After 2008 when the US housing bubble burst on an avalanche of cheap credit, the shockwaves were felt all over the world. So Michael Lewis traveled the world, exploring the most far-out tentacles of the fiasco to unearth the bizarre subcultures that led to the shriveling of several nations' economies.
The book is Boomerang: Travels In The New Third World. It's an appropriate title, since we normally think of the third world as Africa, Central America, and Eastern Europe. But it was "civilized" Western European nations that got duped in this mess: Iceland, Greece, Ireland, and Germany - turning all of their identities upside-down.
It's the fourth Michael Lewis book I've read (in addition to the Obama profile in Vanity Fair and the Foreword to Mike Leach's book) in the last year-plus, and by far the most entertaining page turner.
While Lewis's book is enlightening, it shouldn't be viewed as journalism or history. He draws a lot of inferences based on stereotypes, stringing together entire national populations as one consciousness. It's kind of like watching Stephen Colbert do an interview: very creative, though the information is made to fit the angle.
In Iceland, all the fishermen's kids got educated and wanted to be investment bankers. They bought and bought and bought on credit until their currency was meaningless.
In Greece, everyone cheated on their taxes and none of it was enforced. So the government had no supply. Meanwhile, monks got rich selling a lake back to the government and began a commercial real estate empire.
In Ireland, money was continually poured into building projects, much more than the population needed. When warning sirens sounded in the banking community that there would be no return on these investments, the nation backlashed. No one would believe it until it happened.
In Germany, the people remained fiscally prudent, though the banking community staked all these highly volatile national economies. Lewis theorizes it's because of the Germans' deep, secret love affair with shit.
In California, the escalating salaries of police, firefighters, and prison guards (and even more so their pensions) eat up so much of the government pie, that almost all city services across the state have been slashed. And they're still running the worst deficit of any state in the nation with no end in sight and a state government that is set up to fail.
In summation Lewis cites Dr. Peter Whybrow, a British neuroscientist at UCLA for a possible ground zero to the world's economic malaise. Whybrow wrote a book, American Mania: When More Is Not Enough.
The theory is that for the history of mankind, the human brain has been trained for survival. The American advances in the last generation in banking and technology have made life far too easy. Everything is a button push away.
In "the richest society the world has ever seen," where so many wants are instantly gratified, the survival instinct becomes dormant. Decisions become desensitized, and thus don't carry consequences. People don't see the risk in a subprime loan they can't afford. And the unscrupulous lender doesn't see the damage in issuing the note in the first place.
So how does the US and the rest of the world rebound? Financial regulation would be a good start. But Americans and all humans will evolve and adapt as they always do. We can't all be multi-millionaires.
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