Boomerang
As Pogo once said, "We have met the enemy and he is us." The tsunami of cheap credit that rolled across the planet between 2002 and 2008 was more than a simple financial phenomenon: it was temptation, offering entire societies the chance to reveal aspects of their characters they could not normally afford to indulge. Icelanders wanted to stop fishing and become investment bankers. The Greeks wanted to turn their country into a piñata stuffed with cash and allow as many citizens as possible to take a whack at it. The Germans wanted to be even more German; the Irish wanted to stop being Irish. Michael Lewis's investigation of bubbles beyond our shores is so brilliantly, sadly hilarious that it leads the American reader to a comfortable complacency: oh, those foolish foreigners. But when he turns a merciless eye on California and Washington, DC, we see that the narrative is a trap baited with humor, and we understand the reckoning that awaits the greatest and greediest of debtor nations. - Publisher.
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What Hacker News says
- That populist narrative was popular on social media, but the truth is the exact opposite.
Germany had relatively reasonable debt and government spending relative to taxes.
Italy had entirely dysfunctional spending and Greece was essentially a house of cards built on fraud. Without the Eurozone, Greece would have faced bankruptcy and/or hyperinflation, but instead they got bailed out by the rest of the EU.
Check out Michael Lewis's book Boomerang that covers the distinct problems Iceland, Ireland and Greece faced. The TL;DR on Greece is a country with massive social spending and tiny tax receipts, that took out massive and entirely unsustainable debt thanks to the other Euro countries and then inevitably was unable to pay it back.
Germany was the hero who saved the EU from complete implosion, but instead of being thanked they get misplaced anger for being the only responsible ones in the room.
- Not an expert in this domain but I'll cover the basics: ecurities are a euphemism for stocks and similar. Banks have been loaning out the money you deposit since the beginning of time; it's how they make money. They don't keep all the cash that people have deposited on hand, which is why a "run on the bank" was problematic in the past. They basically keep enough cash around ("reserves") so that the average withdrawals don't get them into trouble. And yes, you are certainly not choosing the investments that the bank makes with your money. And they're not "your" investments: the bank pays you a small fee (3% in this case) and then takes risks with your money to make a higher return and keep the difference.
I'd recommend reading up on the Federal Reserve (The Creature from Jekyll Island), the modern financial system (any of Michael Lewis's books, especially Boomerang and The Big Short), and maybe the first global banking families (The Medicis: Power, Money, and Ambition in the Italian Renaissance). We're talking about the power structure of the world here and it's good to be informed on the main points.
- The Power of Habit - Charles Duhigg (highly recommended)
Steve Jobs - Walter Isaacson (recommended)
Modern Romance - Aziz Ansari (audiobook recommended)
Boomerang - Michael Lewis (great if you have a light interest in macroeconomics)
Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (recommended)
Outliers - Malcolm Gladwell (recommended)
Joyland - Stephen King (great, short read)
Creativity, Inc. - Ed Catmull (Parts on the history of Pixar were interesting)
- To anyone interested in this article, I would recommend reading the book Bommerang: Travels in the New Third World by Michael Lewis: http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0...
- Another great book to read is Michael Lewis' Boomerang: Travels in the New Third World (2012) which is a compilation of articles on the 2008 recession that he wrote for Vanity Fair magazine.
The one on Iceland is called "Wall Street on the Tundra - Iceland" and you can see its preview here: http://www.vanityfair.com/culture/2009/04/iceland200904
(The complete article is behind Vanity Fair's paywall.)
- I cannot recommend the book Boomerang by Michael Lewis enough. He examines what several countries (Greece, Ireland, Iceland, Germany, the United States) did between 2000-2012 when they were allowed to barrow vast sums of money with little oversight. He's a great narrator and it's an overall insightful book.
Towards the end of the book he examines what a number of American cities did when they were allowed to barrow vast sums of money with little oversight. Thumming through it now he covers Vallejo and San Jose. TLDR would be they bankrupted themselves with pensions and tax cuts.
Oh and it's a light read too. And it has an Arnold Schwarzenegger interview.
