Ephemeris of the Mind (Book Review) Boomerang: Travels in the New Third World
Time to read: 3 min read
Book Cover
Yet since the year 2000 a lot of people had behaved as if each day would be sunnier than the last. The Irish had discovered optimism.
Past Michael Lewis reviews:
Review
Lewis puts on his disaster tourist hat and travels around Europe to witness the downfall of former financially stable countries after the 2008 financial crisis. The three main countries on his list are Iceland, Greece, and Ireland. Lewis also fits in Germany and (of course) the US as well.
Lewis analyzes the Icelandic bank failures which were cartoonishly large. He dives deep into Icelandic culture, in particular their view of masculinity and risk-taking. I found very interesting the anecdote about Icelandic fishermen trading permits as opposed to actually fishing, resulting in only the most risk-tolerant fishermen actually fishing. Lewis chalks up Iceland’s failure to Icelandic bankers being overconfident in their (unproven) abilities.
The Greek failure is less caused by private sector mismanagement and Lewis attributes the failure to the poorly run government which did not enforce taxes and a legal system that was extremely slow and inefficient. Honestly, it’s surprising that Greece was allowed into the eurozone at all. Lewis mentions that Greeks are usually friendly people but societal trust is basically non-existent and Greeks adopt a very game theory mindset where they optimize for personal gain.
Ireland is an example that I haven’t really heard of before reading this book. The chief culprit, according to Lewis, was the Anglo Irish Bank, with the real estate collapse being the catalyst. What’s very interesting to me is that, unlike almost every other country which viewed the failed banks with disdain, bailing out the banks in Ireland was somewhat politically popular and the Irish people seemed to shoulder the banks’ burdens willingly.
Lewis’ analysis of Germany is interesting. On one hand, they too were victims of the financial collapse, as they have been sold risky assets by American sales people. Lewis hypothesizes that the German disposition to take the rules at face value and blindly trust authorities (such as the credit rating agencies) caused them to fall for the American sales pitches. On the other hand, Germany is much better off than the other countries in the eurozone, such as “deadbeat” Greece. It thus falls to Germany to shift through the scheiße and rescue the eurozone.
In the US analysis, Lewis brings up the dire situation with municipal finance, in particular the shortfall caused by overly-generous compensation to unionized public service employees. Of course, places in California are the examples that Lewis uses.
If you enjoy Lewis’ sardonic writing style then you’ll find this book entertaining. I’m not too sure how truthful Lewis’ cultural commentaries are, but the financial and business commentaries are valid and well-researched.
Conclusion
Interesting look at some of the fallout from the Global Financial Crisis.