Boomerang: Travels in the New Third World

by Michael Lewis

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...