The fire alarm goes off as Michael Lewis descends in the lift from his hotel room. As a security guard warns nervous-looking guests that the screaming sound was not a drill, it seemed the perfect introduction for a man whose new book about Europe’s debt crisis is flying off American shelves.
“The world does seem to be falling apart,” Lewis says. Even the briefest glance at the headlines would seem to confirm that opinion. As civil unrest flares in a near-bankrupt Greece and European leaders struggle to avert “contagion”, it is hard not to worry that the Great Recession caused by the collapse of debt-laden banks might – horribly – be just a prelude to the even greater disaster of debt-laden countries toppling like dominoes.
That cheerful scenario is precisely the subject of Boomerang: Travels in the New Third World, Lewis’s jaunty yet scary account of his travels in four countries at the heart of the crisis. He visits Iceland to investigate just how a tiny island nation in the middle of the North Atlantic could go through one of the most spectacular banking boom-and-busts in history. He trawls through the sorry tale of the Irish real estate bubble and the epic tragedy that is Greece before examining Germany: Europe’s reluctant rescuer. But finally, and harrowingly, he ends his journey back in the US, warning that Americans have little reason to feel safe from the danger. Instead, they are simply last in line.
To put it mildly, Lewis – whose position as a former bond trader gives him more than just journalistic insight – sees big trouble ahead. “There is going to be a change in the idea that each generation of Americans is going to live a lot better than the one before it,” he says. “Imagine an America where you have got a long recession. It does not become a Great Depression, but you get negative growth or low growth or no growth for a long time and high unemployment. What does that generate? It generates anger.”
Indeed it does. Just a 20-minute taxi ride south from the fancy New York hotel where Lewis is tucking into high quality Japanese food, the Occupy Wall Street movement has now camped out in a downtown Manhattan park for more than three weeks.
From small beginnings, the protests have spread to dozens of American cities. There have been hundreds of arrests and speculation that a new political movement – a sort of Tea Party of the left – is being born. Lewis welcomed the phenomenon. “If you ask the average Wall Street boss what he thought of those people, he’d say it was a joke,” he says. “I don’t think it’s a joke. I think there is actually an incredible frustration and legitimate anger in the country that arises from the unfairness of the treatment of the financial sector.”
That treatment, Lewis says, is the real joke. He points out how Wall Street banks, having helped cause the Great Recession and then been bailed out to the tune of hundreds of billions of taxpayer dollars, have now set about gutting attempts to reform their industry. “It is outrageous. It is totally outrageous and it is so obvious that you can say it until you are blue in the face and you think there’s no hope for change in the world. But now this protest in lower Manhattan happens and it seems to me there are a lot of people who share the sentiment.”
Of course, one person who is not suffering is Lewis himself. Boomerang is one of the most spectacularly well-timed books in recent publishing history, and Lewis is rapidly becoming one of America’s most successful modern writers. His first work, Liar’s Poker, was an account of his disillusioning time as a bond trader in the late 1980s. It was intended as a cautionary tale of foolish excess, though, perhaps presciently, Lewis was shocked when some young graduates saw it more as a sort of handbook to working in the finance industry. But Lewis, who now covers business issues for Vanity Fair, has never restricted himself to just finance. His book about baseball, called Moneyball, has just been turned into a film starring Brad Pitt.
Another tome, about American football, featured material that eventually became the Oscar-nominated movie The Blind Side. He is currently working on a potential TV show for HBO. Such is Lewis’s success that New York magazine ran a profile of him this week under the headline: “It’s good to be Michael Lewis.”
Not that it goes to his head. He speaks in the chatty, friendly style of a professional journalist, with an accent hinting at his southern roots in New Orleans. He exudes a charm and affability that is present throughout the pages of Boomerang. It allowed him to travel to the destinations on his “economic disaster tour” and meet everyone – from the prime minister of Iceland, to sneaking into the Greek monastery where the monks’ dodgy financial shenanigans inadvertently helped bring the Greek crisis into being. Yet, far from kicking him out, the monks ended up happily showing him around. He is good company throughout the book, though he has received a lot of flak for indulging in national stereotypes – both expected and unexpected – as a sort of explanation for why different countries made the mistakes they did. In particular, he has been slammed for a lengthy examination of why German attitudes towards money and human excrement mirror each other (a public sense of order masking a secret fascination with the dark side, since you ask).
But such sideshows are merely that: a distraction from the main theme of the book, which is simply that the European crisis now unfolding is eventually heading for America’s shores. To illustrate the point, Lewis opens the book with an introduction to one of the most unnerving characters in modern American finance: Texan hedge fund manager Kyle Bass. Lewis found Bass while working on his previous book on the banking crisis, The Big Short. He interviewed Bass in 2008 after realising he had made a fortune predicting the bursting of the American real estate bubble. While everyone else had piled in to the boom, Bass had bet against it, and it had earned him a fortune. But Bass by then had moved on and would only talk about the coming debt crisis that would, he predicted, eventually overwhelm Europe, probably starting in Greece.
And what was Bass’s investment advice to prepare for this? It was to buy guns and gold; and on a second visit in 2011, Lewis found Bass had not changed his mind. Indeed, he had purchased 20m nickels, solely for the value of their metal. It is scary stuff, especially as each day brings fears of a Greek default another step closer. Though even Lewis shies away from saying that Bass is going to be right about everything. His vision of an almost literal doomsday scenario is not one Lewis shares. “It does not necessarily mean sitting on top of your pile of gold and shooting people who get near your broccoli patch,” Lewis says. He believes the US government will act to stem the crisis heading its way. It may mean tough times, even a fundamental realigning of what Americans expect out of life, but it will not be a Greek-style imminent collapse.
“Americans are pretty self-preservatory,” he says. “The crisis will create pressures here that will arrest the crisis before it causes the US treasury to stop paying its bills.” But then Lewis pauses: “I think. I don’t know.” By then the hotel fire alarm that had greeted Lewis’s arrival had long been turned off. There had been no real fire. Hopefully, the same will be true for some of the direst warnings in his book.Comments (0)