster in the popular press documenting the finger pointing from the political right and financial types that it was bad policy and regulatory lapses that caused the meltdown, and finger pointing from the political left and socialist types that it was capitalistic greed (led by the dark cabal that is big finance) that caused the crisis, this was a really well grounded essay explaining that there were many factors that influenced how things went so badly wrong in ’08.

Surprisingly, the author does paint a fairly strong argument that one (but certainly not the only) key factor in the collapse was lack of equal access to education in the United States. What? Yup, you read right. The gap between well educated (and thus those will skills who can compete in the new high tech world economy) and those with sub-par education has left the latter growing in numbers for several decades with ever downward pressure on their incomes.

In order to prevent them from losing sight of the American dream (and politicians are ever afraid of dashing voters dreams), the expedient political fix was cheap money to finance home purchases. The bankers were happy to facilitate this policy (perpetuated across both democrat and republican administrations). It worked for awhile but as with all good things, too much becomes a bad thing.

He also jumps into lots of discourse on how global trade patterns affected this perfect storm as well. He also proposes some fixes and provides a dire warning that if we don’t implement some of them soon, things will get uglier before they get better.