Book Summary: Boomerang– The Meltdown

Book Summary: Boomerang– The Meltdown Tour - Written by Michael Lewis
Michael Lewis is a very popular author with writings including – The Big Short, Liars Poker and the Blind
Side. Boomerang is a review of the sovereign debt crisis. This is a global problem that 90% of Americans
are clueless about. This problem and the U.S. debt have the ability to be as fatal to our society as a third
world war. Our government is trying to kick the can farther down the road so they don’t have to deal
with it. Boomerang will open your eyes to the issue from a few of the PIIGS (Portugal, Italy, Ireland,
Greece and Spain) perspective.
Why is this important to me? In this summary, I don’t have to ask this question because the sovereign
debt crisis affects everyone and it is everybody's problem. Unfortunately, herd mentality invites the
slaughter. I recommend you get educated on this and start protecting yourself
1. Doom / Gloom – I am not a doom and gloom world ending person but logic dictates that the debts
accrued by the US and the European Union cannot be sustained. The question is – what happens when
the defaults start. You really need to get educated and start protecting yourself
2. Savers are losers – Robert Kiyosaki from Rich Dad Poor Dad always states that savers are losers. He
does not mean this as a derogatory statement. What he is referring to is that $1 dollar today is the
equivalent to 4 cents in 1913. This means that the dollar has lost 96% of its value. So if you keep your
savings in dollars then you are losing money due to inflation. In 2008, 100 year old institutions were sold
in a weekend (Merrill Lynch). Money and currency are two different things and it makes sense to protect
yourself so that you do not have counter party risk. What this means is that if your money is in the bank
and there is a bank run then you have counter party risk. If you own real money like Gold or Silver then
there is no counter party risk.
Michael Lewis travels the world and investigates the sovereign debt crisis by talking and seeing the
effects first hand. The book is a good story; I only wish it was fiction.
Kyle Bass is the investor who shorted the big banks and predicted Fannie Mae would go bankrupt. He
made millions of dollars by shorting the mortgage industry. When asked what the average person
should do to protect themselves from the potential financial carnage, he says buy Guns and Gold. This is
a scary prophecy from a guy who got it right once.
Look around and listen to the politicians. President Obama in August raised the debt ceiling right in the
last hour to AVOID CATESTROPHIC consequences to our economy. Those words are powerful but I guess
the Real Housewives of Beverly Hills is more important. The U.S. masses are sleeping while this is going
on. Remember that the first thing Hitler did with his population is take away the guns before WWII. The
bankers and Wall Street are taking away the value of our currency and nothing is being done to fix it.
There have been countless domino effects happening right in front of us and the only politician who
remotely understands it is Ron Paul. Unfortunately he will not be elected, but if he was, he would fix it.
The fixes involved will be painful. Greece for example WILL DEFAULT because you cannot change a
whole culture of people overnight. The GREEKS do not pay taxes. They are required too but it is
culturally acceptable to not pay your taxes and there are no consequences if you don’t. In America, we
were paying an average sales person $32 million per year to trade garbage securities. Most of these
traders would starve if they sold technology solutions yet they made millions of dollars while leveraging
our future and country. The mortgage bubble and derivatives can be blamed on less than 100 people. A
select few created these leveraged instruments and we are still caught in the middle of bailout talks.
Question – if you are drowning, does it make sense to throw more water on you? If not, then why is the
only solution to our debt problem, more debt? This picture sums it up. What the U.S. proposes is to
increase spending and hope the economy grows. The current solution looks like this – you make $43,000
per year and have $78,000 in credit card debt thus the logical answer is to open another credit card to
pay for the credit card debt. We are borrowing money from China so we can fight in Afghanistan and
Libya. – Unbelievable!!!
I hope you have found this short summary useful. The key to any new idea is to work it into your daily
routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this
book is to get educated. A lot of people are going to be hurt by this debt problem and I hope you are
not one of them.