Boomerang by Michael Lewis

Boomerang Michael Lewis *** out of ****

After reading Boomerang, a sort of sequel to Lewis’ The Big Short, I can’t help but pause and say, ‘How did recklessness and stupidity become the norm?’
Lewis picks up where he left off after his bestseller The Big Short. That book dealt with the financial crisis in the United States housing market. Boomerang begins with an investor turning his attention from betting against the housing market to betting against the debt of entire nations.
Lewis travels to several countries where the financial situation has led to complete collapse. He investigates the collapse of Iceland, Greece, and Ireland – not in great detail but through the lives of the people who helped make it happen.
At one point he says this about the crisis in the United States, “Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.”
This seems to be the pattern throughout the world. Grab the money with no thought for long-term consequences and then blame everyone else when the whole thing collapses. This is still the pattern in the US, in Iceland, in Greece, and in…
He details how Iceland transitioned from fishing to finance even though its people did not know a thing about how to work in the world of money. He explains how the Greeks manipulated their books to get into the European Union and continued to be both sloppy and deceptive in how they ran their finances. He examines how Irish losses grew to more than 100 billion Euros. And how the Irish government decided to guarantee all of those losses.
Boomerang leaves me pessimistic about the state of world finance. The last three large movements of the American economy have been ridiculous scams and bubbles – insider trading and junk bonds of the 80s, .com of the late 90s and early 2000s, and the housing market. The scams and bubbles of world finance have been bigger and more absurd.
Boomerang leaves you with a sinking feeling. This is not just a book about what has happened, it is a book about what is happening. And what is happening makes past scams and bubbles pale in comparison. Lewis says, “European leaders have done nothing but delay the inevitable reckoning, by scrambling every few months to find cash to plug the ever growing holes in Greece, Ireland and Portugal, and praying that bigger and more alarming holes in Spain, Italy and even France do not reveal themselves.”
Lewis is at his best when he takes the small story and illustrates the big picture. He does it again here with skill and wit. Although, he seems much more harsh and critical about entire populations of people (he rips apart the Icelandic people and the Greeks in a way that makes you wonder if he isn’t just an ugly American tourist). Otherwise, the book is another amazing and scary look into the world of big-time finance.

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