I watched an hour of financial news on CNBC this morning because Michael Lewis was on. He is the author of the blockbuster Liar's Poker from 20 years ago (soon to be a major motion picture, by the way.) Lewis has recently done a bit of "financial disaster tourism" as he calls it and the results are in his latest book, Boomerang.
I bought it for Wilhelm but made the mistake of leaving it lying around and yesterday I did what I said I would not do and started reading it. And couldn't put it down. Fortunately it's short.
In an attempt to figure out what happened to the euro and what is likely to come of it, he went to Iceland, Ireland, and Greece, three of the PIIGS (Portugal, Ireland, Iceland, Greece, and Spain) whose economies are so bad the entire country may go into . . . what do you call it when a country defaults on it's financial obligations and can't get a loan? He finished up in Germany because if help is to come from anywhere, it will come from the Germans.
Lewis will make no friends in Iceland, describing them as he does as belligerant and self-absorbed people. He wanted to answer the question: What made these people think they could run a financial system?
There is a charming lack of financial experience in Icelandic financial-policymaking circles. The minister for business affairs is a philosopher. The finance minister is a veterinarian. The Central Bank governor is a poet. [The Prime Minister], though, is a trained economist - just not a very good one.
They do things differently in Iceland. They looked around them at their stunningly beautiful country and tried to find something they could do to create a modern economy. Tourism. Great, that's one. Fishing. Let's privatize the fish and make some people enormously wealthy. It will trickle down. And it did, more or less.
But the big thing is geothermal energy. It's everywhere in Iceland. What needs a lot of electrical power? Aluminum!
So they went to Alcoa and Alcoa visited and thought it was a fine idea to build a plant in Iceland. They picked their spot and assured themselves the energy was there. Then the project stalled.
Before Alcoa could build its smelter it had to defer to a government expert to scout the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, as an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free, but, as he put it, "we couldn't as a company be in a position of acknowledging the existence of hidden people."
It should have been a surprise to no one when Iceland went bust.
On to Greece, which has peculiarities of its own. In an appallingly corrupt economy, one Greek monastery has the reputation of being the most corrupt entity in the country, so Lewis wanted to interview the abbot.
This monastery is on Mount Athos. Which is not a mountain. It's an island. Except that it's not island. It's a peninsula. The monks have built an enormous wall so that you can't get to the peninsula by land. They allow no women on the island. Not even female animals. Except cats. They allow female cats.
Back in Athens, Lewis interviews a finance minister about how Greece ever got into the European community in the first place when their financial situation was clearly not healthy.
The finance minister stresses that this isn't a simple matter of the government lying about the expenditures. "This wasn't all due to misreporting," he says. "In 2009, tax collection disintegrated, because it was an election year."
What?
He smiles.
"'The first thing a government does in an election year is to pull the tax collectors off the streets."
"You're kidding."
Now he's laughing at me. I'm clearly naive.
And so the three nonfiction books to read in the rest of 2011 are down to two.
2011 No 125
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