Star rating 8/10
If you are not thoroughly depressed by all the talk of the collapse of the Euro and the imminent demise of the world as we know it, and actually want to read about some of the reasons behind the latest economic catastrophe, then look no further than Michael Lewis’s excellent new book ‘Boomerang – The Meltdown Tour’.
Lewis is following on from his previous page turner on the truth behind the credit crunch, credit swaps, and derivatives shenanigans in the US in ‘The Big Short’, which by the way I also heartily recommend. He has turned his attention away from the banking institutions per se, to the current near collapse of the economies of whole countries, and does so in his usual accessible, honest, no nonsense, and very entertaining way.
Iceland, in Lewis’s view, has a feral streak due in part to its size and relative isolation, which led to enormous risks being taken by its banks, and the near obliteration of its economy. He pulls no punches either: ‘Icelanders wanted to stop fishing and become investment bankers, and to allow their alpha males to reveal a theretofore suppressed megalomania’. Ouch!
He describes how in Greece civic life became impossible due to a total breakdown of the tax system, and to general civic lying and cheating on a grand scale. Slightly ironic from a country that is held up as the cradle of democracy. Lewis describes the unlikely role of a desolate Greek monastery in proceedings in a very engaging way, and also the role of banker baddies Goldman Sachs, who Lewis argues ‘engaged in a series of apparently legal but nonetheless repellent deals designed to hide the Greek government’s true level of indebtedness.’ Take that!
Ireland’s crazy Russian roulette style dependence on ever increasing land values, which fuelled a building boom, and has left a legacy of ghost estates across the country, in which no-one wants to live, is also highlighted. Some of the statistics that Lewis uses to substantiate his arguments are so insane they would be funny if not so tragic. For example, by 2007 Irish banks were lending 40% more to property developers alone than they were to the entire Irish population in 2000. Just wow.
His peccadilloes about the allegedly anally obsessed Germans are very amusing, even though their economy has not collapsed – yet. Lewis shows how rash they were to enter into the Maastricht Treaty and form the Euro in the way that they did, and therefore in effect shore up all the weaker European Euro economies. And to round off the book Lewis shows how certain US states like California, who let’s face it are nearly as big as a lot of countries, have got into mounting debts problems due to a colossal public sector pay bill and a pensions black hole.
If any of this sounds uncomfortably familiar, then it should do. Lewis has an uncanny knack of putting his finger right on the economic pulse, and getting straight to the heart of these complex economic situations like a knife through butter. I sincerely hope that his next book will be a deeper look into the British economic malaise and the crazy continuing obsession with rewarding failure and greed within our own banking sector.