The housing boom and bust of the last decade was something that I wanted to put behind me. The craziness of the housing boom at the time was unbelievable; anyone could walk in and bid up the house price and walked away with a brand-new mansion without a down payment or employment record. I changed house during that time and was both a victim and beneficiary of that cycle (I sold my old home and bought a home and an overpriced rental property). When this book was introduced to me, I didn’t want to read it or listen to the audiobook until I ran out of audiobooks to listen to. But I thought it would be good to know the diagnosed root causes of the previous housing boom and bust as it appears another housing boom cycle has started in Northern California due to the recent hot high-tech job market in our area.

I did learn something from the book:

I always thought the housing boom was a result of bad banking practice, bad credit rating of the then popular CDS (credit default swap) – a financial derivative. Little did I know that the politicians, in the name of affordable housing “urged” by the Fannie Mae/Freddie Mae lobbyists, contributed to the housing boom and the subsequent bust by forcing banks to loan to high-risk and often minority house buyers. Banks would have survived the crisis by making sound loans without government’s coercive measure to loan to the high-risk house buyers who ended up default on their sub-prime mortgages.

In the name of “slow” development, the communities tend to create a real estate market of increasingly expensive housings. In comparison, cities like Houston, TX, doesn’t have the same issue thanks to the lack of housing restrictions. So it appears the controlled development leads to higher housing prices.

In the last chapter, the author touched on the historical perspectives: it may not be the New Deal that got U.S. out of the depression, rather it’s the World War II that drafted many people out of job market. More mangling by the government may have contributed to more economic shocks. A good example is Canada, which didn’t interfere in the market and escaped from the financial disaster that the U.S. experienced. The author didn’t paint a good picture that history would not repeat itself in the U.S.

This is a good book if you wanted to know about the housing boom and bust cycles and the root causes of the financial melt down of the last decade but be aware of the author’s “right” bias against government regulations and “legal” corruptions.

Malcolm Gladwell had another hit book here. I wasn’t sure I wanted to read a bible story (spent too many years studying Bible when I was young). But Gladwell’s interesting angle on this simple Bible story got me interested. I listened to the audiobook spoken by Gladwell himself, which was simply delightful. He’s a real master story teller.

At first, I was confused by what the theme of the book was all about. OK. Goliath wasn’t as strong and formidable and David wasn’t really as disadvantaged as we were led to believe from the way Bible story was told. Then what’s the rest of book all about…

There are 3 parts to the book:
One the first part, Gladwell highlights the advantages of disadvantages and disadvantages of the advantages. Gladwell painstakingly told many stories including Vivek Ranadive’s Redwood City Basketball team who played full-court press due to lack of talents and won lots of games. David vs. Goliath. Was David really in a disadvantaged position or is it the other way around?

One the 2nd part, Gladwell touches on the theory of desirable difficulties. Are difficulties like dyslexic, losing parents in childhood desirable? He covered several stories about that.

One the last part, Gladwell drills into the limitation of power or legitimacy of power. California’s 3-strike law, Northern Ireland, and Andre Trocme’s stories were described and used for his arguments.

This is an encouraging book for those disadvantaged (dyslexic or others). You may want want to find a way to turn it into your advantage and bring down the seemingly favored competitor. For those in power (Goliath), you may want to find ways to legitimize your power and don’t abuse the power.

Overall, this is an excellent and interesting book that I highly recommend.

A short summary of the book is here:

Part I: The advantages of disadvantages (and the Disadvantages of Advantages)
1. Vivek Ranadive’s Rewoood City Basketball Team playing full-court press game against more talented teams and won most of the games.

2. Teresa DeBrito’s class size. Gladwell introduces the inverted U-shape curve for academic achievement vs. class size and parenting difficult vs. wealth. Too small the class size makes it hard to student to achieve academic excellence – difficult class discussion, and no diversity. Too much wealth makes parenting difficult too – hard to teach value of money, lose desire to excel. It’s a non-linear relationship.

3. Caroline Sacks:
The French Impressionists decided to have their own arts show instead competing for Salon, which does not value Impressionist. It paid to be a big fish in a small pond than a small fish in a big pond. Caroline Sacks joined Brown University to become a small fish in a big pond of excellent Biologists. She ended up dropping out of the science major. She suffers from “relative deprivation.” The big pond takes very bright students and demoralizes them. Same thing applies to affirmative action.

Part II: The theory of Desirable Difficulty
4. David Boies: A dyslexic who turned his disadvantage into an advantage using his listening skill to become a famous trial lawyer. People tend to practice “capitalization learning” (keep doing what you’re good at) instead of “compensation learning” (compensating for you’re poor at like listening instead of reading for a dyslexic.) Being disagreeable may help you innovate like IKEA’s founder Ingvar Kamprad. Being accustomed to failure helps, like Gary Cohn’s story of how he started in the options business by faking it in a taxi ride to the Airport with the key decision maker. Cohn became the president of Goldman Sachs.

5. Emil “Jay” Freireich: Jay was a brilliant physician who became a successful one taking care of childhood leukemia patients because of his “remote miss” as a child losing his father to suicide and a tough childhood growing up. Just like the Londoners during World War II, the “remote misses” who survived German’s bombing turned out to be tougher, more courageous, and more optimistic than the others. “The conquering of fear produces exhilaration.” In the civil rights movement, Martin Luther King Jr.’s ally, Fred Shttlesworth, who encountered 3 remote consecutive remote misses who became more courageous each time.

6. Wyatt Walker: One of Martin Luther King Jr. right hand person, Wyatt Walker, used trickery to get a photo of a boy being attacked by the police dog and generated the momentum behind he civil rights movement getting bystanders to “join” the movement during commute time home in the afternoon. The story underlines how underdogs may resort to trickery to their advantage.

Part III: The Limit of Power:
7. Rosemary Lawlor. Gladwell told the story of North Ireland and how it became a sore point for England. By using the “principles of legitimacy,” namely, 1) people who are asked to obey authority have to feel like they have a voice, 2) the law has to be predictable, 3) the authority has to be fair. “Getting criminals and insurgents to behave turns out be dependent on legitimacy as getting children to behave in the classroom.” The success story of police offer named Joanne Jaffe in Brownsville, NY in reducing incidences of robbery, reinforces the importance to establish the legitimacy of the authority.

8. Wilma Derksen:
Mike Reynolds, the father of Kimber Reynolds, started the 3-strike law campaign in California and won after losing her daughter to a couple of crystal-meth addicts with a long crime history. Did the 3-strike law help bring down the crime rate in California? Or is it similar to what British did in Northern Ireland? Gladwell discussed the inverted U-curve (diminished return). The arguments for the 3-strike law are: 1) raising the cost of committing a crime, 2) the extra year a criminal is behind bars is another year he can’t commit a crime. But they can be rebutted with 1) criminals without a stake in the society really didn’t have a cost to consider. 2) people don’t usually commit crime past a certain age in the mid 20’s. And the extra time puts a social toll on the family and the young children – the collateral damage. The magic number is 2% of the neighborhood goes to prison, the U-curve of the crime rate starts to reverse.

Wilma Derksen was a young mother, who lost her daughter Candace to a sex criminal but chose not to follow the path of losing their health, sanity, and their marriage if they allowed their daughter’s murder to consume them. She chose to forgive, understands the limitation of power and embrace the advantage of disadvantages.

9. Andre Trocme
Andre Trocme’s story is one with defiance and courage. In the time of German occupancy of France in 1940’s, he lived in Le Chambon, a village near Italy and Swiss border. As the “marginal and disadvantaged,” he took on hiding Jews from the government in defiance of the power/law because it’s in their nature after being persecuted for over a century due to their religion.