The Incomplete Story of the 2008 Housing Crisis

When we first began Michael Lewis’ The Big Short, I was quite apprehensive while reading it as I had no clue about what was happening with all of this business/finance talk. I found myself referring to Google searches or Investopedia trying to identify certain terms to help me understand things a little bit better such as a credit default swap, but it was still difficult to follow along as the material was heavy on the business side of things. I feel as though this was Lewis’ intention, emphasizing the idea that people had no idea what was happening unless you were a banker yourself. While I enjoyed the language (mostly metaphors) that Lewis uses in discussing the events leading up to the housing crisis, I couldn’t help but feel as though the story was incomplete or missing something from it allowing me to feel connected with the work and feel fully satisfied with the story. While we saw what led up to innocent people being hurt by the housing bubble burst, we didn’t really get to see how they were affected and if they recovered from it. Yes, there is some mention toward the end of the book in how the people on Wall Street knew this would broadly affect the average American, but we didn’t get to see beyond that. We did not get to see a more human aspect to it, which as a result added to my sense of disconnect from The Big Short

Directly after reading The Big Short, we jumped into Angela Flournoy’s The Turner House, a novel that turns its attention toward an American family that would be affected by the actions of the investors. To some level after reading both The Big Short and The Turner House, I would say that they work well together to tell somewhat of a complete story and nearly complete Freytag’s Pyramid that we have discussed in class in explaining the housing market crash. Each work tells one half of a version of the story (The Big Short telling the first half and The Turner House telling the second) that nearly completes Freytag’s Pyramid where there is a rising action, a climax, and a falling action, except in this case there does not seem to be any real resolution to complete the pyramid, therefore showing the 2008 housing and financial crisis does not really follow the complete storyline structure we are accustomed to.

Below, I thought it would be best if I broke my reasoning and thought process behind this idea of a nearly complete story between the two books, into the different portions of the Freytag pyramid.

Exposition

One of the other things that gripped my interest in The Big Short besides Michael Lewis’ use of metaphor was his ability to create his “characters” (quotations necessary as they’re real people). He gives them all individual character arcs, where they are portrayed as having similar origin stories where they start from nothing in the financial world as outsiders and slowly builds their persona as they begin becoming involved in the bets made against the subprime mortgage market. In addition, Lewis also gives an origin story to the “crappy loans” that the characters are betting against that eventually have a huge impact on many people’s lives. He explains these loans were ones given out to people who realistically would not be able to keep up with payment of them. This sets us up for our reading of The Turner House later on.

Rising Action

As mentioned before, the majority of The Big Short discusses the business side of what led up to the housing market crash. Lewis jumps between various “players” in the subprime mortgage betting, showing their rise in the industry before they ultimately sell off these loans and abandon ship.

Climax

Like the documentary Inside Job, Michael Lewis leaves us at the end of The Big Short by explaining the corruption that some of the big players involved in the housing crisis were involved in as many CEOs walked away with millions of dollars and little punishment, however as aforementioned, we still don’t learn about how the American family was affected and what closure they get if any from all of this after putting their trust in those who gave them these loans.

This is where The Turner House picks the story up and focuses on Detroit, zooming in on one of those families that would be affected. The Turner children wonder what they should do with their sick mother’s house- do they sell it, tear it down, participate in some form of fraud by selling it to one of their siblings’ partners to keep it within the family? These were presumably the same difficult questions that went through families’ minds in the difficult months following the crash.

Falling Action

While the Turner family questions what to do with their beloved family home, Flournoy also shows us that while this was going on, life still continued in other ways, which to me is something you don’t really get from The Big Short. Lewis’ primary focus were the loans and bets waged against them, occasionally discussing some of the characters’ personal matters such as Michael Burry’s son being diagnosed with Asperger’s Syndrome leading him to believe he may have it. Although this is a personal matter, Lewis still roots it in the narrative of Burry and his ability to place bets against the market. Flournoy, however, further zooms in on individual members of the Turner family and their personal struggles including Lelah and her gambling addiction, Cha Cha and his haint, Viola and her cancer diagnosis- and shows us that other aspects of life do not stop for those families affected. These conditions were already things people were living with before the housing market crashed. Financial troubles were not the only thing on American families’ minds emphasizing how much of a burden these “crappy loans” given to families were.

Denouement/Resolution?

From both The Big Short and The Turner House, readers get the sense that there really is no resolution to this version of the story. 

As aforementioned, investors faced little punishment for their actions and CEOs got to walk away with millions.

Meanwhile in regard to the American people, in one of our class discussion forums I had raised the point that in The Turner House, we don’t end up finding out what the Turner children have decided to do with the Turner house. Do they sell it? Do they keep it? Do they tear it down? I think Flournoy left the story without giving us an answer in order to convey how difficult of a decision this is that families had to face at the time. There is a lot of uncertainty that goes into a decision like this. Will they be able to keep up with payments? Will anyone else want to buy it?

As we saw in the Detroit episodes of This Old House that aired in 2017, many people chose to leave Detroit after the housing market crash in 2008. Many houses were foreclosed and abandoned as mortgages couldn’t be paid which we began to see in the Turner’s own neighborhoods not only on Yarrow Street, but in Cha Cha’s neighborhood and with Lelah’s own situation as well. This left many homes vulnerable to robberies and led new homeowners away from buying homes in these neighborhoods. This Old House frames their episodes to make it appear as though they are fixing this problem and are “saving Detroit”. In the episode of This Old House titled, “Ready for Rehab”, Land Bank executive Craig Fahle comments about how the rest of the neighborhood the crew was working in, looked to be in good condition and they wanted to make sure it stayed that way. He further comments that his company only picks neighborhoods with stability and the potential to be corrected as the goal is to make sure that neighbors stick around. It made me wonder if they would pick the Turner House on Yarrow Street to renovate as many people have left the neighborhood and there had been an increase in crime. What will end up happening in those neighborhoods that have been abandoned and are looked at as having no potential, to use Craig Fahle’s terminology.

This brings me to think about the images in the “Human landscapes in SW Florida” photo essay. Many of the developments in this portion of Southwestern Florida were never fully developed and work seems to have been suddenly stopped within them, others appear to be abandoned by homeowners. The article says, “A guest stated that there were “enough housing lots in Charlotte County to last for more than 100 years””, however it doesn’t appear as though anyone is moving there. Is this due to the housing market crash or is it because the area is simply unattractive to homeowners due to the closeness of some of the neighborhoods? Regardless, this leaves people already living in these cities with the impending questions of “What do we do now?” or “Where do we go now?” as their city becomes desolate. There simply is no clear resolution to this story on a large scale as it is ongoing.

While I was not the biggest fan of Michael Lewis’ The Big Short due to its emphasis on the business side of the housing market crash, I am still glad we were assigned to read it before reading Angela Flournoy’s more personal, The Turner House as it gave me a greater understanding as to how the Turner family and the city of Detroit they live in, got to where it was. It is important that we try to complete our understanding of the housing market crash as best we can by taking in different accounts of the story including both the financial half and the repercussions with the personal half. While Lewis’ account of the financial half and Turner’s story of how an American family could be affected aren’t the only ways in which this story could be told, it still contributes to our own personal, greater understanding of the events in 2008. This will serve to be important as we continue to move through not only our course “Expulsion and the Housing Crisis”, but also the current Coronavirus pandemic we are living through where there may be ongoing effects for families around the world both on a large scale level and a micro-level in the years to come.

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