Thu, Oct 13, 2011 - Page 9 News List

European debt crisis heading to the US

Former Wall Street bond trader turned author Michael Lewis warns in his latest book that there is big trouble ahead for the US — and that Americans are right to be angry, very angry

By Paul Harris  /  The Guardian, LONDON

Illustration: Mountain People

The fire alarm goes off as Michael Lewis descends in the elevator from his hotel room. As a security guard warns nervous-looking guests that the screaming sound was not a drill, it seemed the perfect introduction for a man whose new book about Europe’s debt crisis is flying off US book shelves.

“The world does seem to be falling apart,” Lewis said.

Even the briefest glance at the headlines would seem to confirm that opinion. As civil unrest flares in a near-bankrupt Greece and European leaders struggle to avert “contagion,” it is hard not to worry that the Great Recession caused by the collapse of debt-laden banks might — horribly — be just a prelude to the even greater disaster of debt-laden countries toppling like dominoes.

That cheerful scenario is precisely the subject of Boomerang: Travels in the New Third World, Lewis’s jaunty, yet scary account of his travels in four countries at the heart of the crisis.

He visits Iceland to investigate just how a tiny island nation in the middle of the north Atlantic could go through one of the most spectacular banking boom-and-busts in history. He trawls through the sorry tale of the Irish real estate bubble and the epic tragedy that is Greece, before examining Germany — Europe’s reluctant rescuer. Finally, and harrowingly, he ends his journey back in the US, warning that Americans have little reason to feel safe from the danger. Instead, they are simply last in line.

To put it mildly, Lewis — whose position as a former bond trader gives him more than just journalistic insight — sees big trouble ahead.

“There is going to be a change in the idea that each generation of Americans is going to live a lot better than the one before it,” he said. “Imagine an America where you have got a long recession. It does not become a Great Depression, but you get negative growth or low growth or no growth for a long time and high unemployment. What does that generate? It generates anger.”


Indeed it does. Just a 20-minute taxi ride south from the fancy New York hotel where Lewis is tucking into high quality Japanese food, the Occupy Wall Street movement has now camped out in a downtown Manhattan park for more than three weeks.

From small beginnings, the protests have spread to dozens of US cities. There have been hundreds of arrests and speculation that a new political movement — a sort of Tea Party of the left — is being born. Lewis welcomed the phenomenon.

“If you ask the average Wall Street boss what he thought of those people, he’d say it was a joke,” he said. “I don’t think it’s a joke. I think there is actually an incredible frustration and legitimate anger in the country that arises from the unfairness of the treatment of the financial sector.”

That treatment, Lewis said, is the real joke.

He points out how Wall Street banks, having helped cause the Great Recession and then been bailed out to the tune of hundreds of billions of taxpayers’ dollars, have now set about gutting attempts to reform their industry.

“It is outrageous. It is totally outrageous and it is so obvious that you can say it until you are blue in the face and you think there’s no hope for change in the world, but now this protest in lower Manhattan happens and it seems to me there are a lot of people who share the sentiment,” he said.

Of course, one person who is not suffering is Lewis himself.

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