Boomerang: Travels in the New Third World

by Michael Lewis

When the interest rates on their borrowing rose, these governments would plunge further into debt,

Higher interest rates on bonds means that borrowing is expensive. Case in point: Greek bond interest rates spiked during greek financial crisis.

One of the hidden causes of the current global financial crisis is that the people who saw it coming had more to gain from it by taking short positions than they did by trying to publicize the problem.

Agreed, but wouldn’t they have benefited by publicizing once they had a net short position ?

In Greece the banks didn’t sink the country. The country sank the banks.

when everyone is guilty, no one is.

This told you a lot of what you needed to know about the ability of the U.S. government to live beyond its means: it had, for the moment, a blank check. The shakier the United States government appeared, up to some faraway point, the more cheaply it would be able to borrow.

The head parole psychiatrist for the California prison system was California’s highest-paid public employee; in 2010 he’d made $838,706.

People pay attention so much to how does it affect them immediately: that’s just the way the human mind works.”

It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences.

Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences.

All over the world people borrowed vast sums of money they could never repay. The honest toting up, and taking, of the losses is being delayed. There’s a reason for this. The bad debts are owed, largely, to big banks. The big banks (even bigger than they were at the start of this crisis) and the people who own them enjoy a wildly disproportionate amount of political influence. They also have an argument: if we allow market forces to work they will fail; and if we allow them to fail, they’ll take the rest of us with them. If we allow free markets to reprice risk—the risk of lending money to the Spanish government, for instance, or, for that matter, to Bank of America—we’ll all collapse together in one great heap of financial failure. And so, even now, five years into this mess, we remain at the mercy of the failed financial institutions that sit at the center of our capitalism. Smart and well-meaning people in positions of power—U.S. Treasury Secretary Tim Geithner and U.S. Federal Reserve Chairman Ben Bernanke, for instance—more or less agree with the banks. They, along with their European counterparts, are doing everything in their power to prevent banks from failing. But the effect of this new financial order is bizarre: capitalism for everyone but the capitalists. Ordinary workers remain fully exposed to the increasingly harsh collisions in the marketplace while the highest paid financial elites ride protected by a passenger airbag. This radical unfairness has already g...