The financial crisis of 2008 was likely the best thing that ever happened to Michael Lewis. He was that rarest of combinations: a former Wall Street employee, thoroughly suspicious of finance, and a superb writer. He worked for Salomon Brothers during the go-go 1980s, upon which he based the excellent book Liar's Poker. So when a bewildered public awoke to find their society had been shanked right in the guts by incomprehensible financial instruments called "mortgage-backed securities" and "credit default swaps," Lewis was ideally placed to explain what the devil was happening.
Since then, Lewis' finance writing has fallen off a cliff. What had been a forgivable lack of theoretical depth has become catastrophic misunderstanding, made worse by a fondness for glib analogies. What happened?
His book on the crisis, The Big Short, was both extremely well-written and reported, and rather short on theoretical mechanics. Lewis dug up a bunch of fascinating characters around the periphery of the the great mortgage debt bubble and used them to paint a solid inside picture of just how the crisis was constructed. What it did not do is explain why this crisis — unlike that of the 2000s dot-com bubble, or the 1980s savings and loan collapse — was the worst one outside the stock market since 1929. (For that, you'll be much better served by Paul Krugman, Gary Gorton, and Raghuram Rajan.)
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The Big Short's extremely good writing thus becomes almost a mark against it. The book is so compelling and fascinating that a novice (as I was when I first read it) tends to think he has a much better understanding of what happened than he really does. Still, it's worth reading for the characters and details alone.
In any case, that book made Lewis' reputation as Finance Journalist Man. He proceeded to traipse around Europe trying to figure out what was going on with all this eurozone business, in a series of essays in Vanity Fair, later turned into a book. In Greece he discovered that nobody pays their taxes. In Ireland he discovered that the Irish can absorb fantastic punishment without complaint. In Germany he didn't discover anything, instead constructing a totally ridiculous case that the Germans are obsessed with poop.
The essays were, as usual, interesting and fun to read. But someone trying to understand why the eurozone was falling to pieces would have wasted her time. At no point did Lewis actually dig into the detailed mechanics of a shared currency area, much less clearly explain why having one between economically dissimilar countries with no fiscal or banking union might be a bad idea. At no point did he tie in the euro problems with any basic economic framework. At no point did he even mention TARGET2, the euro-wide central bank clearing system.
That brings me to the ongoing Greece crisis, subject of a recent Lewis column in Bloomberg View. It is a tossed-off piece of witless provocation. Entitled "Greece Saunters Across the Autobahn," it's built around an extended discussion about how Lewis wants to run over Berkeley pedestrians with his BMW. (I'm not joking.) Greece is fooling around with leaving the eurozone for some inexplicable reason, and so Germany would be half-justified in squashing them into pulp, just like the dumb college kids crossing the Berkeley streets with their earbuds in. It's not just glib and cruel — that Greece's economy has collapsed worse than America's did in the '30s goes undiscussed — it's devoid of any comprehensible narrative. He does not even mention that previous Greek leadership followed the European line unquestioningly, much less explain why Syriza might be slightly more annoyed.
He even manages to combine gross (and false) cultural stereotyping with personal irresponsibility, suggesting that Greeks are too lazy to follow through with a run on their banks (thus precipitating their collapse). I can't recall ever seeing someone of Lewis' prominence essentially attempt to bait a whole nation into financial ruin.
Clive Crook's column on the same subject — Clive Crook, for Pete's sake — is superior in every way. It's not just fairer, more decent, more substantive, and more accurate, it's even better written. Lewis' trademark suave voice confidently putting forth howling, bush-league mistakes makes him sound like a dim, pre-WWI British aristocrat.
It's hard to say just what happened to the guy. But I think we can safely conclude that success and adulation are dangerous beasts.
