If We’re So Smart, How Come the Boomerang Came Back To Whack the Stock Market?

If We’re So Smart, How Come the Boomerang Came Back To Whack the Stock Market?
If We’re So Smart, How Come the Boomerang Came Back To Whack the Stock Market?

Interesting watching the stock market gyrate as I read Boomerang by Michael Lewis, the guy who wrote Moneyball and The Blind Side. The EU did not know, when they accepted Greece in 1981, that Goldman Sachs would later teach the Greeks even more sophisticated ways of acquiring and hiding national debt, eventually bringing the Euro to the brink, says Jim Hoaglandin his editorial in The Washington Post.  He agrees with Michael Lewis that historicaly, the Greeks refined milking their government into an art, and they were certainly not going to treat the distant, generous European treasury in Brussels differently.  Hoagland quotes a Friench friend who was in the government that championed Greece’s entry to the EU.  “Bringing Greece in and expecting the budget figures to add up was a romantic policy.”

Michael Lewis is a “disaster tourist,” visiting countries that are on the brink of economic collapse due to spending more than they earned. It is fascinating to see how each country behaves differently when “in a dark room with a pile of money.” I laughed out loud when I finished the chapter on Ireland. The Irish are not like other people!

This frequently-updated graphic from the NYTimes that tracks the European debt crisis clarifies the shifting sands of exposure to crisis that the Euro faces. I had to look up the statistics for the US (missing from the chart). We have about 100% debt-to-GDP and about 10% unemployment as I read the statistics. So much seems to hinge on the credit rating, which we know from reading Michael Lewis’s “The Big Short” is sometimesfanciful, almost magical, and not in a good way. Like magical thinking.

Do you think the Euro will stabilize promptly or deteriorate further?

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