Book Review: Boomerang by Michael Lewis

Boomerang: Travels in the New Third World by Michael Lewis
My rating: 4 of 5 stars

This book was classic Michael Lewis in that he deconstructs quantitatively driven scenarios and converts them into easily digestible stories albeit, with interesting characters. To imply that the author is an economic academic, rather than the journalist that he is, is stretching one's expectations.

Throughout the book he use the metaphor of what individuals or countries do with a pile of cash or credit once the lights have been turn off (left to our own private desires). In the case of the United States, we all went out and bought bigger houses. But the bigger picture he spins in the last chapter is that we wanted it all (until we were "too fat to fly"), we had grown used to having an economy of abundance that we decided to continue with the delusion even though it would have long term consequences. As he states in his last chapter:

"...And as he (Vallejo's new City Manager, Phil Batchelor) talked about the bankrupting of Vallejo I realized that I had heard this story before, or a private-sector version of it. The people who had power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with the police officers and firefighters isn't a public-sector problem; it isn't a problem with government; it's a problem with the entire society. It's what happened on Wall Street in the run-up to the subprime crisis. It's a problem of people taking what they can, just because they can, without regard to the larger social consequences. It's not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of 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 America 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..."

The last chapter also touches on the fiscal problems of San Jose, a city with the second highest level of per capita incomes in the U.S., after New York City, and yet, "is not all that far from being bankrupt".

All in all a good entertaining read which includes a globetrotting narrative into the stories and background of the European debt crisis. But if you remember to tell yourself that this is no financial thesis you enjoy the book as I did.



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