Book Review: The Cul-de-Sac Syndrome
Millions of Americans overbought homes and were totally unprepared for the consequences of the bust -as homes were supposed to be safe investments. For millions of others who lived within their means, it meant a destruction of the equity they built up and perhaps were relying on to help fund their retirement. For many, the American dream of home ownership was gone.
What drove the irrational exuberance that eventually ended in the worst financial crisis since the Great Depression? Was it simply greed from speculators, mortgage brokers and investment bankers? Or did the true cause lie somewhere else? John Wasik tries to provide the answer in his well-written and well-researched book The Cul-de-Sac Syndrome, an interdisciplinary study of the true cost of today's American dream. As one reviewer put it: "It's an unflinching look at the recent period when homeownership actually made many people poorer as they tapped their home equity, went into debt to finance their lifestyle and contributed little to retirement investing because of the misguided assumption that home appreciation would fund their future years."
Wasik's focuses much of the blame on the "spurb," his term for automobile-dependent sprawling suburbs whose only connections to cities are multi-lane highways. He shows how the American dream of moving further from a city to buy a bigger house and find better schools was a costly proposition, which was an underlying cause of the crisis. For me, it was a totally new look at the American dream and its costs. Wasik also provides some prescriptions.
For those interested in learning about the underlying causes of the crisis, I recommend this book along with Professor Raghuram Rajan's Fault Lines.
More on MoneyWatch:
My 2010 Book List
Book Review: The Power of Passive Investing
How Uncertainty About Government Policy Affects Stock Prices
Is Inflation Risk Overstated?
The Death of Buy and Hold
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