House of Debt

Between 2007 and 2009, the Great American Recession cost eight million jobs. Foreclosures resulted in the loss of over four million houses. Is it a coincidence that the United States saw a tremendous surge in household debt in the years preceding the recession, with the overall amount of debt for American households doubling to $14 trillion between 2000 and 2007? Certainly not. Atif Mian and Amir Sufi demonstrate in House of Debt, armed with clear and convincing data, how the Great Recession and Great Depression, as well as the current economic malaise in Europe, were caused by a substantial increase in family debt followed by a significant decrease in household spending.

Though the banking crisis attracted the public's attention, Mian and Sufi contend that present policy is overly focused on safeguarding banks and creditors. They demonstrate that increasing the flow of credit is disastrously unhelpful when the primary problem is too much debt. According to their findings, excessive household debt leads to foreclosures, prompting people to spend less and conserve more. Less spending equals less demand for goods, which leads to production decreases and massive job losses. How do we break this cycle? Mian and Sufi propose a frontal attack on debt. More aggressive debt forgiveness after the crisis helps, but as they show, we can only get rid of costly bubble-and-bust occurrences if the financial system shifts away from its reliance on rigid debt contracts. As an example, they propose new mortgage arrangements based on the risk-sharing principle, a proposal that might have prevented the housing bubble from forming in the first place.

Among the best books on the financial crisis, House of Debt, based on strong economic facts, provides clear answers to some of the most pressing concerns confronting the modern economy today: What causes severe recessions? Could the Great Recession and its repercussions have been avoided? And what steps should be taken to avoid future crises?

Author: Atif Mian and Amir Sufi

Link to buy: https://www.amazon.com/-/es/Atif-Mian/dp/022627165X

Ratings: 4.4 out of 5 stars (from 223 reviews)

Best Sellers Rank: #208,140 in Books

#61 in Credit Ratings & Repair (Books)

#79 in Microeconomics (Books)

#196 in International Economics (Books)