Economic sense and nonsense at Summit County Libraries
December 27, 2012
Did you know that both “Moneyball” and “The Blind Side” were bestselling books before they became hit movies? Or that they were written by the same author? Or that Michael Lewis’ journalistic forte really lies in finance and economics? Or that he graduated cum laude in art history from Princeton before receiving a Master of Arts from the London School of Economics? No wonder the guy is so smart and writes so well. He is also as funny an author as you’ll ever read.
“Liar’s Poker” (1989) was intended to be an expose of the rampant greed and risky financial maneuvers on Wall Street in the years during Lewis’ first job there. Much to his dismay, college students treated it as a how-to-get-rich-quick manual written by a Wall Street insider. Needless to say, his first book-length publication sold a lot of copies, and more successes soon followed, but it’s “Boomerang: Travels in the New Third World” (2011) that has me anxiously awaiting his next book.
Lewis has a knack for finding individuals whose financial mishaps dramatically and hysterically epitomize the larger economic problems at issue in today’s fragile world of international finance. Iceland’s financial gurus traded assets amongst themselves at inflated values, thereby creating false capital. Naturally it all went belly up; the gurus went south; and even today the bankers don’t know what went wrong. Well, a successful cod fisherman sold his boat and nets one day and the next day, sans training, became a banker trading international currencies, on spec of course. Duh! The Irish economy tanked too, thanks to the collapse of its real estate development. (N.B. Liberty Media’s mogul John Malone just bought an Irish estate-cum-castle for 7.23 million euros, about $9.5 million; in 2006 it had sold for 25 million euros. Q.E.D.) One irate developer drove his cement mixer from Galway to Dublin and parked it, disabled, in the middle of the gates of Parliament. Others became national heroes by throwing eggs at corporate bigwigs during stockholders’ meetings. The demise of female mud wrestling clubs in Germany’s largest red-light district is a key to the soft underbelly of Germany’s economy, and in San Jose, Calif., some municipal employees can make more in retirement than on the job. Lewis makes sense out of all this nonsense.
The chapter on Greece is my favorite, because my wife and I were living there when the you-know-what hit the fan. Greece is the example par excellence of an economy in shambles: its public sector is bloated and overpaid; early retirement is a given; and the salary year sometimes extends to 13 or 14 non-existent months. Everyone who can cheat on his or her income taxes does so and if caught simply bribes the tax collector. Even godly men scam the government, and that story is Lewis’ tour de force.
Father Ephraim is the abbot of the run-down Vatopaidi monastery, and Father Arsenios, a financial genius, is his number two. Lewis compares them to Ken Lay and Jeff Skilling respectively, but they’re much better at gaming their government. In the monastery’s archives, the abbot found a 14th century deed, granted by the Byzantine emperor to the monastery, to a lake and its environs in northern Greece. Fast-forward to the late 20th century, and the property has been designated a nature preserve by the Greek government. The Fathers somehow traded the essentially worthless lake and land in northern Greece to the government for prime commercial property and its rents, worth anywhere from many millions to billions of dollars. Lawsuits abound, but the monastery is being handsomely refurbished. Apparently the monks did more than merely twist arms, and to this day no one knows exactly how the switch was made. Lewis is at his best in this chapter.
No matter which Lewis book on money you choose to read, you’ll learn much about economics and laugh while doing so.