Little more than a year before Michael Lewis made his name with the 1989 book Liar's Poker, he wrote a piece for the now-defunct magazine Manhattan Inc about the plausibility of a large-scale earthquake in Japan. Here, a look at what the renowned financial journalist got right, what he got wrong, and what could still come true:
What was the article about?
The article, titled "How a Tokyo Earthquake Could Devastate Wall Street and the World Economy," focused on the possibility of a large-scale quake in the country's capital, how it would devastate Japan, and what it might mean for the global economy.
How similar is Lewis' forecast to what happened?
The article is "disturbingly prophetic," says The Huffington Post. Lewis wrote that a serious earthquake in Japan was inevitable, and also that the economic consequences would be felt across the world. It foresaw a surging yen, just as we're seeing now, and a "volatile stock market."
Did he get anything wrong?
Yes. In fact, the "remarkable" thing about the article, says Shira Ovide at The Wall Street Journal, is "how wrong Lewis turned out to be." Tokyo's destruction, he predicted, would sap economic growth worldwide as Japan sold off foreign assets and halted loans to pay for rebuilding. While the Japanese stock market would surge as a result of inward investment, other markets would collapse and global interest rates would soar. But contrary to Lewis' prediction, analysts say global growth is likely to decline less than 0.1 percent as a result of the quake. On the other hand, Japan's stock market is on course to collapse, spectacularly.
What changed since 1988?
It's all to do with context, says Lewis in Bloomberg Businessweek. When I went to Japan in 1988, the country was an economic powerhouse on course to end U.S. dominance. It had "high savings rates, massive trade surpluses, a booming economy and stock market... There was no question then that Japan would bounce back." But now it is mired in debt, with an economy in the doldrums — and that was before the quake. "Today, Japan feels almost doomed."
What else is different?
The quake itself, of course. Lewis predicted it would hit Tokyo and didn't even consider the possibility of nuclear disaster. So, in many ways, his prediction hasn't come true yet. "The next great Tokyo earthquake is still long overdue," says Lewis. As for his prediction that the destruction of a great economic superpower could have dire consequences for the rest of the world, that could still come true, too, says Ovide at the WSJ. "If he were to swap the word "China" for Japan..."
Sources: The Huffington Post, Wall Street Journal, Bloomberg Businessweek
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Christians have no moral rationale for spanking their children
- How our botched understanding of 'science' ruins everything
- 43 TV shows to watch in 2014
- 4 simple steaks you can cook in a pan
- 10 things you need to know today: September 23, 2014
- What is driving the increasingly weird behavior of the polar jet stream?
- The science of sex: 4 harsh truths about dating and mating
- 6 things the happiest families all have in common
- Does solar energy have a battery problem?
Subscribe to the Week