June 29 (Bloomberg) -- One Sage came from Omaha, seeking stocks he could hold “forever.” Another fled Hungary and traded his way to wealth. The third, a rumpled giant, slew the inflation dragon that ravaged the U.S. in the 1970s.

Warren Buffett, George Soros and Paul Volcker may look as different as Coca-Cola, Cristal and German lager. Yet all three had this in common: the character and judgment to shun the mob, as can be seen from two new books on the financial crisis, “The Sages” by Charles R. Morris and “Our Lot” by Alyssa Katz.

Their approaches are poles apart. Morris offers three biographical sketches to show what it takes to rise above financial frenzy. Katz plunges us into the stampede itself, documenting how decades of U.S. social engineering fed the anxiety and greed that drove Americans mad with housing lust. Taken together, they offer insights into how to steer through the crisis and toward a sounder future.

Morris is the lawyer and former banker who brought us “The Trillion Dollar Meltdown.” In “The Sages,” he explains why Buffett, Soros and Volcker saw the crisis boiling up even as top forecasters were still predicting economic growth.

Buffett and Soros built their fortunes on the assumption that markets are often wrong. Volcker made a career out of cleaning up after market malfunctions, including the breakdown of the gold standard.

“They understand that financial markets relate to the idealized ‘Market’ of theory as the shadows in Plato’s cave do to reality,” Morris writes.

Backaches, Hot Dogs

This is a primer: The choicest anecdotes will be familiar to anyone who’s read Soros’s “The Alchemy of Finance” or the Buffett biographies by Roger Lowenstein and Alice Schroeder.

We’re reminded of how Buffett liked to correct his Wharton business professors when they misquoted their own books. And how Soros theorized about his trading to the amusement of his son, who says the old man changes his positions “because his back starts killing him.” Volcker, whose every utterance moved markets, ate hot dogs for lunch and slept in “a tiny bachelor’s pad.”

Morris pads the text with passages from Soros’s “Alchemy” and Buffett’s annual letters to shareholders of Berkshire Hathaway Inc. Yet he has a gift for distilling the essence of a man in a few memorable lines:

“Soros is the global predator, with feline sensitivity to quivers of disharmony in the economic flux,” he says.

Now that the crisis has discredited bankers, economists and regulators alike, “the Sages stand taller than ever,” Morris writes. “There is a lesson there, and one hopes the world will learn it.”

‘Our Lot’

Katz brings something fresh to the debate in “Our Lot” -- a down-in-the-trenches history of how the housing binge bubbled up from decades of social engineering by a government bent on encouraging home ownership.

From Herbert Hoover’s campaign for “Better Homes in America” to George W. Bush’s “Ownership Society,” buying houses has been promoted as a way to strengthen families and communities, Katz says.

“That idea has been embedded in the national psyche, not through any innate aspiration in the human spirit but by dint of methodical, deliberate salesmanship and an array of incentives seemingly too powerful to refuse,” she writes with icy fury.

Katz, who teaches journalism at New York University, supports her thesis with anecdotes stretching back the rotten teeth of abandoned homes on Chicago’s West Side in the 1970s -- each with “its furnace, copper piping, everything of value ripped out.” The cause of this devastation will sound familiar.

Bipartisan Basher

“In 1972, in Chicago and in every other city in the nation, almost anyone could get a home mortgage, including borrowers who didn’t earn enough to pay them off,” she writes.

Though her agenda is clear -- she keens for rent control and a crackdown on “lunatic corporate socialism” -- Katz is a bipartisan basher of every president, including Bill Clinton, who has used homeownership to score cheap political points. And when it comes to mortgage fraud, she spares no one.

“Don’t feel sorry for the victims,” she writes. “They supplied the weapons and the getaway car, on the assumption they would get a cut of the proceeds.”

Katz crisscrosses the country to document how government policy reshaped the landscape, gutting Cleveland’s Slavic Village and building Levittowns in the Sacramento Valley. In Phoenix, we meet a Mexican-born carpenter who traded up to ever bigger abodes he couldn’t afford. In Florida, we find a home flipper who recalls the month the sales stopped, October 2005.

“It was like someone turned a faucet off,” he says.

Drug Gangs

In between, she recounts all manner of shady dealing, from “reverse redlining” -- targeting poor people with loans they could never hope to pay back -- to drug gangs that laundered money through real-estate deals.

Katz does her thorough reporting a disservice with a late chapter that amounts to one long whine about high-cost housing in New York City. She herself grew up in a rent-controlled apartment on the Upper East Side, “two bedrooms of solid, elevator-man brick for a few hundred dollars a month.”

Ah, those were the days -- for the privileged occupants.

“The Sages: Warren Buffett, George Soros, Paul Volcker and the Maelstrom of Markets” is from PublicAffairs (199 pages, $23.95, 13.99 pounds). “Our Lot: How Real Estate Came to Own Us” is from Bloomsbury USA (278 pages, $26).

(James Pressley writes for Bloomberg News. The opinions expressed are his own.)

To contact the writer on the story: James Pressley in Brussels at jpressley@bloomberg.net.

Last Updated: June 28, 2009 19:00 EDT