Like Malcolm Gladwell, Michael Lewis has made his career reporting on outliers. Lewis has delivered bracing accounts of investment bankers whose doomsday predictions went ignored until they came to pass, of teenagers who harnessed the power of Internet message boards to undermine the stock market, and of low-budget baseball teams that used unorthodox statistics to compete with richer clubs.
Also like Gladwell, Lewis is a fast read: His explanations of thorny financial processes are surprisingly compelling, his characters entertaining, and even when we know things aren’t going to end well, there’s a distinctly American optimism to his journalism—a sense that a lone genius could come out of nowhere to rescue us from our backward systems.
But what happens when no white knight arrives? Lewis’s latest book, a collection of five previously published essays on the global financial crisis as it struck Greece, Germany, Ireland, Iceland, and California, suggests that while all thriving economies are alike, failing economies fail in different ways. Set in the wake of the “tsunami of cheap credit that rolled across the planet between 2002 and 2008,” Boomerang is a roundup of economic autopsies—but it’s also an investigation of the underlying attitudes that set these various crises in motion.
Boomerang begins in Iceland, one of the first dead canaries in the global mine shaft. When Iceland’s economy collapsed in 2008, a country of just three hundred thousand people was left with more than $100 billion in banking losses—roughly $330,000 of debt per person. Iceland’s self-immolation is notable because it’s an exaggerated version of our own, Lewis tells us: Emboldened by an arriviste investor class, Icelandic banks created the illusion of profit by spending borrowed money on assets they couldn’t afford. Similar stories recur throughout Boomerang: In Greece, after citizens found themselves “alone in the dark with a pile of borrowed money,” they elected to “turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.” In Ireland, the government courted economic crisis by insuring the country’s failing banks; in California, voters perpetuated their state’s budget crisis by refusing to trim ballooning municipal spending. The odd country out in Lewis’s survey is Germany, which, by virtue of its membership in the EU, inadvertently “used their own money to enable foreigners to behave insanely.”
Boomerang makes the case that the tidal wave of virtually free money released at the height of the bubble permitted countries to express their deepest national desires—longings that ultimately proved to be self-destructive. Americans wanted to live in mansions they couldn’t afford; “Icelanders wanted to stop fishing and become investment bankers”; “Germans wanted to be even more German; the Irish wanted to stop being Irish.” And in an effort to account for the distinctive course that the meltdown took in each national setting, Lewis rolls out some armchair sociology: Americans are delusional about their prospects for future wealth, Icelanders have a “feral streak” behind their Scandinavian equanimity, the Irish are desperate to shed their long history of poverty, and Germans—well, Germans are obsessed with shit.
By combining this sort of dubious cultural analysis with more reliable hard reporting, Lewis offers an insightful, if at times disturbingly reductive, vantage on the misadventures of the Eurozone. He also lays bare the grand dream of economic unity, which induced European representatives to gamble on a common economic system capable of subduing regional differences and political antagonisms. The fate of this dream is now the most important question facing the EU, but as Thomas Sargent and Christopher Sims, the newest Nobel laureates in economics, have observed, the Eurozone’s problems are political, not economic. Instead of viewing Europe’s crash—as well as our own—as a casualty of the global economy, Lewis zeros in to blame respective cultures of short-term planning.
In the final essay, Lewis speaks with the mayor of San Jose, California, a city teetering on the brink of bankruptcy even as it boasts the second-highest per capita income in the country. When asked how this happened, Chuck Reed channels his constituency’s mind-set. “We’re all going to be rich,” he says. “We’re all going to live forever. All the forces . . . lined up to preserve the status quo. To preserve the delusion.” But as the delusion rapidly fades, Lewis reminds readers that nobody will save us but ourselves.