PAST DUE

An authoritative account of events leading up to the current recession.

In his debut, New York Times national economics correspondent Goodman draws on extensive reporting to examine the “financial make-believe” that drove Americans to borrow and spend their way into a crisis which, by 2008, had wiped out $7 trillion worth of wealth and destroyed 2.6 million jobs. Using plain, direct prose, the author describes what happened and vividly traces the effects on more than two-dozen people among the millions caught up in the ripples of the bust. They include Dorothy Thomas, a middle-class African-American in California who lost her job and was forced to pretend to be a drug addict to stay in a homeless shelter; Willie Gonzalez, a liquor distributor who spent excessively, bought a $180,000 home with two-percent down and went bankrupt; and Fran Barbaro, a middle-aged MBA graduate with a six-figure income who spent all of her money and faced foreclosure. In this “Neverland” economy—made possible by the government’s “massive abdication of regulatory authority,” says Goodman—working Americans spent money freely, first in the technology boom and bust, and then in a real-estate market that enticed them to “buy a home, watch it climb in value and pull money from it as if it were an ATM machine, one that never required a deposit.” The author places much blame on too-easy credit—readers will be infuriated to read about brokers who sold subprime loans to recent immigrants unable to read English—greed and fantastical thinking, combined with free-market cheerleading by Federal Reserve chairman Alan Greenspan, who touted credit default swaps. Goodman argues that the country must generate high-quality jobs in such growth areas as biotechnology and renewable energy.

A must-read for anyone still wondering why the bottom dropped out of the economy.