by Michael Lewis
Adult Nonfiction 330.905 L
Michael Lewis begins his new tale of economic despair by reflecting on his previous work, The Big Short, and the man he left out of that book, Kyle Bass. Kyle, like the investors Mr. Lewis chronicled in The Big Short, foresaw our 2008 economic crisis and made a fortune off of it. Lewis, in retrospect seeing how right Mr. Bass was, heads back to Dallas to ask ‘What’s next?’ His answer, that countries around the world will go bankrupt and default on their debt, sends Michael Lewis to Europe as he tries to find out why this is happening.
He begins in Iceland and finds that a country whose economy was once centered on fishing has transformed into a nation whose economic goals focused on acquiring as many foreign assets as possible. When those assets lost value, Iceland went bankrupt. He travels to Ireland to find a nation that decided to make financing real estate projects ridiculously easy. This of course led to overvalued assets, a huge bubble and eventual crash (Sounds familiar, doesn’t it?).
Lewis then makes his way to the current Ground Zero of national economic failure, Greece. It turns out that Greeks really enjoy it when their government hands out as much money to them as they can. The problem with that is a population averse to paying for any of this reckless government spending. The violation of tax law is so rampant in Greece, it is essentially ingrained into the culture. This leads him to Germany, who is now essentially in charge of fixing Europe. They aren’t innocent in this whole mess, having provided the financing for many of the failed investments across Europe.
The author finally heads back to the U.S. and details the municipalities, particularly in California, that are starting to go bankrupt. The biggest reason for these financial shortcomings? Outsized pension obligations. The author tries to end on a positive note by saying that all of these problems are solvable. While this may be true, it is unlikely that the necessary sacrifices will be made and our problems will continue to be pushed off for future generations to handle. This can only happen for so long, so the question becomes: Where does it end?
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