Boomerang: Travels in the New Third World

It's hard not to be entertained AND enlightened by a Michael Lewis book. His books exploring subjects like Major League Baseball, the NFL left tackle, the stock market and financial shorting are to non-fiction, somewhat like Apple was to personal computing. He has the creative ability to explain in clear and simple terms subjects that are complex or seem otherwise mundane. As Jobs said, "the way we’re running the company, the product design, the advertising, it all comes down to this: Let’s make it simple. Really simple,” noting the Da Vinci quote on Apple's first brochure: "Simplicity is the ultimate sophistication." As Isaacson's Jobs biography explained, what Jobs meant was that you have to work really hard and creatively on the difficult things to make them simple enough for potential customers to enjoy and understand. Lewis writes with clarity and wit, using his unique creative abilities to render subjects compelling to the average reader. It's only a half-joke to say that if Lewis set his mind to fully understanding organic chemistry, he could deliver a book explaining it to the masses, or to proclaim that Lewis could deliver a best-seller about telephone books I read BOOMERANG a few years back, lost it in a move and bought the audio version early this year after Greek citizens soundly rejected the terms of a proposed 2d bailout agreement. While published in 2011, the book is still a timely, excellent aid to understanding the basic root causes of the debacles in Greece, Iceland and Ireland, Germany's role in European collapse, as well as giving a view here at home via an abbreviated examination of California's economic and political climate. To give a sampling of quotes from the book to show Lewis' ability to offer the intriguing with wit: Iceland: One problem encountered by “Alcoa, the biggest aluminum company in the country, ...when, in 2004, it set about erecting its giant smelting plant... [was] the so-called hidden people—or, to put it more plainly, elves—in whom some large number of Icelanders, steeped long and thoroughly in their rich folkloric culture, sincerely believe. Before Alcoa could build its smelter it had to defer to a government expert to scour the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free...." Germany: Lewis explains the Germans' obsession with human excrement, or scheiße (pronounced "scheisse"), as a way to explain that country's role in the global debt collapse: “Germans longed to be near [scheiße], but not in it. This, as it turns out, is an excellent description of their role in the current financial crisis.” "The first thing Gutenberg sought to publish, after the Bible, was a laxative timetable he called a 'Purgation-Calendar.' Then there is the astonishing number of anal German folk sayings. 'As the fish lives in water, so does the [scheiße] stick to the a$ $hole!,' to select but one of the seemingly endless examples.” Another is *you are just as dirty as toilet paper!* Greece: “Individual Greeks are delightful: funny, warm, smart, and good company. I left two dozen interviews saying... 'What great people!' They do not share the sentiment about one another: the hardest thing to do in Greece is to get one Greek to compliment another behind his back. No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating, and stealing....” "The retirement age for Greek jobs classified as 'arduous' is as early as [55] for men and [50] for women.... when the state begins to shovel out generous pensions...." Over 600 Greek professions were able to get so classified: "hairdressers, radio announcers, waiters, musicians, and on and on and on." Ireland: “The Irish people and their country are like lovers whose passion is heightened by their suspicion that they will probably wind up leaving each other.” California: "California had organized itself, not accidentally, into highly partisan legislative districts. It elected highly partisan people to office and then required these people to reach a two-thirds majority to enact any new tax or meddle with big spending decisions. On the off chance that they found some common ground, it could be pulled out from under them by voters through the initiative process. Throw in term limits—no elected official now serves in California government long enough to fully understand it—and you have a recipe for generating maximum contempt for elected officials. Politicians are elected to get things done and are prevented by the system from doing it, leading the people to grow even more disgusted with them. 'The vicious cycle of contempt,' as Mark Paul calls it. California state government was designed mainly to maximize the likelihood that voters will continue to despise the people they elect.'" I highly recommend this book for both delight and enlightenment.

This is the first Lewis book I've read and found it very light reading. It was a nice combination of stories and facts that drove home reasons for the economic crisis that countries find themselves in today. I don't have a problem with the fact that the articles can be found for free on a website. I was willing to pay the $10 to download the book and have the information in one place. Boomerang explores five countries' experience with sovereign debt. This book is an easy and entertaining read because amusing anecdotal evidence is used to support the reasons behind each country's economic difficulty. From the twenty million nickels bought as a hedge against economic collapse to the exploding cars for insurance purposes, Lewis provides some great examples that illustrate the economic conditions countries find themselves. The book starts with a visit to Kyle Bass, a hedge fund manager who financially benefitted from the 2008 collapse. Bass has a large inventory of gold and precious metals and has now turned his attention to nickel by buying one million dollars worth, 20 million nickels. Bass' view on current economic suffering is an atonement for Wall Street's behavior. Lewis then moves on to Iceland where "When their three brand-new global-size banks collapsed, Iceland's 300,000 citizens found that they bore some kind of responsibility for $100 billion in banking losses--which works out to roughly $330,000 for every Icelandic man, woman, and child." Lewis goes further in describing the billions lost in currency speculation and the 85% collapse of Iceland's stock market to result in unknowable amount of loss for the average Icelander. Lewis sets up an exploding vehicle syndrome with this description of the financial state Icelanders found themselves in. "Now many Icelanders--especially young Icelanders--own $500,000 houses with $1.5 million mortgages, and $35,000 Range Rovers with $100,000 in loans against them. To the Range Rover problem there are two immediate solutions. One is to put it on a boat, ship it to Europe, and try to sell it for a currency that still has value. The other is set it on fire and collect the insurance: Boom!" Boomerang leaves us with an Iceland that has its Krona being a shadow of the peak period, a lamp that was out of stock now costs three times the amount before the crash, its work force ill-suited for the endowment it has, and insufficient political acumen to get it out of its predicament. The latest report on Iceland however, is that it is one of the bright lights in the economic recovery with 3% GDP growth. Iceland let its banks default and have deleveraged and returned to economic growth, something a small country can do without jeopardizing the world financial system. Lewis then moves onto Greece, the next stop on this tour of economic devastation. The explanation of Greece's debt comes from its culture, government spending without revenue collection. Lewis does a good job of annotating the level of ridiculousness Greece's public sector has come to "The average government job pays almost three times the average private-sector job." And "Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs" are two examples of the state of Greek public spending. While in Greece, Lewis stays at the Vatopaidi monastery, the soul of corruption for this country. The monastery had fallen into disrepair but Father Ephraim uses three prongs to rebuild: relationships with the rich, international outreach, and real estate which provides the most interesting story of the Greek experience. Father Ephraim and others turn an ancient deed and a worthless lake into millions or even billions of dollars. Ireland is the next stop on this tour where the Anglo Irish bank looses 34 billion Euros or $3.4 trillion in the crisis. Total Irish bank losses tally to 106 billion Euros or $10.6 trillion. Lewis explains "The Irish budget deficit--in 2007 the country had a budget surplus--is now 32 percent of its GDP, the highest by far in the history of the euro zone." Lewis does a great job in contrasting where Ireland has come from and what it has achieved only to be set back by the greed of the finance industry. "In late 2006 the unemployment rate stood at a bit more than 4 percent; now it's 14 percent, and climbing toward rates not experienced since the mid-1980s." Before leaving Europe, Lewis describes Germany's role in the economic crisis. German's are described as trusting American financial statements as reliable and therefore suffered by investing in them. The German bank IKB became Wall Street's best customer. IKB hired Dirk Rothig, someone with financial experience in the States, to do something new and unusual for the bank. Rothig invented something called a conduit which grew the IKB portfolio from $10 billion in 2005 to $20 billion in 2007, according to Rothig. IKB ended up losing $15 billion on US subprime loans. The last stop on this tour of economic disaster comes back to the U.S. where Lewis looks at a 60 Minutes interview of Merideth Whitney and her analysis of the financial condition of State debt. Whitney doesn't think the States will have a problem because they can transfer their debt to the counties and the cities. This is where Lewis spends his last stop, analyzing a city in the worst financial condition in the States, Vallejo California. In Vallejo, businesses post "WE ACCEPT FOOD STAMPS" on their windows, weeds surround abandoned businesses, and traffic lights permanently blink since there are no police in the streets. Real estate in Vallejo fell 66% between 2006 and 2010. The main cause for this city's woes were public safety wage contracts that resulted in bankruptcy. Lewis concludes this trip with comments about human nature and the lack of forethought for everything from obesity to gambling, drug and alcohol addiction, and of course personal indebtedness. "Americans sacrifice their long-term interests for a short-term reward." This describes the underlying problem with the world economy today.

In The Big Short Michael Lewis showed us what happened during the early stages of our ongoing financial crisis. In this new book, a compilation of more recent reportages that have appeared separately in Vanity Fair, Lewis leads us through the next leg of the story. Engaging in what he refers to as "financial disaster tourism" he hits the ground in the four locales which he regards as most emblematic of the global juggernaut that was unleashed in 2008 and that is still rolling with varying degrees of virulence over the world's economies. Lewis again employs his trademark technique of seeking out a handful of people whose individual stories communicate the essence of a macro picture. He starts in Iceland at the recommendation of Texas-based hedge fund manager Kyle Bass. Apparently Bass has long had a fascination with Iceland because, like Bill Gates, he was an inveterate Risk player as a child and he always felt Iceland's geographic niche between Europe and North America made it a strategic key in that game of global domination. Bass's adult interest in the tiny country, however, had nothing to do with its geography and everything to do with its peculiar banking system. Michael Lewis travels there with that same focus, finding in the island nation's bizarre dysfunction a microcosm for the post-2008 financial world. With its entire population roughly the size of Toledo, Ohio, Iceland had its own currency and massively outsized banks, the three largest of which collectively had assets that by 2007 had ballooned to more than ten times the GDP of the country. When the banks blew in the next year, the fallout too was outsized The origins of these queer circumstances make for an interesting story given that Iceland's economy historically was based in little more than fishing. The people had managed to parlay this economic nucleus into a surprising degree of prosperity, which enabled education and cultural development. The problem was that career opportunities were still limited in the nation's small-town milieu. And the other problem, according to Lewis, was the daredevil proclivities of Icelandic males. Perhaps stemming from genetic selection in an environment where the ability to fish in treacherous waters had always been a survival skill, male Icelanders seem prone to testing the limits of almost everything and then barreling blindly forward. Lewis, in amazement, describes this trait as though it had hardened into a kind of faulty neurological wiring that makes the men incapable of even perceiving risk, much less allowing it to moderate their behavior. Thus combining career boredom with an innate recklessness, Iceland was flirting with trouble when it's professional men discovered investment banking in the 1990's. They found they could borrow massive amounts of money in the global markets and invest it profitably for the time being in almost anything. And if regulation was weak in New York and London, it seems to have been virtually non-existent in Reykjavik. Asset values inflated into what one academic interviewed by Lewis describes as the most perfect financial bubble in the history of the world. His next stop, unsurprisingly, is Greece. And for anyone who might suspect Lewis of pursuing some kind of leftwing vendetta against the banking industry, his reporting on Greece shows him ready to apportion blame wherever he sees it, which is almost everywhere. Actually, the Greek banks come off relatively well here, and it is Greek society as a whole that Lewis portrays as bearing responsibility for the national pathos, even as he finds Greek citizens as individuals to be warm and delightful. We see a nation seemingly guided by a liberal collectivist ideology but in practice governed by private greed, fraud and universal mistrust. Hence, the Greek parliament is forever offering extravagant funding for everything Greek hearts might desire, but administration of the programs is given into the hands of corrupt officials, crony capitalists and thuggish unions who game the system at every opportunity. The cost of government is thus sky-high, while revenues to pay for it are forever lagging, due in part to almost universal tax evasion that officials do little to punish or even detect. Next is Ireland. Perhaps owing to a long history of abject rural poverty, the Irish took to residential property development like starving birds to a sudden over-abundance of corn when easy money flooded the global markets after the 1990's. The problem was that no one seemed to be paying much attention to who was going to buy all these new homes. One can picture our financial-disaster tourist wandering aimlessly, camera in hand, around what he calls the Irish "ghost estates". These are large, uninhabited new developments out in the Irish countryside which are connected to nothing. Construction was stopped on many of them when the money ran out and awareness dawned that buyers were lacking anyway even if the money had continued to flow. Since the Irish government chose to guarantee the blind and broken banks who funded all this, the hapless Irish taxpayers remain on the hook for it. Lewis also visits Germany, apparently to get a quick view from the other side of the Eurobanker's table. Americans, like non-German Europeans, seem incapable of writing about the Germans without lampooning them. Often they appear as ham-fisted martinets, other times as guttural buffoons. Sometimes they are portrayed as evil geniuses who harbor fond memories of Hitler or the Kaiser and are still bent on ruling the world. Lewis manages to find a different tack. Taking his cue from a sociologist who developed the observation, Lewis informs us that Germans have a national obsession with all things scatological. In their literature, their songs, their humor and their everyday speech, it seems the Germans, more so than other cultures, are focused on excrement. The theory then attempts to explain the German love for order and cleanliness as reaction formation against this private compulsion in the other direction. Getting us back to finance, Lewis takes the idea a step further by suggesting that the Germans have worked very hard to keep their own financial system pristine, while facilitating "dirty" finance outside of their own borders. I found all this a little strained, and Lewis's chapter on Germany is in my opinion the weakest part of his book. He fully redeems himself in the final chapter, however, where he takes us back to the United States. He finds the ultimate portrait of financial disaster in his own adopted home state of California. Here, his writing rises again to its tragicomic best. Lewis's celebrity nowadays is such that he can get his journalistic foot into almost any door he chooses. And indeed, he opens this chapter in the company of none other than Arnold Schwarzenegger, former Mr. Universe, former pop movie icon and, of course, former "Governator" of California, all professional heights he reached after arriving in America as an obscure immigrant from Austria in the late 1960's. For his meeting with Lewis, Arnold arrives offhandedly dressed and without any entourage or security whatsoever. He's invited Lewis to go biking with him, and now leads him on a spin through the chaotic exurbs of Southern California. Afterwards, barely winded, and unfazed by multiple traffic hazards, he takes his shaken new charge back to his office to tell him all about California and its intractable problems. I'm pretty sure that Michael Lewis is a Democrat, but he writes without ideological blinders. He obviously admires the Republican Schwarzenegger for his intellectual honesty, optimism and relentless energy. However, even the redoubtable strongman, by his own admission, proved helpless against the problems of California. The state's voters embraced him initially and then eight years later threw him out of office, his approval ratings having crashed through the bottom of the floor. In Lewis's rendition, the travails of California sound depressingly like those of Greece. A land of shallow idealism mired in administrative incompetence, California promises everything but is willing to pay for little. The state's perpetual budget crisis seems to be without the slightest hope of being resolved at any point in the foreseeable future. Arnold seems disappointed but has taken it all in stride and moved on with his life. He says he had fun trying. Lewis realizes he could visit just about any city in the state and find a relevant crisis to observe, so he picks a few. The mayor of one of them - San Jose - sums up pretty well the problems of his city and most of the others when he points out that he could terminate every single current employ in his government and not save enough money to pay the pensions and post-retirement benefits of the former employees. He could then tax his wealthy citizens into oblivion and, having thus destroyed his tax base, still not put much of a dent in the problem. Apparently believing themselves much richer than they were - particularly during the Fin de siècle boom years - government officials had fecklessly backed away from confrontation with the public service unions, who were thus able to assume a largely free hand in crafting pay and benefit packages. The day of reckoning came much sooner than even pessimists had imagined. On his way out of the Mayor's office, Lewis asks as couple of his aids for suggestions about where, given his investigative focus, he should go next. Without hesitation they both point him to Vallejo, and Lewis makes a beeline for the place. Three years earlier, Vallejo became one of the few municipalities in the United States ever to file for bankruptcy, overwhelmed by reckless promises made in happier times to its public employees. By the time Lewis gets there, the city has few active public employees left and is a shell of itself. Many of its homes are in foreclosure and its taxable population is drifting away. Street maintenance is non-existent, and crime is rising. Paradoxically, though, it's in reporting on Vallejo that Lewis discovers more glimmers of hope than he has managed to find elsewhere, for much the same reason that former drug addicts can sometimes be inspirational: hitting absolute rock bottom creates a certain clear-sightedness about problems and a motivation to correct them. Lewis meets the recently-hired city manager, Phil Batchelor, who has come reluctantly out of retirement to take the job. A sober, unassuming man, his one precondition for doing so was that the city council members all sign a written pledge to him they will start behaving in a civil manner towards one another. It seems someone had recently thrown a severed pig's head onto the floor at one of their meetings. Having been able to discharge most of their debt in bankruptcy and renegotiate their labor contracts, Vallejo has the chance for a fresh start, and Batchelor is determined to make the best of it. He's not interested is apportioning blame to anyone for past failures and is pragmatically focused on solving problems one at a time. Lewis also spends time with a 41-year-old Vallejo fireman named Paige Meyer. Meyer has seen his compensation and benefits cut sharply, but is nonetheless still passionate about his work. He treats fighting fires as though it were a calling, and is re-inventing the job to make do with fewer resources, even though Vallejo apparently has many more fires than other comparable communities. He seems to have no bitterness and to enjoy his life despite the financial devastation around him. Putting all these stories together, it's not hard to get Lewis's vision of what has happened to our developed Western economies. He doesn't preach, but rather like Dickens' Ghost of Christmas Future, he lets the grim facts unfold and speak for themselves. The common denominator here is the illusion of easy money, which our modern financial markets have conjured up for us and which has fooled everyone from multi-millionaire bankers to municipal street cleaners into thinking that everything they want is there for the taking. Lewis doesn't say it directly, but he appears to regard the problems of places like Greece and Vallejo as indicative of what lies in store for all of us who fall prey to illusions that life is easy and money is free. Despite his gloomy subject matter, the tone of Lewis' writing remains funny and optimistic. He closes with stories about people like Batchelor and Meyer because he wants us to see in them role-models for how to get by when our world suddenly ceases to be sustainable.

Everything this man touches, writes, or thinks about is fascinating. If you have taken the time to read any of his previous books than very quickly you become an individual who is compelled to read everything Michael Lewis writes. I looked forward to reading this book and was not disappointed. Lewis is not an individual who is interested in everything as others are. It is very difficult to get his attention. However, when a subject does get his attention, it becomes all consuming. Very quickly, Lewis becomes an expert on a topic. This is evident in all his previous books. Each one is a different subject with no relationship to each other. Sometimes it's Wall Street, sometimes it's the economics of baseball. The author delves into layer after layer of information in an attempt to find out everything he can on a subject. He becomes the go to man on the subjects he writes about. I will not repeat what other reviewers are saying, so I will come at this book from a different approach. Very briefly, I will give you a series of bullet points to help you determine if you want to read this relatively brief 224 page narrative that can be done in a couple of hours. * Understand the origins of the current European sovereign debt crisis, and the options as to how it might turn out. * You have an interest in why politicians in this country and Europe are FROZEN in their ways of thinking about the crisis. * How hedge funds truly operate, and why only a small number of hedge funds can truly achieve performance. * Are the International Monetary Fund and the World Bank all that they are cracked up to be? * Why Icelanders wanted to become investment bankers and how they failed miserably? * Were we in a global financial crisis or were we in a series of local financial crisis that piled up into a world-wide crisis? * The Germans merely wanted to remain Germans and now they would be saddled with the financial weight of Europe upon their shoulders. How long will Germany carry Europe? How long will German citizens pay the pensions of Greek citizens? * If you're a Greek tax collector in Greece, and you are good it, you get FIRED. Find out why? * Why the Greeks feel no guilt about not paying off the massive debts they have incurred? * Why are women better money managers than men, and yet investors always give their money to men? This is especially true of hedge funds. * Ireland has only 7 million people but managed to create a debt of 44 billion in Euros. This is the same as an American bank telling the government we have lost $3.4 trillion dollars. This is insanity and how did it happen? CONCLUSION: The beauty of a great book is that you think you understand something and then you read a book like this. You now realize that the entire framework of what you thought you knew has been jolted into a new reality, and things can never be the same again. Boomerang is so persuasive, so intelligently written and sourced, that you must now think differently. That is what great writing does and that is what this writing has achieved for me. For years I have argued that economics is not a science. Economists can't predict anything with accuracy, but I could never understand why this was so. I have been searching for the answer, and there it was in one sentence in this carefully thought out and endlessly fascinating narrative. Michael Lewis at one point states, "I don't believe in the predictability of unpredictable things." This is what a great book can do for you. I urge you to pick up a copy of Boomerang, and be knocked right out of your seat. This is not a politically biased book. Lewis is not coming at you from his own subjective opinions. The filters that Lewis views our current problems through are apolitical. He leaves it up to you to sort through the evidence, and the blame. At the same time, he takes you so thoroughly through a world that you knew existed, but did not understand, that it becomes very difficult to argue with what he is saying. You are going to love this book, and thank you for reading this review. Richard Stoyeck

The conflict within this collection of stories is, "How to deal with incompetent people who are interested in their own self-interest that elects incompetent people who are interested in their own self-interest?" Unfortunately we don't get the answers to the conflict. But what we do get is a clear explanation of the tragic state of government finances from towns, to cities, to states, to nations. The villain in the story is clear. Unfortunately, the hero is not revealed in this collection of short stories (the stories follow, but are not exact) to the articles featured by the author Michael Lewis in Vanity Fair Magazine. We often hear, "A fool and his money are always separated." As we will learn from Boomerang, a community of fools is also separated from their money. It often takes some time, but ultimately they are separated. We get an inside peek at the actions and results of individuals who are seeking to maximize their own self-interests at the expense of their long term collective interests as a group. I found this book rather enjoyable as it was informative, educational and entertaining. These traits are a hallmark and quite typical for Michael Lewis books. This is storytelling at its finest (non-fiction) albeit broken down into chapters that are unrelated in characters but related in common theme. The theme is current humanity and the relationship between members of a community and elected leaders on financial matters. We discover that people will take what they can, because they can without regard to the greater good of their society or community. As depressing and despondent as the stories are, they allow the reader plenty of time shake their heads in disbelief and also smirk because they are true. Each episode accomplishes the goal; take a complicated financial social structure of government and allow the reader to live the story and connect the dots from the set-up to the conclusion. The stories are like viewing a train wreck. You can anticipate the ending, cringe in what is coming, yet you can't look away. People that will enjoy this book would include those who already have a disdain and distrust of public government and risk firms (i.e. large banks) and have a curiosity and enjoyment of politics, sociology, public finance, and leadership (or lack there-of). This is not a "how-to" book on management or best practices in public policy or government effectiveness. Yet, there are plenty of lessons to be learned in what not to do and failed risk management. This is a quick read (a few enjoyable hours). It is not a long continuous book such as Moneyball, Liar's Poker or The Big Short. Grading this book is more difficult because it depends on if you are comparing the book to another author (in that case it would rank very high) or you are comparing the book to Lewis' other books (which relative to his other masterpieces it would lag). Thus I would say this will be an extremely enjoyable 3.5 or 4 stars if you are seeking informative and entertaining short storytelling based on current events. This book will be relevant throughout our current debt deleveraging cycle. It is not a book that will be irrelevant due to any particular election cycle. Unfortunately, although history doesn't always repeat itself, it does rhyme and we'll see these types of stories in the headlines for some time to come.

I admit to being a fan of Michael Lewis' books, so take that into consideration as you read this review. Lewis earned a masters degree in economics from the London School of Economics and went to work as a bond trader for Salomon Brothers before its scandals. His education and investment experience qualified him to write "Liar's Poker" in 1989, though I have no idea what qualified him to write such an entertaining and lucid description of the Wall Street culture of that time. Subsequently, I have read Lewis' "Moneyball" (in 2003), "The Blind Side" (in 2006), and "The Big Short" (in 2010). All of these books are very easy to read and hard to put down. They tell well-researched, interesting stories. In the case of "The Big Short" it helps to illuminate the origins of the financial crisis that broke starting in 2007. In Lewis' latest book, "Boomerang," the subtitle is, "Travels in the New Third World." Lewis is not referring to Asian or Latin American countries here. He's talking about European countries that drank the elixir of seemingly endless and cheap credit prior to the bursting of the recent financial bubble. To say that cheap credit transformed the economies in Greece, Ireland and Iceland, for example, is to understate the impact of the financial bubble on these countries. Talk about a timely book--I am writing this during September 2011, and yet this book refers to the recent downgrade of U.S. debt, which occured only last month, beginning on page 171. As in many of Lewis' books, there's a new person who you probably never heard of before to meet. In "Moneyball" it was Billy Beane, the general manager of the Oakland Athletics baseball team, and in "The Big Short" it was Steve Eisman, Michael Burry and others. This time it's Kyle Bass, the manager of a Dallas-based hedge fund, who Lewis makes sound both very insightful and eccentric. What would you call a man who owns a 40,000 square foot ranch located on thousands of acres in the middle of nowhere with its own water supply and an arsenal of automatic weapons? Or someone who would recommend "guns and gold" for his mother? Anyway, the gist of Bass' financial analysis is that mountains of shaky debt (arising from borrowings during 2002 - 2006 by people who couldn't repay) was essentially transferred from private institutions (like banks, etc.) to various governments, to the point that eventually markets would question the credibility of these governments. Put differently, the public debt of certain countries wasn't just the official public debt, but also that which came from supporting various private institutions. Bass, Lewis tells us, visited Harvard professor Ken Rogoff (coauthor of "This Time is Different: Eight Centuries of Financial Folly," which I recommend), and found even Rogoff to be surprised by the magnitude of the public debt problems. Just as Bass bought credit default swaps on subprime mortgages prior to the financial crisis, Bass later bought credit default swaps on Greek government bonds, because he was convinced that Greece would be one of the first countries to experience real problems. Bass expected the swaps he purchased for 1,100 per year per million to eventually be worth 700,000. Anyway, Lewis interviewed Bass years ago in preparation for writing "The Big Short," but he "left Kyle Bass on the cutting room floor." Lewis returned to Dallas two and a half years later, this time to find that Bass was betting most heavily against Japan and France at the time. Bass also had literally bought 20 million U.S. nickels (don't ask how), because he said the value of the metals in each nickel was worth 6.8 cents. The majority of this book is devoted to Lewis' travels in Iceland, Greece, Ireland and Germany, and to his discoveries during his travels. To get a flavor for the book and Lewis' writing style, here are some of Lewis' passages, in his own words: Iceland: "Iceland instantly became the only nation on earth that Americans could point to and say, `Well, at least we didn't do that!'" Greece: "As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was to turn their government into a pinata stuffed with fantastic sums and give as many citizens as possible a whack at it." Ireland: "But while the Icelandic male used foreign money to conquer foreign places--trophy companies in Britain, chunks of Scandinavia--the Irish male used foreign money to conquer Ireland. Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do was buy Ireland. From each other." Germany: "Either Germans must agree to integrate Europe fiscally, so that Germany and Greece bear the same relationship to each other as, say, Indiana and Mississippi (the tax dollars of ordinary Germans would go into a common coffer and be used to pay for the lifestyles of ordinary Greeks) or the Greeks (and probably, eventually, every non-German) must introduce `structural reforms,' a euphemism for magically and radically transforming themselves into a people as efficient and productive as the Germans." Quoting Lewis quote UCLA neuroscientist Peter Whybrow in the book's last chapter (on California's financial problems, not European countries), Lewis writes, "'Human beings are wandering around with brains that are fabulously limited. We've got the core of the average lizard.' Wrapped around this reptilian core is a mammalian layer (associated with maternal concern and social interaction), and around that is wrapped a third layer, which enables feats of memory and the capacity for abstract thought. 'The only problem is our passions are still driven by the lizard core.' Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. Every pastry chef in America understands this, and now nueroscience does, too. 'In that moment the value of eating the chocolate cake exceeds the value of the diet. We cannot think down the road when we are faced with the chocolate cake.' ... Everywhere you turn you see Americans sacrifice their long-term interests for a short-term reward." Love him or not, Michael Lewis is a talented writer, and I truly believe that most readers will have a hard time putting this book down. If you have enjoyed his earlier books, the decision to purchase this one seems to be a no-brainer. If you haven't read one of his earlier books, this one is worthy of your consideration.

I decided to edit this after comments: The book is a though provoking read and after finishing it I thought there were some good point, until I considered some of what he said. Here are some of my concerns. 1 - Citizens of a country get the kind of government they deserve, Really? Isn't his blaming the people if their politicians misbehave? Wonder what the people of Zimbabwe or China might think? 2 - Vallejo CA Bankruptcy - due to greedy public service workers. Completely ignores the devastation wrought on the city by declining home prices, caused by Wall Street 3 - Greece deserves its problems because the people don't pay taxes Makes it sound like the Greeks are scoundrels and dead beats and ignores forty years of government corruption and stealing from the citizenry, people don't want to pay if they don't get anything Is govt corruption the fault of the populace? maybe ... 4 - California, Schwarznegger tried to fix the state but citizens blocked him; CA citizens wants something for nothing Surprised he said this since his has been at Berkeley Arnold's failed propositions were just a repeat of previous failed ideas, Californians voted them down before and did it again, didn't matter that Arnold wanted them I live in CA, we pay one of the highest state tax rates in the country Nobody here wants something for nothing, we have mass transit, high speed rail, good workers' comp We want responsible spending everyone else CA is Democratic at all levels and the Republicans will never get a foothold here because we know they only represent the rich and fortunate Don't read this book unless you want to hear more right-wing Republican BS about who is to blame for the financial crisis today. According to the author the blame falls squarely on greedy public sector workers and citizens who expect something for nothing from their governments. He doesn't put much blame on corrupt politicians who pushed through financial de-regulation or greedy banks and stock traders who took advantage of the new free markets. He blames the Vallejo bankruptcy on public sector workers asking for unreasonable wage increase while ignoring the fact that much of the Vallejo crisis was due to falling tax revenues as a direct result of the housing crash which was caused by Wall Street. This is only a first effort by the Republican party to use a back door way to renege on public sector pension obligations through bankruptcy. In the author's opinion the former California governor was a good old boy who was going to get the party's talking but was thwarted by the lack of commitment on the part of normal Californians. Since the author lives in Berkeley he can hardly be unfamiliar with the idea that Schwarzenegger was elected by inland Republicans and most normal Californians disagreed with him and his positions. His initiatives failed they were the same old failed Republican policies the citizens have voted down again and again.

Below are key excerpts form the book, that I found particularly insightful: 1- "The subprime mortgage crisis was more symptom than cause. The deeper social and economic problems that gave rise to it remained. The moment that investors woke up to this reality, they would cease to think of big Western governments as essentially risk-free and demand higher interest to lend to them. When the interest rates on their borrowing rose, these governments would plunge further into debt, leading to further rises in the interest rates they were charged to borrow. In a few especially alarming cases - Greece, Ireland, Japan - it wouldn't take much of a rise in interest rates for budgets to be consumed entirely by interest payments on debt...The moment the financial markets realized this, investor sentiment would shift. The moment investor sentiment shifted, these governments would default. And then what? The financial crisis of 2008 was suspended only because investors believed that governments could borrow whatever they needed to rescue their banks. What happened when the governments themselves ceased to be credible. There was another, bigger, financial crisis waiting to happen - the only question in Kyle Bass's mind was when." 2- "When you borrow a lot of money to create a false prosperity, you import the future into the present. It isn't the actual future so much as some grotesque silicone version of it. Leverage buys a glimpse of a prosperity you haven't really earned. The striking thing about the future the Icelandic male briefly imported was how much it resembled the past that he celebrates. I'm betting now they've seen their false future the Icelandic female will have a great deal more o say about the actual one." 3- "The costs of running the Greek government are only half the failed equation: there's also the matter of government revenues." 4- "The structure of the Greek economy is collectivist, but the country, in spirit, is the opposite of a collective. Its real structure is every man for himself. Into this system investors had poured hundreds of billions of dollars. And the credit boom had pushed the country over the edge, into total moral collapse." 5- "The Irish real estate bubble was different from the American version in may ways. It wasn't disguised, for a start. It didn't require a lot of complicated financial engineering beyond the understanding of mere mortals. It also wasn't as cynical. There aren't a lot Irish financiers, or real estate people, who have emerged with a future. In America the banks went down but the big shots in them still got rich; in Ireland the big shots went down with the banks." 6- "The Greeks not only have massive debts but are still running big deficits. Trapped by an artificially strong currency, they cannot turn deficits into surpluses, even if they do everything outsiders want them to do. Their exports, priced in euros, remain expensive. The German government wants the Greeks to slash the size of their government, but that will also slow economic growth and reduce tax revenues. And so one of two things must happen. Either the Germans must agree to integrate Europe fiscally, so that Germany and Greece bear the same relationship to each other as, say, Indiana and Mississippi - the tax dollars of ordinary Germans would go into the coffer and be used to pay for the lifestyle of ordinary Greeks - or the Greeks (and probably, eventually, every non-German) must introduce "structural reform," a euphemism for magically and radically transforming themselves into a people as efficient and productive as the Germans. The first solution is pleasant for Greeks but painful for Germans. The second solution is pleasant for the Germans but painful, possibly even suicidal, for Greeks." 7- "The curious thing about the eruption of cheap and indiscriminate lending of money between 2002 and 2008 was the different effects it had from country to country. Every developed country was subjected to more or less the same temptation, but no two countries responded in precisely the same way. Much of Europe had borrowed money cheaply to buy stuff it couldn't honestly afford. In effect, lots of non-Germans had used Germany's credit rating to indulge their material desires. The Germans were the exception. Given the chance to take something for nothing the German people simply ignored the offer. "There was no credit boom in Germany," says Asmussen. "Real estate prices were completely flat. There was no borrowing for consumption. Because this behavior is totally unacceptable in Germany. This is what the German people are. This is deeply in German genes. It is perhaps a leftover of the collective memory of the Great Depression and the hyperinflation of the 1920s." The German government was equally prudent because, he went on, "there is a consensus among the different parties about this: if you're not adhering to fiscal responsibility you have no chance in elections, because the people are that way." 8- "When people pile up debts they will find difficult and perhaps even impossible to repay, they are saying several things at once. They are obviously saying that they want more than they can immediately afford. They are saying, less obviously, that their present wants are so important that, to satisfy them, it is worth some future difficulty. But in making that bargain they are implying that when the future difficulty arrives, they'll figure it out. They don't always do that. But you can never rule out the possibility that they will. As idiotic as optimism can sometimes seem, it has a weird habit of paying off."

Great book

This book is about the debt crisis. This time it isn't about the banks and investment companies but about the governments and the crisis they faced after they took over the banks. This book is a collection of stories he wrote for Vanity Fair. Michael Lewis is very good at finding analogies to explain things. Entertaining, hilarious, and above all shocking.

Lewis decides to become a financial disaster tourist, and travels to various bankrupt European countries. He wants to find out at the ground level, what happened in; Iceland, Greece, and Ireland. Well Lewis collects the data he was looking for, and spins out quite the story. In a nutshell these countries get a hold of cheap foreign credit, and go into a wild financial mania. They also abandon all previous forms of prudent economic management. The details regarding the Greek economy, are beyond anything I have ever heard before. In fact, the Greek situation makes the former Tulip Mania and Dot Com Bubble, seem rather tame and orderly. The Greek debt problems have still not been fully resolved, so this makes the details all the more engaging. This is a small book, but the message delivers a big impact. The reader will be left with, a much better understanding of the current global financial dilemma. This book was hard to put down, and a very good read. Both general and financially interested readers, will be entertained and astonished.

This book is interesting because give the reader a frank feedback of financial reality behind the events: people are greedy and Germans are gullible. Jokes sidelined, the worst of all is that after reading this book the reader probably realizes that nothing has changed since 2008's financial crisis and the vicious circle, someday, will happen again and again (bubbles boom and bust).

Ogni capitolo racconta di uno stato europeo in crisi (e.g. Islanda, Irlanda, Grecia etc…). Molto interessante il capitolo sulla Germania