Book of the Week: "Boomerang: Travels in the New Third World" by Michael Lewis
My second book for the year is "Boomerang", and given the following article “US Debt Is Now Equal to Economy” on CNBC today, I couldn't have read it at a more appropriate time. To anyone that is interested in learning more about the world economic debacle that has been going on for the past few years, I highly recommend it.
The book describes the economic events in Iceland, Greece, Ireland, Germany and finally the US, specifically in California. The way Michael Lewis writes is colorful (aka profanity), humorous, and biting. The events in Iceland, Greece and Ireland would be hysterically funny but given that Lewis just reports what he finds out, the truth seems at once both absurd and scary. I found that when he got to the US, he left me wanting much more, but definitely believing that our economic system (and specifically governmental bodies--cities and municipalities) has some serious economic issues ahead—you only have to read the linked article to recognize this is proving to be true (and by other articles put out on a daily basis as to the economic status of the US and other nations).
After reading "Boomerang" I find it harder to believe statements from some economists that: “a better measure of the nation's debt is how much the government owes creditors, not counting $4.7 trillion owed to future Social Security recipients and other government beneficiaries. By that measure, the debt is roughly a third less: $10.5 trillion, or nearly 70% the size of the economy.”
I am not an economist, but this is the type of thinking that underestimates the economic problems in the US (and other countries, too), an underestimation that is extremely dangerous—what are Social Security and Pensions off the Balance Sheet??? You just have to look at Vallejo, where Lewis states: "Back in 2008, unable to come to terms with its many creditors, Vallejo had declared bankruptcy. Eighty percent of the city's budget--and the lion's share of the claims that had thrown it into bankruptcy--were wrapped up in the pay and benefits of public safety workers." I believe economists shouldn't be so quick to list Social Security and retirement plans as an unimportant factor of our debt.
Read the part of the book where Mr. Lewis discusses the financial situation with the mayor of San Jose and see if the following statement from today’s article appears a little scary—“Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6% a year to keep pace.”
Read this book and see if you have a different view of our economic issues.
Michael Lewis is one of those writers that amuses while he enlightens the reader (the humor, at times bordering being vulgar is appropriately placed). Even though, some the characters are a bit one-dimensional as Forbes states in their review of the book, I look forward to reading some of the other books that Michael Lewis wrote, including The Big Short.
Ultimately, our economic problem (yes it is OUR problem, not just America's but every citizen's problem) is as Lewis states it "a problem with the entire society" and all levels of society has played a role: "from the top of society to the bottom."
Have you read this book? What are your thoughts? Let me know here or on my Facebook page.
Boomerang, Week 2
