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  • Bob Burg

“Just in my second year in business, I'm on track to do over a MILLION DOLLARS in commissions!”

~ Cal Faber, Agent, RE/MAX - Victoria, BC

The Financial Meltdown – What Really Caused It?

November 19th, 2012 by Bob Burg

The Financial Crisis and the Free Market Cure book coverSince our country’s housing and financial crisis occurred, I’ve often felt like Don Quixote tilting at the windmills of public opinion and belief.

Not only have I claimed the meltdown not to be the result of Free-Market Capitalism or having had anything to do with it whatsoever; I’ve provided many an “amateurish” explanation, as well.

So, I was delighted and ecstatic to hear that one of my heroes; John Allison, had just come out with a book on this very topic.

It is entitled, The Financial Crisis And The Free Market Cure. This is an absolutely fascinating look at what really caused the crisis and the thinking/action needed to get us back on the road to liberty and abundance.

Important: This is not about Democrat versus Republican or Conservative versus Liberal; it’s about why free minds and free markets work (if, by work, one means abundance, prosperity and a higher standard of living for all) and why government — when operating outside its legitimate functions of protecting its citizens from force and fraud — does not.

Ask Most People What Caused This Crisis

If you were to ask most people today the main cause of the housing and financial crisis they would answer something like, “unfettered Capitalism”, “deregulation” or “not enough government oversight.” And, as Mr. Allison proves with compelling yet easily-understood facts…they couldn’t be more wrong.

Capitalism? Hardly. That such a large number of people believe it to be the cause in the first place is not only a shame, but perhaps the biggest problem of all. After all, it’s difficult to defend a concept when you don’t understand it and cannot define it. Capitalism is *not* the same as “corporatism”, “cronyism” or, as it’s often called, “crony-capitalism.” (Actually, Crony-Capitalism is to Capitalism what Chinese Checkers is to Checkers…NOTHING. But, I digress.)

There was a high degree of cronyism — not Capitalism — which led to the crisis.

Deregulation? Not one bit. It was not deregulation but horrible — as the author accurately terms it — “MIS-regulation.”

And, it was a huge amount of interference from the government and the government-sponsored entities that operate with government’s full force and backing. The Federal Reserve, several presidents, congressmen, government-sponsored entities, regulators; they all had a huge hand in this monstrosity that took place. And as usual, the fix was more (and all-too-similar) government solutions to the government-caused problems.

Mr. Allison lays it out for the reader in a very logical and easily-understandable fashion.

What Are The Author’s Qualifications for Writing This Book?

That the Harvard Business Review named him one of the decades top 100 most successful CEOs is certainly a nice shot of credibility. More importantly, however, during Mr. Allison’s tenure as CEO, his bank grew from $4.5 billion to $152 billion in assets. And, they were hugely successful during a time when many banks failed spectacularly.

This was accomplished via rational, long-term thinking, a desire to provide exceptional value to customers, employees and shareholders alike, and by acting from a base of uncompromising values.

Key Point: It is interesting to note that BB&T did not participate in sub-prime lending, choosing to write only conventional mortgages.

Having learned of Mr. Allison several years ago and watching some of his lectures, my expectation was that the book would be enjoyable to read and with great knowledge, information and insights that would never be gained from listening to the usual experts. It is that, indeed!

The bonus, however, is that anyone who wants to learn how to become a principle-based leader and a hugely successful individual, both in business and in life itself, can gain a TON of wisdom from reading and studying this book.

But, that is simply the bonus. What this really is…is one’s opportunity to understand why the crisis really happened. If you are already a believer in Capitalism but not sure where to separate fact from fiction regarding the financial crisis, you’ll love this book.

If you tend to want to believe that Capitalism is the enemy and that big government is the friend of the poor, I ask you to read the book, even if you choose to read it with total skepticism. That’s okay. But, at least read it. Then, come to your own conclusion.

I believe this book is a Masterpiece!

19 Responses to “The Financial Meltdown – What Really Caused It?”
  1. I am SO excited to read this book! Being in real estate I see first hand, on a daily basis even today, how government programs are prohibiting growth and wealth in the housing market. Looking forward to more discussions after reading this book 🙂

  2. Kathy Zader said at 10:14 am on

    Great review, Bob! I’m over half way through the book and it is eye-opening. John Allison explains so clearly what caused the financial crisis. I hope a lot of people will read this book and learn what capitalism really is. Mr. Allison is right that “pure Capitalism is the World Economy’s only hope! I’m also glad BB&T is my bank. 🙂

  3. Bob Burg said at 10:32 am on

    Christie: Thank you. While you’ll love the information he shares, you’ll – if you’re like I am – also feel saddened by what really goes on, and by how very destructive it is, both to the middle class and especially to those who can least afford the destruction. And, that most people think the crisis has anything to do with free markets is what is truly maddening to me. The book is extremely illuminating and enlightening and had a powerful effect on me…even though I was already familiar with the situation. The depth of understanding he takes the reader to his terrific. I only hope that people will take it upon themselves to read it, even if they don’t want to know about it.

  4. Bob Burg said at 10:36 am on

    Kathy: Thank you. Eye-opening is an excellent description. And, I agree that, if nothing else, there will be an understanding regarding what Capitalism is and – just as importantly – what it is not! If the end result is that people who read it understand that Free Markets had nothing to do with the collapse, it will have been a book well worth having been written. However, it is much more than just that; it is also the solution, and one that – if followed – will create a higher standard of living for everyone.

  5. Kumar Gauraw said at 11:22 am on


    Thank you for this excellent post and your insightful review. I am going to get the book. I am already excited to get hold of this book right away!


  6. Bob Burg said at 12:05 pm on

    Kumar: Thank you for your kind words. I think you’ll find it to be even more valuable than indicated in the review!

  7. That is the challenge I have with books like this. I get so upset by what has happened I just want to ignore it…which we all know is a dumb thing to do. I hope LOTS of people pick up this book, knowing it will make them angry, but also knowing it will enlighten them and hopefully prompt poeple to take action.

  8. Bob Burg said at 12:28 pm on

    Indeed, Christie. It will make some angry because, while they kind of already suspected it, they’ll see just how deep it goes. Others will become angry when they see that the government they so trusted over the past 80 years or so to help the less fortunate did an absolutely horrible job of doing that. Sometimes, well-intentioned but wrong. Other times, totally politically-motivated.

  9. Mike Benoit said at 12:57 pm on

    Thanks for alerting us to another “must read” book. I ordered the Kindle version a couple of hours ago. I read the first 3 chapters and having trouble putting it down …but I must before the day gets away 🙂 Looking forward to reading more of the book this evening.

  10. Bob Burg said at 1:03 pm on

    Mike: Thank YOU. So glad you’re enjoying it thus far. You’ll find it even more gripping as you go along. Much appreciated, Mike!

  11. Doug Wagner said at 2:57 pm on

    Hey Bob,

    Thanks for the review and recommendation. I’ve been meaning to pick up a book on the subject to better understand it.

    It is sad to live in democratic countries and see people with such poor understanding of how business and commerce really works and who believe government is in a better position to run everything.

    I think a lot of the problems lie in the fact that teachers and most parent know very little and so pass on the myths or nothing at all. The other issue is that politicians are manipulating triggers to get elected because it works better than facts and deep discussion.

    The social aspect of technology is in some ways may make this worse. Despite the potential for sharing real information too many people are using it to go “so what do you think” and then following their friends.

    There is hope and that hope is for people in business to make a real impact on that education front: for their employees, their family and their friends. We can’t trust anyone else to do it but we do have to do it in a way that is relate-able and not preachy.

  12. I’m glad you’ve pointed out, Bob, that “crony capitalism” isn’t capitalism. Have to admit though, that I wasn’t sure what it was. I had to look it up. Wikipedia says it’s made of “self-serving friendships and family ties between businessmen and the government influence the economy and society …”

    But darn! I thought networking and friendships were always good. Oh wait, had to read the rest of the sentence:

    “…to the extent that it corrupts public-serving economic and political ideals.

    So networking is always a good thing for those involved? But all networks aren’t necessarily a good thing? Or working toward a positive purpose, I guess. For example, gangs.

    Is my logic solid? Or do I need to read the book? =D

  13. Bob Burg said at 7:43 pm on

    Beth: “Crony Capitalism” (or, more correctly called “Cronyism” or “Corporatism”) is really nothing more than special interest groups – often, but not limited to, major corporations or industries – buying special favors, rules and regulations from the legislators (via their lobbyists) in exchange for campaign contributions and other goodies. Not only is it totally unconstitutional, but it totally ruins the free-market because now force is involved. In the following post, written several years ago, I explain it just a tiny bit further and I refer to it in a number of posts. http://www.burg.com/2009/10/the-real-reason-i-won%E2%80%99t-see-michael-moore%E2%80%99s-newest-movie/

    My suggestion would be to read the book; not just for an understanding of the above (that’s one part) but for everything he teaches in the book. Then, please share it with as many others who are open to learning about it. Only through the public knowing will there ever be a chance to fix the mess our politicians have gotten us into.

  14. Looking forward to the read and another great post.. Thanks have a great new week…

  15. Bob Burg said at 9:24 pm on

    Carly: Thank you!

  16. Bob Burg said at 9:27 am on

    Doug: My apologies. I somehow missed your comment earlier. I’ve got to tell you: I love EVERYTHING you wrote. In my opinion, you are right on the mark. Great teaching, my friend!

  17. John said at 10:27 am on

    Thank you Bob for your review and recommendation. I’ll order the book. It is obvious that the crisis is not only in USA but worldwide. There are lots of discussions that the CRISIS ORIGINATED in USA and it spread around the world. So,the issue is: the Americans are looking for solutions to take them out of the crisis; and, so it is the rest of the world, mainly Europe! Is the Amrica’s solution applicable to Europe and rest of the world and/or vice-versa? We are talking about PEOPLE BEING IN DEBT… but is the the main cause of the banks to collapse? What about the governments’ debts around the world? Look at USA, France, Italy, Portugal, Greece!! The people are paying not only THEIR OWN DEBT but the goverments’ debt too!! People are “forced” to control their expenses, find extra jobs to get extra income, etc…. but are government’s cutting their expenditures?

  18. Bob Burg said at 8:23 pm on

    John: Thank you for your comment. Yes, get the book. Your questions will be answered. You’ll most likely be amazed by what you read, while at the same time it will also make very logical sense.

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