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Tuesday, 8 November 2011

Book review: Boomerang, Michael Lewis (2011)

This book is a sort of sequel to Lewis' The Big Short, which came out in 2010 and which I wrote about in May that year. Lewis talks about the genesis of Boomerang: The Meltdown Tour in his acknowledgements at the back of the book when he thanks "Graydon Carter and Doug Strumpf, at Vanity Fair, for encouraging me to go [to the places he visits for the new book]". And yesterday I saw a link to a segment of the book on the Vanity Fair website, so they're using material from it directly. I can almost hear the conversation between VF editors and Lewis, who has become one of the hottest properties in literary journalism due to a string of solid, interesting titles over recent years. "That was great, Michael, but this global economic crisis is not going away quickly so why don't you try to get a handle on what happened in these other problematic markets?"

So Lewis visits Iceland, Greece, Ireland, Germany (which is relatively healthy but where the banks had a wide exposure to dodgy subprime-based financial instruments leading up to the crash in 2007), and California. Why California? Because Lewis thinks it is the metropolitan liabilities in the US which are dragging down the economy. So he visits the worst state - financially speaking - and the worst city in that state: Vallejo. There he finds a bankrupt city council operating on a shoestring because pay claims from the arms of public security - police, fire brigades - have pushed the city to its limits, and beyond. The city is so poor that the mayor only has money to pay for one admin staffer, and when she goes to the toilet during the day she has to lock the mayoral offices.

In fact, Boomerang is a great, big, extended belly laugh aimed at crushing economic stupidity in each of the localities it concentrates on. The style is much looser than was the style of The Big Short, which tended more toward the forensic rather than the broad-brush. There's a diabolical undercurrent in Boomerang that tends toward the cynical and is, for this reason, unsettling. You get the feeling that Lewis is a bit tired of having his worst suspicions constantly reconfirmed by way of the arrant idiocy of so many people in so many places around the world. Whether it's the insular and close-knit financial community in Iceland, that brought the country past the verge of bankruptcy, the corrupt and every-man-for-himself Greeks who refuse to pay their taxes and whose political leaders cooked the books for decades in order to be allowed to join the Euro club, or the credulous Germans, who took a rating agency's triple-A rating at pure face value and so endangered Europe's biggest economy. Oh, and the Irish? They just seemed to believe in fairies.

In the end, the book is philosophical, if not downright pessimistic. Our bodies and minds, having learned for millennia to expect scarcity, can hardly bear the burdens of surplus. We are used to getting as much as we can. But there is now a requirement for a different, more consultative and less confronting paradigm. It's up to us how we manage our economies in future but, says Lewis, the health of an economy depends on how each individual in it behaves. It's no use blaming our masters, he says. We're all accountable.

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