Boomerang: Travels in the New Third World gets 4 Stars
but could have been much better. An offshoot of his The Big Short: Inside the Doomsday Machine, he gives us the financial shenanigans of the world during 2002-2008, the time of the financial crisis in the US. Not only the US went crazy with seemingly unlimited credit and low interest rates. First he goes to Iceland, where this small country went bankrupt by trying to play financial ball with the big bad boys of Wall Street and the world. Next he goes to Greece and we get a picture of why they are so screwed up financially. Next stop is Ireland and their rapid rise and fall. I was struck by the differences in national character as each country faces the financial music of terrible decisions. Germany is next on the tour and, surprisingly, were as gullible as anyone. My takeaway quote from the book was from a German banker:For forty years we didn’t lose a penny on anything with a triple-A rating,” he says. “We stopped building the portfolio in subprime in 2006. I had the idea that there was something wrong with your market. I did not have the idea that your market would completely collapse.” He pauses. “It has told something to me. I was in the belief that the best supervised of all the banking systems was in New York. To me the Fed and the SEC were second to none. I did not believe that there would be e-mail traffic between investment bankers saying that they were selling…” He pauses again and decides he shouldn’t say “shit.” “Dirt,” he says. “This is by far my biggest professional disappointment. I was in too much positive way U.S.-biased. I had a set of beliefs about U.S. values.”
So the NY Fed guy is now the Treasury Secretary, the Fed chairman is still there and who knows how the SEC chairman at the time even got the job—at least he is no longer there. No one is punished for what went on. Sick. No one will trust the U.S. for a very long time, if ever. And the world’s finances are in terrible shape still.
The last chapter deals with the U.S., focusing on 2 cities in dire straits, San Jose
and Vallejo, CA
. Probably the scariest part of this short book, he shows us what is in store unless we can change our ways. This is a very short book that covers financial ground without delving too deep. What makes this book important is the window it offers into our future. Or you can ignore this book and be happy up until a certain day arrives.