Michael Lewis on Iceland, Ireland and Greece is worth reading

Review of Boomerang, the Biggest Bust by Michael Lewis. Penguin Books 2011 I didn’t read Michael Lewis’s The Big Short, or Liar’s Poker about the dark art of investment banking, but this one is surely immensely readable. Lewis is a ‘financial catastrophe tourist’, travelling to Iceland, Greece and Germany interviewing key people in each country’s unique version of the Global Financial Crisis. He obtains interviews with significant players – Prime Ministers, ministers of finance, officials in treasury, hedge fund managers, traders, economists. In Greece he interviewed the head monks of an ancient monastery which had played a such key role in the indebting of Greece. If you can ignore the fact that the writer is an economist who is still believes that banks just lend depositors’ money rather than create the credit (understandable when you realise how hopelessly captured universities are these days by the banks), you will enjoy this romp through the financial stupidity outlining how Greece, Ireland and Iceland got into such trouble. I read the chapter on Iceland twice because there is a move to bring the leader of the protestors Hordur Torfason to New Zealand. Torfason will explain how in 2011 Iceland arrested nine bankers together with the Prime Minister who allowed the madness to take place on his watch by privatising the banks, freeing up trade and lowering taxes. Lewis says “From 2003 to 2007, while the value of the U.S. Stockmarket was doubling, the value of the Icelandic stock market multiplied nine times. Reykjavik real estate prices tripled.” When the bubble burst, Iceland’s 300,000 citizens found they bore some kind of responsibility for the $100 billion in banking losses. The debt was 850% of their GDP. Lewis has a nice way of writing mixing the factual stuff with well painted personal profiles and vivid stories. Warning: If you want to read this book in a public place, people will think you are reading porn. The sensual cover features wine glasses and a prostrate woman in a tight gold dress.      

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