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Boomerang Book Review
Since I rarely travel, I don't have much experience planning ahead for my trips. Such was the case last Sunday evening, because as I headed toward the entrance of the airplane, I realized I didn't have a single bit of reading material.
I don't do well without something to read. I'm not going to watch a movie, and God knows I'm not going to spend four hours reading the in-flight magazine. My panic subsided when I saw the "Wi-Fi On Board" sticker on the outside of the jet. I was saved by Go-Go Wireless.
When heading home the next evening, as I headed toward my gate, I stopped myself and turned around to go to the book shop, because I wanted to make sure I had something interesting to read if the plane didn't have WiFi (which, it turned out, it did not).
Most airport book stores are crammed with the very latest business books which promise to make you a better worker at whatever job you've got, guaranteeing you a much bigger salary. ("Good to Great", "Emotional Equations", "Entreleadership", "Switch", and a myriad of other worthless drivel). I was heartened to see Michael Lewis' Boomerang, which is something I knew would interest me. So that's what I bought.
The book is essential a layman's overview of the sovereign debt crisis. As with Lewis' other books, Boomerang was a pleasure to read.
Having now finished the book, I can tell you the thing which stood out the most for me was that most of the descriptions about the Euro crisis could easily be slipped into today's newswire. In other words, even though the situation being described represented very old news from nearly a year ago, it still comes off as absolutely timely, because nothing has changed! The chapter on Greece in particular reads like it was just "ripped from the headlines" of ZeroHedge.com
The chief angle that the book takes is the characterization - - generalization, some would say - - of countries that had some part in past or present debt crises. The countries in question are Iceland, Greece, Ireland, and Germany. The portraits Lewis paints are fascinating. Many would describe these characterizations as two-dimensional, but so be it...........it made the pieces of the puzzle fit together much more nicely for me, and frankly, it makes the situation with the Euro a lot easier to comprehend.
Bluntly stated, Lewis portrays:
+ Iceland as a miniscule country of 300,000 seriously inbred people that should have really stuck to fishing;
+ Greece as a country of cheats and crooks whom absolutely detest one another;
+ Germany as the fastidious overlord of all of Europe (and the Germans themselves as having a deep and abiding interest in their own feces. We're talking really interested, people);
+ Ireland as a depressing bog where it never stops raining, full of heavy drinkers that went insane building up vast real estate developments that will never benefit from actually being occupied.
I probably make the book sound nastier than it really is, although most of the 1-star reviews on Amazon (which are in the minority - - the book is very highly-rated) do make a stink about an "ugly American" approach to viewing these other nations and their people.
Reviewers were also none-too-thrilled that the book isn't really original, but is instead a compendium of articles that Lewis wrote for Vanity Fair. That doesn't really bother me. The book hangs together pretty well, although I've got to say that - - as with Malcolm Gladwell's books - - things do seem to peter out near the end.
Another takeaway for me - - and I don't think he had a name for it in the book, but I'll just to capture it here - - is the notion that once a certain level of debt is reached, it simply doesn't matter to anyone anymore. If you loaned a kid in college $100, you'd be a little worried. If you loaned him twice as much, you'd be twice as worried. But if for some reason he owed you ten million dollars (and he wasn't rich), the doubling his debt to you wouldn't really mean anything, because you're never going to get it back anyway. He might as well owe you a trillion.
Something very similar right now is going on with sovereign debt. Just this week, the payroll tax cut was extended, and I read it put an average of $40 extra for each worker "per paycheck" (whatever that means - they never state the timespan) and that it would add $100 billion to the debt. By most standards, $100 billion is a lot of money (for context, that's the optimistic value of Facebook), but no one seems to give any notice, mainly because intuitively I don't think anyone believes any of this money will ever be paid back.
On the whole, I'd recommend the book. It was a breezy, engaging read, and I believe I can view the situation with the Euro with more clarity and understanding now. I'd suggest you pick up a copy.
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Here is an NYT review of same book from six months ago
typical for Tim, great insights in hindsight just like is charts
beware
http://www.nytimes.com/2011/09/27/books/boomerang-by-michael-lewis-revie...
The only problem I have with "Boomerang" is that the section on Kyle is so short (just the Preface). I want Lewis to do a book only on Kyle.
The book is easy to read, quick, funny and talks how the Icelanders where blowing up Range Rovers to collect insurance in the middle of the night.... I have found the book enlightening but many of us Zero Hedge Readers already know whose behind what.....
Based on the impressive level of detail about national character, I'd say the USA is some kind of blend of Greece/Ireland, so it'll be neat to see how long it takes for their woes to appear here.
Ja! Have you seen the toilets with the shelf for the poop to land on and be examined before flushing?
http://www.banterist.com/archivefiles/000212.html
http://medienkritik.typepad.com/blog/2006/01/german_inspecti.html
http://asecular.com/~scott/misc/toilet.htm
Then this guy is holding back big time.....
http://www.zerohedge.com/news/europe-caption-contest
And LeGarde looks like she can't get anything out to inspect in the first place.
Yeah, if a college kid owes me a trillion dollars, I would probably assume that he won't pay me back in real cash. In fact, I think I still owe my sister about a billion from a Monopoly game we played a few years ago... oh, shit, I forgot about the interest on that bill... eh, who cares, I'll just write out another IOU to her.
On the other hand, if the same college kid owes me, say, a thousand, and comes back for more cuz he blew it on pizza and beer, why would I lend him more? The bank is now closed until he comes up with the cash to pay it back. The fact that he has to work an entire summer at a minimum wage job to get a grand to pay me back is precisely the reason that I will not lend more. There is no way I am throwing my hard-earned cash at a bottomless pit. The difference between a thousand and two means nothing to him, because he knows that he will never pay it back. The diffence to me is that I can use that same two thousand to do any number of things that I need to do, productive or not. But he ain't getting a dime more from me.
The whole idea of unpayable loans only comes up when the currency is worthless. If I lend you a billion dollars (I have it, really! Swear!) that has no value outside of the paper it's written on, I wouldn't really care if I don't get it back. I think that's the little tell-tale in the whole charade. The fiat system is so worthless that countries and banks are throwing it around, knowing that they can always get Benny to print up a little more when they are short on payday. Nobody throws gold or silver around like that. Nobody writes off a loan of 100,000 ounces of gold because it has actual value. Paper and digital representations? Not so much...
As a Federal Reserve PhD Econ would put it, "Given that the marginal cost of producing another digital dollar is zero, it follows that its marginal value must asymptote to zero as well."
If autumn leaves could be used as currency, we'd all be millionaires, but there'd be a terrible shortage of mulch.
True 100 Billion just does not seem like that much anymore on the grand scale...but since we on average make no more than we did 10 years ago we all know that 100 Billion IS still a lot of money. When the dust settles the 100B will not be paid back but the guy who gets his hands on the 100B now can make life rather better for himself "on the other side' of the coming hyperinflation. 'When Money Dies" recounts how those in the know did just that. Some folks from a country that had just experienced HI saw immediately what was happening in Weimar and played the game correctly. They bribed bankers for big loans and invested wisely. They did well....but they got caught. Moral: play the game right, know the rules of HI, don't get caught. See...history can be interesting.
Another life elevating book as US citizens are so able to deliver.
Read it, if you dont, you'll regret it the day you die.
Nah, I would worry over each incremental increase in the loan balance to a college kid/sovereign nation...and stop loaning when the debtor's solution to his/its debt crisis was to borrow more money. I'll whip out some austerity on 'em.
I'm looking forward to some movie reviews, but perhaps without reiterating the film-makers rascist views.
If this Tim Knight has summed up Michael Lewis' book correctly, it seems to be just another copy of 'Simplify your life'. Too bad Lewis seems not interested enough in his own shit to flush it down by himself.
"Iceland as a miniscule country of 300,000 seriously inbred people"
Ah.. so THAT'S why there are no vowels in their language.
The old saw is that if you owe a banker 10Gs, he owns you; it you own a banker 10 million, you own him. Never so truer than with the current state of the CRE market, as those 5 year balloon notes taken out at the peak to finance commericial real estate are now rolling over without a peep, even as the buildings are vacant and worth less than 1/2 the value of the construction loan.
"(and the Germans themselves as having a deep and abiding interest in their own feces. We're talking really interested, people)"
Literal fact.
Nein!
Ja! Have you seen the toilets with the shelf for the poop to land on and be examined before flushing?
http://www.banterist.com/archivefiles/000212.html
http://medienkritik.typepad.com/blog/2006/01/german_inspecti.html
http://asecular.com/~scott/misc/toilet.htm
Not only seen it, but had the experience cited by the blogger:
Does this horrrible dilemma only happen to clueless foreigners? I didn't stay around to find out!
It comes from pork being the staple meat in the german diet.... gotta make sure that worms are not present...
At least this is what my German colleagues told me a few years ago...
The courtesy flush is an non-existent concept given the toilet design....
I read it and thought it was very funny and bang on.....
Bought it at an airport no less....