Boomerang: Travels in the New Third World

Michael Lewis touches down in the nations damaged by the 2008 financial meltdown and proves – yet again – that he can turn anything into compelling prose.

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    Boomerang:
    Travels In the New Third World
    By Michael Lewis
    W. W. Norton
    213 pp
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Let’s say you’re Michael Lewis. By the time you turn 50 you’ve written almost an entire shelf of incredibly successful books (including “Liar’s Poker,” “The Blind Side,” “The New New Thing,” “The Big Short,” “Moneyball”), some of which have been turned into equally successful movies.

So engaging is your writing that poetry lovers devour your financial journalism and stockbrokers inhale your sports stories. Your 2010 book (“The Big Short”) explained the 2008 Wall Street collapse to the average reader in vivid and lucid terms. What do you do for an encore?

Lewis’s answer was to take advantage of a brand-new travel option: “financial disaster tourism.” In other words, head to some of the places on the planet most badly singed by a horrific combination of avarice and the 2008 failure of Lehman Brothers, talk to some of the more colorful victims, and then write a book about it all.

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That book is Boomerang, and you won’t know whether to laugh or cry while reading it.

Lewis says that the idea for “Boomerang” came to him “accidentally,” while talking to a hedge fund manager who believes that Europe could be on the verge of a series of “sovereign defaults” – the bankruptcies of entire nations. To check the situation out, Lewis hopped on a plane and began his personal tour.

What he ended up compiling is a saga of staggering selfishness, greed, and incompetence that somehow manages – because it is Lewis doing the telling – to be every bit as engaging as it is horrifying.

First stop: Iceland. Here grossly inexperienced Icelandic bankers caused three of their global banks to collapse, leaving the nation with debts amounting to 850 percent of their gross domestic product. Iceland’s principal distinction today, says Lewis, is that it’s now “the only nation on earth that Americans could point to and say, ‘Well, at least we didn’t do that.’ ”

Next stop is Greece – a nation saddled with an outstanding government debt of “roughly $400 billion (and growing).” How did it happen? When they thought no one was looking, explains Lewis, Greeks hoped to “turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.”

In Ireland a single bank lost $3.4 trillion, largely on bad property deals. This mess, says Lewis, “was created by the sort of men who ignore their wives’ suggestions that maybe they should stop and ask for directions, for instance.” (Among other indelible images from Ireland: a brand-new, abandoned village in the middle of a rain-swept former potato field. Apparently no one bothered to ascertain before building it whether or not anyone would want to live in it.)

The story Lewis follows in Germany is different in that – rather than greed or out-and-out incompetence – the Germans seem to have been guilty of massive credulity. Because German bankers tend to play by the rules, says Lewis, they couldn’t comprehend that American bankers often do not. So when “extremely smart traders inside Wall Street investment banks” created “diabolically complicated bets” and then went in search of “some idiot” to “take the other side,” it turned out that “a wildly disproportionate number of those idiots were in Germany.”

Lewis finishes his tour of what he calls “the new third world” in California. There (after taking a dizzying high-speed bike ride with Arnold Schwarzenegger), he meets with the mayor of San Jose, a city so in the red that “it could cut its debts in half and still wind up broke.” How did such a thing happen?

“I know how it started,” explains the mayor. “We live near rich people so we thought we were rich.”

Lewis tells his tale of financial malfeasance through a lively cast of global characters. There’s the Icelandic cod fisherman who became a currency trader on the strength of three days of training. There’s the Greek monk-turned-opportunistic capitalist. There’s the cheerful Irish retiree who was so outraged by his country’s shenanigans that he threw rotten eggs at a bunch of high-level Irish bankers. (Then he took the bus home for a cup of tea.)

Overall, “Boomerang” is the story of how governments throughout the developed world allowed politicians, bankers, and ordinary citizens to pile up debts they could never possibly repay. And now the whole world will be paying the price – perhaps for a long time to come.

It’s not a pretty story, but thanks to Lewis it is a compelling one. And despite its bleak contours Lewis doesn’t imply that it’s a completely hopeless one. Future generations don’t always figure out how to solve the crises created by their elders, he points out. But then again, “you can never rule out the possibility that they will.”

Marjorie Kehe is the Monitor’s books editor.

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