2013-07 - Boomerang, by Michael Lewis

07 - Boomerang, by Michael Lewis
WHY I PICKED IT: I've read The Blind Side and Moneyball and enjoyed them both.
ELAPSED TIME: 5 days
RATING: Very Good

Michael Lewis' latest book is a travelogue of countries hit by the Global Financial Crisis.  In his usual style the storytelling is engaging and concepts are easily understood.  That he is able to get interviews with the key players from each of these countries, and sprinkles in stories from others that he encounters, ties the decision-making and the impacts of those (seriously flawed) decisions together in easy-to-read vignettes.

What do people want to do if they and/or their governments are (essentially) given blank checks?

a) Iceland - Their banks loan their citizens $100 billion to buy foreign companies.  Unfortunately, they don't know what they're doing and they buy weak companies that are not worth what they paid for them.

b) Greece - Their government racks up $1.2 trillion in government debt by increasing spending significantly above what they could hope to collect in taxes (and fail to collect that).

c) Ireland - Their local banks loan their citizens 34 billion euros to invest in property in Ireland.  Unfortunately their property is not worth anywhere close to that, and their government decided to bail out the banks.

d) Germany - Their local banks decide to invest overseas ($180 billion in losses and counting)... without bothering to learn what the underlying assets are about, and whether AAA-rated bonds are truly risk free (they're not).

Now the German government gives money to the European Union rescue fund, so that it can give money to the Irish government, so that the Irish government can give money to Irish banks, so that the Irish banks can repay their loans to the German banks.  Awesome.