In 2008, the satirists at the Onion released a straight-to-video comedy that included a faux news segment on little-known national stereotypes. Dutch people love speaking to telemarketers. Puerto Ricans can dangle from steel beams for hours on end. Irish men have enormous nipples. And poncho-clad Peruvians always swoop in at the last second and save the day.
Well, turns out they missed a few. In “Boomerang,” his latest book on the planet’s seemingly endless financial implosion, journalist Michael Lewis drops in on Iceland, Greece, Ireland and Germany, and chronicles the mess they’ve made of their markets and money. Yet even as “Boomerang” captures the essence of the international economic crisis — as a sort of travelogue version of Lewis’s must-read “The Big Short” — it also offers an odd collection of searing, sometimes funny but mostly head-scratching judgments and stereotypes about the offending countries. Lewis not only shows us what the Greeks and Icelanders and Irish and Germans did to get into trouble, but he attempts to unveil their souls, too. And it’s not a pretty sight.
Lewis’s financial-disaster tourism begins in Iceland, where “an entire nation without immediate experience or even distant memory of high finance had gazed upon the example of Wall Street and said, ‘We can do that.’ ”
And for a while, it seemed they could. From 2003 to 2007, Iceland’s banking system, stock market and real estate sector all boomed. But it was an illusion, a web of cronyism in which bankers lent each other vast sums to buy stuff — Beverly Hills condos, private jets, Elton John singing at your birthday party — at insanely inflated prices. It was all among friends, because, as Lewis writes, Iceland “is less a nation than one big extended family.”
Then the bubble burst and the banks imploded, collectively leaving each Icelander on the hook for some $330,000 in banking losses. The country’s problem, according to Lewis, is one of national character. These aren’t a bunch of sweet Scandinavians, he warns, but a people with “a feral streak in them, like a horse that’s just pretending to be broken.” (The evidence is that several men bump into the visiting Lewis on the street, without apologizing.)
The Icelanders thought they were special — during the boom, the president gave speeches extolling “our heritage and training, our culture and home market” — but they weren’t. Lewis pokes fun at the lack of sophistication among the country’s financial elites, not just the fishermen turned investment bankers, but the philosophers, veterinarians and poets making up the government’s economic team.
These men might have saved themselves, however, if they had gotten out of the way and let Iceland’s women run the show. “One of the distinctive traits about Iceland’s disaster, and Wall Street’s, is how little women had to do with it,” Lewis concludes.
Greece, his next stop, offers the book’s most fascinating tale: how the kindly monks managing the millennium-old Vatopaidi monastery jutting out over the Aegean Sea became the nation’s poster children for greed and corruption.
Father Arsenios and Father Ephraim — whom Lewis compares to Enron execs Jeff Skilling and Ken Lay — managed to acquire ownership rights to a lake and somehow swapped it for much more valuable government land in a murky deal that, once revealed in the national press, outraged the public. (Lewis’s description of the monks negotiating with a Citigroup exec turned Finance Ministry official is alone worth the book’s $25.95 price tag.) Thanks in part to cozy ties with the prime minister’s chief of staff — they heard his confession, after all — the monks ended up building a commercial real estate empire worth about $1 billion in an effort to restore Vatopaidi to its former glory.
Greece’s innate corruption is corroborated by anonymous interviews with two whistleblowing tax collectors (cheating on your taxes is a “cultural trait” in Greece, one lamented) and by Lewis’s account of how Greek officials lied their way into the European Union by doctoring their economic data. “Government statisticians did things like remove (high-priced) tomatoes from the consumer price index on the day inflation was measured,” as well as move stuff such as pensions and defense spending off the books. That’s how a deficit greater than 10 percent of GDP came in under 3 percent — and how the Greeks joined the E.U. club.
For Lewis, these episodes get to the heart of the country’s character: Greeks are selfish. Greeks are insular. Greeks can’t say anything nice about each other. “The epidemic of lying and cheating and stealing makes any sort of civic life impossible,” he writes. As for whether Greece will pay its debts, or will default and pull Europe deeper into crisis, it is “really a question of whether Greece will change its culture” — and he’s not optimistic about that.
Why jet around the world and pass judgment on nations and populations after short stays here and there? Because, Lewis says, the crisis created a unique occasion for international psychoanalysis. “The tsunami of cheap credit that rolled across the planet from 2002 to 2007 . . . wasn’t just money, it was temptation,” he explains. “It offered entire societies the chance to reveal aspects of their characters they could not normally afford to indulge. Entire countries were told, ‘The lights are out, you can do whatever you want to do and no one will ever know.’ ”
The moment the money is taken away is equally revealing, Lewis writes. After Ireland’s economic boom of the 2000s — when the chronically pessimistic Irish people “discovered optimism” — a precipitous collapse and massive bank bailout did not lead to Greek-style protests or American-style town halls or Wall Street marches. Ireland was the first European nation to watch its banking system crumble, but its business-friendly conservative party stayed in power until early this year. Also, Lewis marvels, aside from an egg-thrower at a shareholders meeting of the Irish bank AIB, and a property developer who adorned his cement mixer with anti-banker slogans and left it at the gates of Parliament, there was not much protest.
Lewis chalks up such acceptance to the long and intimate relationship between the Irish and wretchedness. “They’d gone from being abnormally poor to being abnormally rich without pausing to experience normality,” he writes. So when the boom ended, it was painful, but at least historically familiar.
The weirdest of all the trips — or at least Lewis’s weirdest analysis — has to be Germany. The author wallows in a supposed German obsession with fecal matter, then uses it as a metaphor for the nation’s role in Europe’s financial turmoil: “Germans longed to be near the [expletive], but not in it. This, as it turns out, is an excellent description of their role in the current financial crisis.” Okay.
Germans did not go nuts during the global credit boom. They did not spend beyond their means and run up massive deficits; citizens did not buy a bunch of overpriced assets they couldn’t afford; former government financial officials did not dash off to make bundles at investment firms. But that doesn’t mean that they were blameless or that they won’t suffer, Lewis notes. Not only did German banks become top creditors for all those spendthrift European nations, but they also lost a pile in America’s subprime mortgage debacle, purchasing assets they thought were safe. Why? Because, Lewis writes, Germans believe in rules, not just excrement.
“The Germans took the rules at their face value: They looked into the history of triple-A-rated bonds and accepted the official story that triple-A-rated bonds were completely risk-free.” Even when they weren’t. Lewis quotes a Wall Street trader, circa 2007, explaining who was still buying the securities he was peddling: “Stupid Germans in Düsseldorf.”
Now Germany’s “preternatural love of rules” will come into play as the world waits to see if it bails out the E.U. After all, when the Germans signed on to the euro, they didn’t think they were signing up to be Europe’s insurance policy — but what did they know? “The same instincts that allowed them to trust Wall Street bond salesmen also allowed them to trust the French, when they promised there would be no bailouts, and the Greeks, when they swore that their budget was balanced,” Lewis posits. Those silly Germans — so gullible!
Lewis has a wonderful talent for distilling complicated stories, whether bond trading in New York (“Liar’s Poker”) or a baseball-analysis revolution in Oakland (“Moneyball”), in simple terms and with telling detail. “Boomerang” — adapted from a series of essays he wrote for Vanity Fair — doesn’t disappoint on this score.
Everyday Irish people speak in “basis points” rather than percentages, indicating how deeply finance has penetrated their lives. The vacancies in Reykjavik’s posh 101 Hotel — “the sort of place bankers stay because they think it’s where the artists stay” — embody the city’s sudden collapse. And the conundrum of ascetic Greek monks somehow getting fat on a menu of cucumbers and raw onions suggests that not all was as it seemed.
But the book’s incessant moralizing and stereotyping may leave readers wondering why Lewis, beyond traveling throughout Europe, also took the path from master storyteller to itinerant scold. “Boomerang” is full of wonderful characters and unforgettable scenes. But it’s also preachy, even angry, and the mix is as distracting as it is enlightening.
Travels in the New Third World
By Michael Lewis
Norton. 213 pp. $25.95