Michael Lewis’s latest book, Boomerang, gives the current economic crisis some international context. In an entertaining and somewhat breezy manner, Lewis investigates why countries as disparate as Iceland, Greece, Germany, and the United States all fell into the economic mess. Here are a few thoughts about his take:
1. My overwhelming thought about Lewis’s explanations is that he wants to delve into different cultural approaches to the world of finance. Lewis’s argument goes like this: even though these countries have very different histories and cultural mindsets, somehow they all got involved with bad debt in the 2000s. This same topic could spark a fascinating economic sociology or cultural sociology manuscript.
2. Unfortunately, Lewis either doesn’t have much time to spend with each country (he admits the book began as he was working on understanding the US system, which became The Big Short or he doesn’t want to delve deeply into his thin arguments. For example, in Germany he tries to tie their fondness for following rules (which means Germans were the last people to be being disastrous American CDOs) to their fondness for scatalogical humor (which Lewis bases on one anthropological study). While there is a lot of potential here for showing how different cultures can be tied together by a global finance market, Lewis needs a lot more evidence to construct a convincing argument.
3. I found the last chapter to be both exhilarating and depressing. Lewis comes back to the United States in the final chapter and describes how this could all play out. Here is what Lewis suggests: while the centralized governments of Europe struggle, the problem in the US is pushed down the road because the federal government can push off more and more obligations on state and local governments. If this plays out as Lewis suggests (though there is debate over whether it will be as bad as Meredith Whitney suggested), local governments will continue to feel the pain of the economic crisis for years to come and the results may not be pretty.
Summary: I think Lewis is on to something here but I would like to see the topic covered with more depth and include more research.