Written by a New York Times economics editor, Busted is the twin story of the editor’s descent into foreclosure after a very foolish house purchase and the housing market’s descent into meltdown. On the personal side, a newly-divorced, wanting to remarry professional wants a real home and closes his eyes has he signs more and more improbable loan agreements while he knows very well that he cannot both pay the mortgage and his child-support payments — or perhaps he could, if he did not also have to feed the children under his roof, pay the phone bill, or buy any clothes. The personal stories can be painful at times but they keep a human dimension for the larger story, while highlighting how even people who should know better — and we are talking here about someone who had professional access to Alan Greenspan and the heads of assorted banks and mortgage companies — got sucked into the great lie of never-ending home price increases. As he discussed with his mortgage broker, he knew very well that after the teaser rate he would not be able to pay the mortgage at all, but “don’t worry: the value of the house will be higher in five years and you’ll refinance.” Not so.
The larger story is told with just the right amount of details so the lay reader can understand clearly what happened. It is an eloquent discussion of how the capitalist system can go very, very wrong. Anyone who could make a buck (or a billion) jumped in to the housing market and pretty soon the fact that the majority of home loans being made were so-called liars’ loans, in which borrowers simply “state” their income with no verification whatsoever, stopped to be of concern to “the market”, with horrible consequences to come.
I recommend this book as a personal and highly understandable story of the housing bubble.