Michael Lewis has got to be one of the best story tellers when it comes to the world of high finance and economic crises. I recently read Boomerang which is another one of his great books; it’s a fairly short book and you can breeze through it in an afternoon or so.
The book has only 5 chapters, and each chapter looks at a country which found itself in the center of financial turmoil, and the 5 countries are Iceland, Ireland, Greece, Germany and the US.
In typical Lewis style, the book is devoid of much financial jargon, is easy to read, consists of plenty of colorful characters, and is full of anecdotes that keep you hooked.
Lewis takes a look at every country, and writes how they dealt with the easy money that came to them during the boom years, where they invested, and then how they dealt with the situation after the crash.
In addition to that the stories that Lewis tells about these countries are really something else. Take this one for example:
What might Icelanders be especially suited to do? No one thought that Icelanders might have some natural gift for smelting aluminum, and, if anything, the opposite proved true. Alcoa, the biggest aluminum company in the country, encountered two problems peculiar to Iceland when, in 2004, it set about erecting its giant smelting plant. The first was the so-called hidden peopleâ€”or, to put it more plainly, elvesâ€”in whom some large number of Icelanders, steeped long and thoroughly in their rich folkloric culture, sincerely believe. Before Alcoa could build its smelter it had to defer to a government expert to scour the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free, but, as he put it, â€œwe couldnâ€™t as a company be in a position of acknowledging the existence of hidden people.â€ The other, more serious problem was the Icelandic male: he took more safety risks than aluminum workers in other nations did. â€œIn manufacturing,â€ says the Alcoa spokesman, â€œyou want people who follow the rules and fall in line. You donâ€™t want them to be heroes. You donâ€™t want them to try to fix something itâ€™s not their job to fix, because they might blow up the place.â€ The Icelandic male had a propensity to try to fix something it wasnâ€™t his job to fix
The stories about Greece will sound uncomfortably familiar to Indians as there are several similarities, though you get a feeling that the Greek went way overboard with their issues.
Though it’s not all similar – take this for excerpt for example. Nobody in India joins the government sector for money, but the schooling system sure sounds familiar.
The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greeceâ€™s rail passengers into taxicabs: itâ€™s still true. â€œWe have a railroad company which is bankrupt beyond comprehension,â€ Manos put it to me. â€œAnd yet there isnâ€™t a single private company in Greece with that kind of average pay.â€ The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finlandâ€™s. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something.
There are several such specific examples from other countries as well, and they are all a lot of fun to read, though you get the feeling that the situation has been over simplified to present a simple theme built on human vices and how those vices affected people in different countries.
Boomerang is fast paced and talks about the human side of the financial crisis – of people getting overpowered by their vices and spending money that they didn’t have and blaming others when things go wrong.
I doubt that this will offer you any new insight on the current economic crisis if you have already been following this story for the past 3 years or so, but it does an absolutely great job of stringing together a series of stories to come up with a book that gives you a quick primer on what happened in each of these countries and how differently they reacted to the situation due to differences in their national character.