A returning boomerang is designed to circle back to the thrower. This financial invention aka boomerang started from US (best described in his book ‘The big short’) and it is presently on its homecoming path by obliterating so many economies on its way back. These are intricate times and this disarray can be elucidated by someone who is apt at his job. In his new book Boomerang, Micheal Lewis explains why he is the best at what he does and you cannot stop marveling at his intellect. It is very important for us to understand the seemingly permanent recession that has hit the world economy and affects each one of us. Micheal Lewis explains these thorny times with his trademark humor. But remember, he is not going after some cheap joke – his grasp of the subject is remarkable and he takes a dig at someone to get across the point to us lesser mortals.
And, thanks to “Boomerang,” a collection of financial-disaster reports from Iceland, Ireland, Greece, Germany and California, few will be able to contemplate of Germans without recollecting what Lewis memorably describes as a national obsession with muck.
Interestingly book starts with describing a small nation Iceland with its miniscule 300,000 residents. Shockingly, its finance minister and head of the central bank is actually a poet and understands pure basics (I doubt that too!) of finance. Hence, it is not a shocker that country is bankrupt and going through the worst phase of its 1000 year history – same is true for Ireland which he enlightens in granular details.
When we look at these big economies going down the drain, there seems no solution. Few who read Lewis’s account of his trip to Greece — where tax evasion is a birthright, where civil servants get paid for 13 or 14 months a year to evade salary limits, where the first thing a government does in election years is to pull its tax collectors, where a mob prevents cruise-ship passengers from disembarking and spending — will question about whether that nation will default on its debts. The numbers involved in the catastrophe facing Greece and other at-risk countries are not just shocking, they are ludicrous.
With Germany, it gets mesmerizing. Germans, as has been described in the book, are always near the shit but not in it. He observes that, at a popular German mud-wrestling event, spectators are given rubber coverings to keep scrupulously clean even as they revel in the filth, Lewis writes, “Germans longed to be near the shit, but not in it. This as it turns out, is an excellent description of their role in the current financial crisis.” To know his genius, you would have to read this book – the way he has been able to demystify the crisis and tear it into shreds and when you look at each one of those shreds you can confidently say ‘what is wrong with these banks’. Obsession for excrement is there at every level in German society which is best described by Hitler’s fantasy of making his GF poop on him (eeew!)
Lewis writes, “When Morgan Stanley devised extremely complicated credit default swaps so they were all but certain to fail, so that their own proprietary traders could bet against them, the buyer was German. When Goldman Sachs helped the New York hedge fund manager Paulson design a bond to bet against — a bond that Paulson hoped would fail — the buyer on the other side was a German bank.
Overall, this book gives an idea to the reader on the vulnerability of European countries to the global crisis – starting point of which is US and it comfortably boomerangs around. In its wake, it leaves destruction in terms of mounting debt (fiscal deficit), spending cuts, and lesser money available for public spending. Thus, increasing unemployment – tornado of epic proportions, the effect of which we are only beginning to comprehend. This is best described by him in the funniest manner possible, but, in layman language – a language that anyone could understand. He also talks about how states in US are getting bankrupt and how California is at the threshold of a disaster. Scary, tantalizing and funny is how I describe his book. I give it a 4.5/5