Michael Lewis takes a global look at nations in financial trouble.
'Financial-disaster tourist" Michael Lewis doesn't simply visit nations like Iceland, Greece, Ireland and the United States to speak with academics about the profound failures of these nations' financial systems. When researching his new book, "Boomerang," he met with the people on the ground floor of the whole, evolving global mess and asked them illuminating questions to discover what went so wrong. What he found is that the global debt crisis is both systemic and cultural, and thus perhaps intractable. As in his 2010 bestseller, "The Big Short," in "Boomerang" Lewis' genius is in converting abstract financial complexity into accessible human stories.
In Athens, Lewis sits down with two Greek tax collectors who explain how almost everyone in Greece has succeeded in evading taxes for decades. The number of Greeks working inside the public sector is staggering, notes Lewis, and "the average government job pays three times the average private sector job," and also guarantees absurdly generous benefits. Yet tax collections in Greece are minuscule, especially when compared with the gargantuan obligations of the Greek state.
The problems in all of these financially troubled nations, notes Lewis, flowed from the same source: an overexpansion of credit that made possible booming economic conditions, which proved simply unsustainable. Lewis shows, for example, how real estate values in pre-crisis Reykjavik, Iceland, tripled in a four-year period, allowing Icelanders to use this equity to finance lavish lifestyles and invest further in overinflated assets. When it all came crashing down, Iceland became a moonscape of unfinished and unoccupied offices and houses.
Lewis views the same sort of post-apocalyptic wreckage in Ireland, too. There, the boomtime of the "Celtic Tiger" worked to reduce the nation's inborn sense of insecurity, Lewis finds. After the Irish government promised to pay the bad debts of the woefully mismanaged Irish banks, the nation slashed public spending to save the risk-loving bankers. In this climate, the dark, sardonic part of the Irish mentality has come roaring back, especially as legions of construction workers suddenly have no jobs.
Lewis ends his illuminating, absurdly page-turning account (who knew that financial disaster could be so entertaining) with a look at the collapsing budgets and burgeoning deficits of this nation's states and local government. This tsunami of cost-cutting and service reductions is just beginning, Lewis notes.
Nobody has explained the continuing implosion of our global financial systems as well as Lewis, whose ability to zoom in from abstraction to very human stories represents nonfiction narration at its very best.
Readers seeking to understand the current global economic wreckage would do well to invest their time in Lewis' revelatory account.
Chuck Leddy is a member of the National Book Critics Circle and lives in Boston.