History Is A Lie Agreed Upon “History is a lie agreed upon.” Napoleon Bonaparte Questions about housing that should be asked with answers that should be heard. By Larry Kush
More than 4,000 U.S. banks closed in 1933 when the Great Depression hit its lowest point. On Wall Street people were jumping out of windows. There were long food lines. Unemployment skyrocketed. Cole Porter wrote a hit Broadway musical that ignored the entire mess. And history recorded the disaster with dozens of conflicting versions. One wonders how history will treat our current economic catastrophe and the blow it delivered to America’s housing. For lawmakers and journalists of today and historians of tomorrow, a few questions come to mind:
Q. Employment being the key to just about everything, how important is housing? A. Every single family home built in America directly creates 3.1 jobs for one year. The ripple effect extends far into our economy and includes much more than just workers in the construction industry. The 3.1 figure is direct employment. Indirectly, the benefit is overwhelming. Q. Who really was at fault for the housing dilemma? A. Many in Congress are still accusing housing for shooting itself in the foot. This is about as dumb as blaming McDonalds for obesity which, incidentally, some in Washington seem to believe. Banks made ridiculous loans, part out of mismanagement and part from coercion that went something like this: “Want those new branch banks in Ohio? Make these sub-prime loans.” Many loans were made more out of pure greed than good business judgment, then packaged and sold on Wall Street, using investment vehicles that were impossible to understand. In fact, some of the people who did understand these convoluted investment instruments made billions betting on their eventual failure. Q. What will be needed to help set things straight? A. National Association of Home Builders Chairman Bob Nielsen said recently, “Unless we resolve the ongoing credit problems for home builders – the vast majority who are small business owners who employ less than 10 workers – the industry will lose even more jobs, resulting in longer term economic damage.” Lenders have stopped making acquisition, development and construction loans and are calling in existing loans, even when the borrower’s
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