The House That George Romney Built
"Put differently, policy makers in the late 1960s and early ’70s confused the cause of prosperity (good jobs) with its symptom (homeownership). And for 40 years, we kept doing the same — finding new ways to funnel money into housing, while doing little to put it into small-business growth.
One solution would be to begin securitizing small-business debt, which would provide a safe and profitable outlet for all that capital that corporations and banks are nervously hoarding right now. Unlike houses, small businesses will produce growth, which will benefit not only the owners and the lenders, but all of us."
A Brief History of Debt
"Paradoxically, it was the very prosperity of that postwar generation that enabled so much borrowing to occur because it was in the postwar that bankers began to discover how profitable it could be to lend to consumers. The good wages of the postwar made profitable borrowing possible. As those good jobs faded, the borrowing remained. Unlike our parents and grandparents, we borrow but we just don't earn enough to pay back what we borrow."
The Evolution of American Debt
"Along the way we meet characters like the Henry Ford, the xenophobic inventor of the Model T whose scorn for the liberal age of borrowing got the best him, and Lower East Side grocery clerk Joseph Miraglia, whose miraculous $10,000 spending spree in 1965 made history as one of America’s heftiest credit cart blunders."
The Powerful Illusion of Thrift
"In a 1956 essay in Fortune magazine, Whyte labeled budgets the “opiate of the middle class” since they dulled borrowers to the dangers of overspending. Even if monthly payments could be made, interest still sapped families’ wealth."
Choice subject editors recognize the most significant titles reviewed during the calendar year by compiling the “Outstanding Academic Titles” list, which is published each January.
Laid Flat by Layaway
"The programs’ return, then, isn’t a signal that consumers have more choice. It’s a signal that in today’s cruel economy, there’s no choice left."
"What if the financial stratagem that got us into this mess could help get us out? Here’s a thought: Securitize loans to small businesses like those to consumers, as a way to bolster the credit-starved employers that goose the common good. Bundling the debt of cheese shops with those of florists and contractors and T-shirt makers, then selling these as securities to investors, might draw capital away from dead-end consumer loans and into businesses that create jobs."
"Guns and Housing are, economically, empty calories."
"What we need is a Bobby Mac [to securitize business loans] not Freddie Mac [to securitize housing loans]."
"The rich are getting rich and the gap between the rich and poor in America is getting wider. Fifty years ago the gap wasn't all that big, but in the 1970s it began to grown. There's a new documentary film about the origins of today's budget crisis called "The Flaw." One of it's backers is economic historian Louis Hyman, also the author of a book called "Debtor Nation." He tells Anne Strainchamps that inequality is the driving force behind the change in America's economic structure."
"After nine, Veronica Rueckert and her guest examine the evolution of how the government, financial intuitions, and individuals think about debt in America, and how it led us to our current economic state. "
"So how and why did the United States trade factories for finance in the 1970s? The young scholars collected in The Shock of the Global anthology have many more answers. Louis Hyman, a 2007 Harvard history PhD who landed at McKinsey & Co., gives us a groundbreaking account of how a new financial instrument called the "mortgage-backed security" emerged, irony of ironies, from the embers of the urban riots of the 1960s. It was intended as a safe way for industrial unions to invest their pension funds but ended up as the turbo-charged vehicle of choice for go-go hot-money investment banks seeking to "evade geographic and state boundary restrictions on lending."
"As an elegantly crafted historical analysis of how consumer credit grew to a colossus, Debtor Nation is compelling reading. As a well-documented financial analysis, Debtor Nation exposes the weak underside of lenders' balance sheets. Legislators should read it. Lobbyists for banks and other lenders may not be able to ignore it."
"The drive to yield is one of the things that makes capitalism both powerful and dangerous"
"On the one hand you have home buyers who are struggling to make ends meet,” argues Harvard economic historian Louis Hyman, “looking for the only way they know how to make money in our economy. They can’t make money through their labor, so but maybe they can make it through buying a house and seeing the value of that house increase. So people look to mortgages, these easy-to-get mortgages as a way to finally get their share of the American Dream. And, on the other hand, the income inequality produced a ready supply of capital at the top to be invested in these kinds of mortgages. So while the top was not willing to pay the bottom higher wages, they were willing to lend them money.”
"Has your research changed your spending habits? Oh, no. I love to shop. But as an academic, I don't have a lot of money to spend."
"Structurally the program could not work because it tried to solve a problem of wealth creation through debt creation. Homeowners cannot build equity in an overvalued house, no matter what the terms of the mortgage. Whether that inflated value comes from corrupt inspectors or frenzied markets is immaterial. The crisis, now as then, is a symptom of inequality — not its cause."
Backstory radio (NPR)
"Louis Hyman talks about the structural changes that led to record levels of personal debt in the late 20th century. It’s not that Americans are more willing to go into debt than they used to be, he says, but rather that they are no longer able to pay that debt off."
Rear Vision (Australian Broadcasting Channel)
"In the 1930s you see the emergence of the larger capitalist institutions becoming involved in lending, often through the interventions of the Federal State, so in the midst of the New Deal, you had for the very first time, large banks lending personal loans to working class people. This is very weird; why would you lend money to someone in the midst of the Depression?"
The Flaw, a documentary on the financial crisis
"We need capitalism to work for us, not work us over"
On the Subprime Crisis (American Historical Association 2009)
Consumer history, Labor history, New Deal history
(Organization of American Historians 2009)