Locklin on science

Why Michael Lewis Annoys the Bejeepers out of Me

Posted in finance journalism by Scott Locklin on August 29, 2011

Michael Lewis is the preeminent financial journalist of our age. In many ways, Michael Lewis is the only financial journalist of our age. No other author on finance is so widely read. His articles are widely taken as something like the conventional wisdom. This is a great tragedy, as, despite the fact that Michael Lewis is unarguably a great writer, he’s a terrible journalist. Reading a Michael Lewis article on finance is much like watching the evening news. It gives you the impression that you’re well informed, but in reality, you’ve been deceived by noise.

Consider his latest Vanity Fair missive. Michael Lewis attempts to get to the bottom of the German side of the financial crisis. This is an interesting and tremendously important subject. Why? Because Germans didn’t have a financial crisis. This, despite the fact that the German Landesbanks were the counterparties in a good fraction of the printing of shitty bonds (aka, Germans own a lot of the worthless bonds printed up by American banks). This despite the fact that the Germans own a bunch of shitty Greek government paper. This despite the fact that Germany was incinerated and invaded in WW-2, and half her territory and a third of her population incarcerated under communism until 1989. Yet, Germany is a prosperous and pleasant nation to live in; one of the best in the world. Germany manages to have lower unemployment than the US, despite all their unions and socialistic regulations for hiring and firing: laws which Harvard economist ding a lings will insist would be the ruination of the American economy. How did the Germans manage this?

Michael Lewis doesn’t know; he’s too busy making turd jokes. I’m not exaggerating. Some jackass gave him Alan Dundes’ imbecilic, “Life is a Chicken Coop Ladder.” This is a book documenting alleged German folklore surrounding scatology, and drawing the conclusion that Germans are prone to killing Jews because of inadequate toilet training. If you think that’s some kind of joke: it isn’t; the guy who wrote it is completely serious. The local Kraut-hating bigot who insisted I read it was serious as well. Lewis takes it at face value also, and uses it as an excuse to regale us with Teutonic turd humor for a significant fraction of the essay.

Lewis’ article is some funny and well written bigotry, including the obligatory Nazi jokes all English speaking writers are required to make when discussing German culture. Of course, if he did an article on some cannibalistic African hell hole in the same “light hearted” spirit, he’d be hounded by the Southern Poverty Law Center for the rest of his life as an evil cousin-fucking racist. Not that there is anything wrong with that: some of my best friends and all that. I’m just pointing it out.

Lewis has, according to his report, spent a grand total of about a week of his adult life in Germany. His report, like the rest of the VF roadtrip series, is an adolescent travel story: some ethnic stereotypes, with some bad financial analysis thrown in. It’s true, the Landesbanks were royally ass-raped by shady American bankers. It’s also true that Germans tend to be gullible and trust in authorities, such as the American credit rating agencies. This is a racial characteristic of virtually all Germans I have known; German-American or straight from the tap. It is also true that Germans tend to be orderly people with a deep seated thirst for justice, equity and social harmony. I don’t think this has anything to do with poop, and I don’t think Germans have any more interest in turds or mud wrestling than anybody else. The real story of Germany is their banking systems is awesome, despite the fact that the actual banks were run by retards (rather than thieves), and their economy is doing really well. Somehow the great journalist finds it more interesting making poop jokes, rather than getting to the bottom of this. Why do the Germans do so well, despite their getting the wrong end of the financial disaster?

The last Lewis article I read was about Iceland. Again, he gives a fair, if bigoted characterization of Icelanders: fearless risk takers who belong on fishing boats or strongman contests rather than trading floors. No real argument from me on that one: Icelanders are brave men. His silly prescription to heal the Icelandic economy? Let Icelandic feminists run their banks. I’ve got a better idea: why not let Germans run their banks? Germans have a longer track record, and have unarguably contributed more to banking, human civilization and the ordering thereof than all the feminists in all nations in all of human history.

The important story from Iceland, he missed completely: they told the EU and the world financial system to eat shit, and are actually better off for it. It was obvious they were going to, but Lewis didn’t raise the possibility in his 2009 article, or any subsequent ones. The other real story of the Iceland tragedy: there are actual villains, and they’re not brave honest-faced Icelandic fishermen. Lewis is too chicken shit to name them (he could have; I’m pretty sure wikileaks did). I’ll name them: the Tchenguiz Brothers -a couple of Iraqi guys from the Anti-Semitic central casting department who ripped Kaupthing off to the tune of 2 Billion dollars, and the fat bag of fecal debris who let them get away with it: Sigurdur Einarsson.

Lewis’ assertions about the alleged German love of turds doesn’t even pass the sniff test. He claims the Germans have the only toilet museum in the world? Well, I know of one in South Korea off the top of my head. Feeding the phrase into google nets one in New Delhi, one in Massachusetts, one in Texas, one in Ukraine, one in Great Britain and at least one on the goddamned internet. Who checks Lewis’ facts? My editor would shit on me from a tremendous height for making such an unsubstantiated remark, and he’s not even a little bit German. Similarly, Lewis got an assertion about Irish parliamentary proceedings wrong too: mostly because it got in the way of a good racial stereotype about my lazy, potato-eating, Bog Negro cousins. If he can’t get crappy little facts like this right … why should anyone believe him about anything else?

It’s difficult to resist mentioning Lewis the prophet. The way he runs around unexplaining things, you’d think he predicted our present financial predicament. He seems to claim to: Liars Poker was his prediction, dontcha know. While it was a great book, his memory is faulty. The internet is forever, or so I am told. Right before the poop hit the prop in 2007, Lewis was making farty noises at the heavy hitters at Davos who were warning of immanent dangers, calling them, “wimps, ninnies and pointless skeptics.” I owe Janet Tavakoli an apology: she was right about the guy. I’ll go out on a limb as a forecaster: his assertion that the Germans will continue to pay for lazy Greeks and other lazy Southern Europeans is dead wrong. I haven’t been to Germany in over a decade, excepting for airport fly throughs, and I know that for a fact.

Michael Lewis is part of the establishment. His position in the financial community is based on celebrity and patronage rather than actually knowing anything. The man lives in Berkeley for crying out loud. If you want to really understand what is going on in the world, you’re not going to get anything out of listening to a perfumed prince of the media-banking-government complex. No, I don’t think Lewis is in on any conspiracies; I just think it’s easier and more comfortable for him to be funny and misleading than right.

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69 Responses

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  1. Martin said, on August 29, 2011 at 9:43 am

    Spot on.

    There was an interesting part to the article, but it was just one or two paragraphs about what seemed to be economic geography and the like explaining why Germany was doing so well (it’s the euro, it forces the deficit countries to rebalance), but that was about it.

    There were two other pieces this week that addressed the situation in a more serious matter about why Germany was doing so well:

    Michael Pettis explains the consequence:

    http://mpettis.com/2011/08/some-predictions-for-the-rest-of-the-decade/

    Fistful of euro’s also had a good take on it in “it’s the geography stupid”

    http://fistfulofeuros.net/

    • Scott Locklin said, on August 29, 2011 at 9:28 pm

      There were a few allusions that brushed on the real story of the German system. That’s what makes it so annoying. A few bits of wisdom, covered in turd jokes.

    • SocraticGadfly said, on August 30, 2011 at 9:43 pm

      I’d take AFOE over Michael Lewis any day of the week.

  2. Simon Rierdon said, on August 29, 2011 at 10:55 am

    You are dead right about the Germans not going to bail out their mismanaged Euro compadres. I’ve been here on the ground for the past six months and the rage among the people over what Angela Merkel has done just to this point is palpable. She is about to lose her coalition in the German Parliament and when that happens, all bets are off. Thanks for the linkage Scott.

    • Scott Locklin said, on August 29, 2011 at 9:16 pm

      Thanks for the article: it was a great one. I recommend everyone read it and check out the videos:

      http://veritasaculeus.wordpress.com/2011/08/22/why-iceland-is-important/

      You don’t even need to travel to Germany to know they’re going to be hopping mad. You don’t even need to ever speak with an actual German person to know this. The Kipling Poem I linked to is enough.

      “The Saxon is not like us Normans. His manners are not so polite.
      But he never means anything serious till he talks about justice and right.
      When he stands like an ox in the furrow – with his sullen set eyes on your own,
      And grumbles, ‘This isn’t fair dealing,’ my son, leave the Saxon alone.

      “You can horsewhip your Gascony archers, or torture your Picardy spears;
      But don’t try that game on the Saxon; you’ll have the whole brood round your ears.
      From the richest old Thane in the county to the poorest chained serf in the field,
      They’ll be at you and on you like hornets, and, if you are wise, you will yield.

      • Simon Rierdon said, on August 30, 2011 at 3:12 pm

        That’s also one my favorites but I hadn’t read it in years until you linked it. Speaks to my Germanic blood (even though it’s kind of bastardized with some English, go figure). I hope you don’t mind if I add you to my blogroll?

    • deniz said, on August 29, 2011 at 10:18 pm

      Of course the people are enraged. That’s because they only see the cost and not the benefit. The fact is Germany has benefited tremendously from being in the EU. Euro gives germany a trade advantage in exports that it would not otherwise have.

      The problem is that whenever something good happens, the politicians take the credit for themselves. Whenever something bad happens they blame the EU. They don’t realize that such partisan politicking has real consequences when trying to implement the right policy.

      • bullionaire1 said, on August 29, 2011 at 11:46 pm

        Well, there are two sides to every coin –

        I would suggest that the PIGS derived greater benefits from the Euro than either Germany or France, by having a “harder” currency than they had before, and being able to borrow more cheaply with greater access to credit.

        The problem is they squandered those advantages and instead of using that credit & cheap interest to invest in productive assets, they blew it on extravagant consumption and mismanaged government finances, just like they did before they joined the Euro. Now they want rich Germany to bail them out so they can continue to spend recklessly and rack up huge deficits??? Total & utter foolishness if that is what they expect – The people I’ve talked to in Germany won’t be fooled again.

        To somehow think that these poor Euro cousins’ shutting out German exports out of spite will doom Germany is more than a stretch as Pettis suggests – they need Germany more than Germany needs them and I suspect Germany has its sights set on much bigger fish, namely the BRICs…which on a combined basis, dwarfs the rest of Europe & US & Japan combined.

        • Martin said, on August 30, 2011 at 12:07 pm

          If they need Germany more than Germany needs them, then why is Germany bailing them out? This was actually one of the better pieces in Lewis’ poop-joke ridden article: bailing out the PIIGS is a roundabout way of bailing out German banks.

          There are two sides to a debt contract, there is a creditor and there is a debtor, the debtor can only borrow as long as the creditor is willing to lend and the creditor can only lend as long as the borrower is willing to borrow. The story is a tad bit more complicated than heroes and villains.

          • Barbara Paine said, on January 28, 2012 at 4:35 pm

            Thank you. When you lend money to your crack-addled brother-in-law, you might have some legal recourse to try to get the money back (that is, if you signed a contract with him). But you won’t get a lot of my sympathy. There are profilgate borrowers, but there are also stupid lenders.

  3. Aaron Smyth said, on August 29, 2011 at 11:41 am

    Yeah, having read the Irish and German articles, its as if he is using some kind of prattish template, bringing up the German quasi-preoccupation with shyte in an economic article is kind of strange, me thinks he has got carried away with himself on several troubling levels. In a similar racial reduction par excellence, he says the Irish belief in fairy rings is the cause of them being sluggish in spotting the truth behind a property bubble… Using racism as a literary device to tie your benign brain-farts together is out of order, someone should break his fucking nose.

    • Scott Locklin said, on August 29, 2011 at 9:26 pm

      Political correctness leaves us like a bunch of tittering Victorians in the presence of overt racial stereotypes like the ones Lewis uses. It’s an underserved market, and Lewis is a clever man for doing what he’s done. I don’t mind it terribly, when it’s relevant or interesting. None (or very few anyway) of the stereotypes he’s been trucking in have much to do with the actual stories he’s covering.

      For example: I firmly believe the Germans to be a race of people who are orderly, hard working and extremely prone to Teutonic rage at injustice. That’s why their bankers make only $150k a year, and aren’t a pack of thieves. I also think this is why the German economy and banking system is still functioning, despite all the problems they’ve been faced with: their system was designed to serve the people, rather than the other way around. It has nothing to do with any alleged fascination with turds.

      I’d also really like to see the guy try that sort of thing with a designated victim group. I have a bit of German on the distaff side; must be coming through.

  4. Tokyo Reporter said, on August 29, 2011 at 2:10 pm

    Toilet maker Toto has a museum in Tokyo:

    http://shinjuku.keizai.biz/phone/headline.php?id=877

  5. jay said, on August 29, 2011 at 6:35 pm

    You’re absolutely right. Lewis is a giant shill.

  6. meli said, on August 29, 2011 at 7:36 pm

    Agreed.

  7. Robert Breitweg said, on August 29, 2011 at 8:56 pm

    I missed the author’s name (not who posed it). That said I stopped reading after all that was being said was bat mouthing Lewis. No facts; Just that Lewis is this and, that over and over?? While it maybe true, it’s not about how you feel, it’s about the facts, and proving it with your facts. So what did you really learn here?

    • Scott Locklin said, on August 29, 2011 at 9:09 pm

      If you stopped reading, how do you feel qualified to judge the merits of what I wrote?

      • Robert Breitweg said, on August 29, 2011 at 11:40 pm

        Hi Scott,

        The first 5 ~ 6 paragraphs contained ALL opinion of the writer, with no footnotes or links to substantiate any of the “views”. I for one don’t know how far they are reaching to make all that I was reading. Really, it (the post) was so biased that it may have been the work of a nut. I see you post it, but no name at the end? Some of us want to know “who, what and why”. It’s the why part missing after the opin (like what quote from Vanity Fair would support the view). What I was looking for was Lewis supports this economic policy and, it has been shown to have these short comings ……

        • Scott Locklin said, on August 29, 2011 at 11:53 pm

          There is a very obvious link back to his essay. If you disagree with something I’ve said about it, feel free to get specific. If you haven’t read it, or my essay, well, um, I dunno what to tell you.

          • Phil D said, on August 30, 2011 at 4:15 pm

            You write, “He claims the Germans have the only toilet museum in the world? Well, I know of one in South Korea off the top of my head. Feeding the phrase into google nets one in New Deli, one in Massachusetts, one in Texas, one in Ukraine, one in Great Britain and at least one on the goddamned internet. Who checks Lewis’ facts?”

            Lewis writes, “Europe’s only museum devoted exclusively to toilets was built in Munich.”

            The exhibition of toilets in GB (Stoke?) was, I believe, neither permanent or exclusive so unless you know of another European toilet museum then he’s right. By the way, who checks your facts?

            • Scott Locklin said, on August 30, 2011 at 6:13 pm

              Ukraine is in Europe the last time I checked. On my blog: my readers check my facts. In Taki’s mag, Jim Goad does: and he would have noticed that, and not allowed it to be published. WHen you’ve seen what a real editor does, it’s real easy to spot shitty editing. VF’s editing sucks.

  8. Yalman said, on August 29, 2011 at 9:36 pm

    While Lewis might have focused on German folklore too much, he’s not wrong in seeing problems in the banking system. I have a chapter on German banks and how they’re connected to the problems in the Eurozone in a book coming out in October (http://amzn.to/p9X18G). I’d love to send you the manuscript so you can decide whether you agree with my diagnosis of the German banking system. Please email me your coordinates if interested. And I have a chapter on Iceland, which makes the point you argue should be made and how that has helped them recover.

  9. Gargoyle Consultant said, on August 29, 2011 at 10:08 pm

    Hahaha! Few have the combined ability to write this well, and call out the bullshit we’re bombarded with on an hourly basis. The world could do well with more people like you.

  10. deniz said, on August 29, 2011 at 10:10 pm

    I read a few of Lewis’ books, most recently the big short. He is a great writer and has a rare knack for storytelling. And you know what they say: never let a few facts stand in the way of a good story :)

    Germany is doing well partly because german workers paid the price for it through declining real wages over the past 20 years, which has put the country at a tremendous competitive advantage. Something similar happened in Canada. The country escaped the crisis partly because its banking system (although highly concentrated) had better public/private oversight, but also because the Liberals implemented austerity measures and welfare reform in the 90s. It doesn’t have the debt overhang problem that the US and EU faces right now.

    • Scott Locklin said, on August 29, 2011 at 10:33 pm

      I agree Lewis writes really well: seems wasted making poop jokes though.

      I don’t pretend to understand the German economic system, but it is pretty obvious they know something we Americans don’t know. Lewis won’t tell us what it is.
      While they may have declining real wages, their GDP/capita isn’t bad: better than Britain, for example. Their GINI coefficient is also quite good, despite whatever austerity measures they may have experienced. By contrast, the US ranks with Uganda. As such, I’d rather be a working class German than a working class American.

      • Dennis said, on August 31, 2011 at 3:26 am

        The Germans already went through their recession. Between 1999 and 2005 when the Fed was busy blowing bubbles the Germans went through painful labor market reforms that saw unemployment skyrocket. As someone else pointed out here, the German banks recycled German savings into buying crappy debt because its the system of their export focused policies.

  11. BS Footprint said, on August 30, 2011 at 1:08 am

    Toilets are very important devices, and are certainly deserving of a museum (or two) in every country! Just sayin’…

  12. Roger Bigod said, on August 30, 2011 at 2:53 am

    He did an article on Greece in VF:

    http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010

    He presents them as hopelessly, inscrutably corrupt. European wogs.

    • Scott Locklin said, on August 30, 2011 at 3:05 am

      Taki (who is Greek) doesn’t contradict that too much. I have no clue, myself. Never been: I’d rather visit Turkey.

  13. Links 8/30/11 « naked capitalism said, on August 30, 2011 at 10:27 am

    [...] Why Michael Lewis Annoys the Bejeepers out of Me Scott Locklin (h/t Larry). [...]

  14. Links 8/30/11 | Jackpot Investor said, on August 30, 2011 at 11:45 am

    [...] big losses Financial TimesHow an SWF works Macrobusiness. Aussies mull the advantages of an SWF.Why Michael Lewis Annoys the Bejeepers out of Me Scott Locklin (h/t Larry).Antidote du jour: Read More at the naked capitalismSimilar [...]

  15. Michael M Thomas said, on August 30, 2011 at 12:32 pm

    “Of course, if he did an article on some cannibalistic African hell hole in the same “light hearted” spirit, he’d be hounded by the Southern Poverty Law Center for the rest of his life as an evil cousin-fucking racist.”

    Having seen The Book of Mormon, which is as racist as a 1930s Stepin Fetchit movie, one wonders. At $200 a ticket, perhaps racism is as racism does. That said, I agree completely about Lewis – but he has the most effective media support group ever!

  16. [...] Why Michael Lewis Annoys the Bejeepers out of Me « Locklin on science Germany is a prosperous and pleasant nation to live in; one of the best in the world. Germany manages to have lower unemployment than the US, despite all their unions and socialistic regulations for hiring and firing: laws which Harvard economist ding a lings will insist would be the ruination of the American economy. How did the Germans manage this? Michael Lewis doesn’t know; he’s too busy making turd jokes. (tags: journalism germany credit-crisis) [...]

  17. Moopheus said, on August 30, 2011 at 1:22 pm

    New Delhi.

    If Lewis-san has to check his facts, you should at least check your spelling.

    • Scott Locklin said, on August 30, 2011 at 6:15 pm

      That’s a fair cop, thanks, except I’m a guy writing in his underpants for free, rather than someone being flown all over creation to make turd jokes. My editor don’t work here either.

  18. Elmer Stack said, on August 30, 2011 at 1:37 pm

    Pretty good rant, although if you really don’t think Germans are more interested in feces than other people you don’t know much about Germans.

    • Scott Locklin said, on August 30, 2011 at 11:01 pm

      I’ve visited longer than Lewis has, and I’ve shared my bed with one or two. I think it’s one of those confirmation bias things. Japanese and Koreans have more of a turd thing than any German I’ve ever met.

      • Andreas Yankopolus said, on August 31, 2011 at 2:17 pm

        All conversations eventually degenerate into a discussion of sex or excrement. It is known.

  19. mgblock said, on August 30, 2011 at 2:45 pm

    Great post. Thanks for taking the time to write this. I wish more people would come out against the racism and vapid analysis of the piece Lewis did on the Germans in VF. Michael Lewis should be ashamed of himself.

    However, I disagree with your prediction about the Germans not continuing to bail out the over-indebted Euro member states. The Germans are willing to bail out these states is because it is in their national self-interest. Not because they need to save their own banks — it would be easier to let the sovereign bankruptcies simply happen and then recapitalize the banks as needed, rather than continually prop up over-indebted nations. The reason that they will continue to prop up the over-indebted Euro members is that the monetary union allows the Germans to have a currency, the Euro, that is far weaker than what the standalone Deutschmark would be. For an example of what I am talking about, look at Switzerland. Investors the world over are looking for a currency and a safe haven and can’t find much aside from the Swiss franc. As the Swiss franc has soared, it has had enormous distortionary impacts for the Swiss economy, specifically for its exports. And that is the secret to Germany’s economy: exports. Germany is one of the most impressive export machines in the world and being yoked to the Euro gives the Germans a huge advantage. The Euro blends the risk of Northern and Southern countries and keeps the currency relatively in check, unlike the Swiss franc. If the Euro were to collapse to a hard core of fiscally sound nations (plus France for political reasons), its value would soar, thus making German exports far more expensive for China, for Brazil, for Russia and for the rest of Europe that is not in the hard core Euro.

    This dynamic is not something that sells newspapers, I guess. I would love to see more journalists and financial commentators exploring this .

    • Scott Locklin said, on August 30, 2011 at 7:04 pm

      It’s a debatable point whether or not they actually benefit from this arrangement: if they do, it’s certainly not the only way to weaken their currency, or the one that benefits German people most directly. Either way: people do not make choices based on economic benefit. If that were always true, there would be no advertising industry.

  20. Graeme said, on August 30, 2011 at 7:18 pm

    Interesting comments… I won’t pretend I have anything to add other than anecdote, but I feel compelled to add my anecdote. Traveling though the EU in 2007, I heard a lot of German tourists making comments about how they missed the DM days. Their resentment of paying for an Italian vacation in Euros was palpable. Whatever the powers that be would like to see the German politicians do, I think they’re constrained by their voters.

  21. JJ said, on August 30, 2011 at 8:29 pm

    “Germany manages to have lower unemployment than the US, despite all their unions and socialistic regulations for hiring and firing: laws which Harvard economist ding a lings will insist would be the ruination of the American economy. ”

    Hmmmm, this quote seems to imply that union and socialistic regulations aren’t very relevant to unemployment rates. I’d disagree.

    Strict labor laws are not irrelevant. Economies can do well under 4ucked up government rules when the economic winds blow their way. Hell, California had budget surpluses in the late 90’s.

    Germany’s unemployment rate is lower than the US in spite of their strict labor laws. Their current rate is 7% and that is the lowest in almost twenty years– I’m not sure I’d want to wait around twenty years to be in a better position than the US. Germany’s lower rate is partially the result of their reduction in working age population size, immigration policies, ability to export capital products, and their most recent, if mild, -liberalization- of labor regulations. Also, the government subsidized employee salaries to prevent losses; for comparison purposes, shouldn’t the US count everyone receiving unemployment insurance as employed? If so, the gap between the rates narrows significantly.

    And as the prevailing economic winds are blowing Germany’s way, the US government has raised the minimum wage, extended unemployment benefits, made it more difficult for businesses to predict the cost to employ people over the next two plus years, crapped all over US bankruptcy laws, raised taxes, and intimidated US companies over how they do business (Boeing and Gibson).

    Generally, European-style regulated states are worse for their regulation.

    • Scott Locklin said, on August 30, 2011 at 11:11 pm

      Don’t even get me started on immigration policy.

      I don’t dispute the idea that those laws raise unemployment; it seems obvious they do. It should raise some … well, some questions when they’re doing better than the US on that front, in spite of their regulations and all their other problems.

    • Angry Voter said, on January 25, 2012 at 1:54 pm

      In Germany, companies have to pay unemployment benefits after they lay off employees.

      In the US, companies have to pay payroll taxes when they hire or keep employees. In an amazing coincidence, right after the government raised payroll taxes a few years ago companies starting laying people off.

      In New Zealand it costs a company more to have 2 part time employees than to have 1 full time employee so most jobs are full time.

      In the US it costs less to have 2 part time employees because you can cheat them out of health and retirement benefits so more and more jobs are part time. Employees end up working multiple jobs, doing them all badly and feel justified in stealing from their employers.

      Yes, even the guy scrubbing the toilet is smart enough to realise he’s being cheated and will get back at the company.

  22. Munkie Magik said, on August 31, 2011 at 10:08 am

    Interesting article, and I agree to an extent Scott. I think you are correct to pull Lewis up on his more, how shall I put this, “creative” instincts – we need to deal only with reality at the moment. But I think your criticism would be more accurate and effective were it slightly more tempered and less reactive to Lewis’s creative economic writing.

    The reason I would take issue with the overly chastising tenor is the fact that, whether you like it or not Scott, Lewis was largely correct in his assessment of Ireland (and I say this as an Irishman with a background in both law and economics) – even if he did veer off in a creative direction on one or two occasions. You are also wrong, as a matter of fact about the financial health of Germany (though admittedly this has yet to be confessed to, reported and discussed).

    My primary criticism is that I simply cannot abide your diagnosis that Germany did not have a financial crisis – it will. this seems to form a fairly central component of your reason for criticising Lewis’s latest VF offering.Unfortunately he is correct about this. Deutsche Bank, for instance, is leveraged a crazy 50:1, with tangible common equity shading in at just around 2%. They were also (and Lewis is also correct on this) arguably the single most active player in the securitisation fraud madness that occurred over the first decade of this century. Still on very thin ice as a result. D-Bank has an asset book that comes it at around 100% of German GDP and this is stuffed to the rafters with commercial real estate gone horribly wrong (yet to be marked down), piles of sovereign paper that would in all likelihood (were price discovery actually possible) need to be written down by at least 25% in many instances – and a lot more in some cases – all topped off with a veritable confection of derivative products that have lashings of counterparty risk in the event of further shocks to the financial system (looking highly likely, probably certain, at this stage). And that is just Deutsche Bank – there are other German banks that while not as much of a systemic risk, are still going to cause huge headaches. Commerzbank is a D-Bank-esque mess, just with smaller asset book, and the Landesbanks are not much better. Basically, there is a German financial crisis baked in to the cake and they have only avoided this reality by throwing other debtor nations under the bus to date.

    So Germany, like France, is in terrible shape on the banking front. The only reason they have been able to fudge this thus far is that hapless and totally clueless governments (believe me, Irish govts are not so much Machiavellian schemers as just massively out of their depth on big, global issues – same goes for a lot of those at the top of Irish professions; half baked insiders) in countries hosting the main debtor banks have guaranteed and paid off 100 cents on every Ponzi Euro (when all the dust finally settles Ireland will be the poster child for this pointless economic self immolation when we realise that we have bankrupted the country to bail out foreign banks that are, irrespective of our stupidity, still insolvent by any measure of common sense and transparent accounting)

    To compound this you should bear in mind that going into this crisis (we’ll take the year 2007) German gross public debt as a % of GDP stood at around 65%. By contrast, and in spite of all the economic illiteracy of Irish policy makers more beholden to a conceited and somewhat mythological national narrative than hard headed fact and sense (again, Lewis was right on this – and that’s not opinion Scott, it’s first hand fact), we had a gross public debt/GDP ratio of 25% (with net public debt/GDP of 12.7%). Now I appreciate that our tax revenues imploded with the property hyper-bubble, but nonetheless, we still had a fairly decent degree of wiggle room on the public debt side. But stupidly our govt of the day (and the new one is not much more literate when it comes to economic policy) agreed to pay off reckless lenders 100 cent on the Euro and justified this with “growing-with-austerity” budgetary prescriptions for years to come, budgetary prescriptions and growth prospects that are simply pure fantasy. These reckless lenders were by and large German banks and UK banks. We have bankrupted ourselves simply to allow German banks leveraged 50:1 a few more years of pretending all is well when it is in reality profoundly screwed up.

    In a nutshell: “So much for Teutonic parsimony”.

    I think (perhaps) Greece being the flash point to date has been hugely unhelpful. Their problems were decades of good old fashioned political corruption and greed. Everywhere else has been (and will be) smashed by a capital market system that was allowed to run amok. But the focus on Greece has lulled many external observers into the false premise that there is any sort of correlation and consistency between the problems with Greece and the rest of the Eurozone.There isn’t (other than a common currency crudely bet onto a continent with wildly asymmetric economic and political constructs, of course)

    My point is this: the only reason Germany has maintained the charade of having not had a financial crisis is that countries such as my own fair land have embarked on about the maddest economic policy responses seen to date. Notwithstanding our boneheaded munificence, German banks are still in truly appalling shape and will most definitely be roiled in the coming year. And remember, the German’s have gone into this crisis with much higher levels of public debt than other countries, so lets see how rosy the outlook is when the stark reality of bank insolvency finally hits home. Let’s also see if they pay off 100 cent on the Euro in bailing out banks, like they have demanded of weaker members in the Eurozone – my bet, of course, is that they won’t. The only reason Ireland’s problems have been exposed, and many other countries are yet to admit their embedded issues, is that our financial madness was manifested solely and completely in a plain vanilla property hyper bubble and was therefore easy to diagnose.Elsewhere the problems are obfuscated by nutty derivative and securities fraud. This doesn’t mean that there is not a commercial real estate and derivative disaster waiting to happen in other Eurozone banks.

    Just saying is all – and I do speak from a position of some authority and first hand professional and life experience of the countries Lewis has so creatively critiqued.

    And on top of that, I have German family (aunts, uncles, cousins etc living in Germany) and while Lewis certainly takes some big liberties when going on his anthropological detours into scatology, they are actually prone to being duped by form over substance insofar as rules are concerned. Critical thinking often stops at a literal, superficial adherence to form, with a pragmatic and slightly skeptical/incredulous approach under appreciated and under utilised (if you don’t believe me, ask my Irish uncle living in Germany for over a quarter of a century, or my cousins, or even indeed my native German aunts – anybody not native to Germany but living there a long time will tell you that there is a tendency to take things at face value and this begets both a slightly revisionist and at times naive dialogue on big issues). For the Irish side of things, it’s not so much a case of credulous adherence to rules, as a destructive mythological narrative that keeps our public discourse mired and a mediocre level at best. Again, sorry to say, Lewis wasn’t wildly wrong is drawing such conclusions about my own country.

    So while I agree with you that Lewis ought to dampen his own enthusiasm, and that he is more of a story teller than reporter/analyst, I still think he is more correct than you realise and that perhaps aggravated cultural sensitivity is part of the reason you dislike him. His work is not a wildly distortive as your piece suggests.

    • Scott Locklin said, on September 1, 2011 at 6:14 am

      Well, I’m not sure any of this was noticed by Lewis; the first I heard of it was in Yalman’s manuscript mentioned above. I’m no economist, nor much of a journalist. I’m a guy blogging in his undershorts. If you say there are problems in the German banking system coming ’round the corner: well, I might believe you. Lewis didn’t really say that, as far as I can tell. Whether or not you can abide my characterization of Germany not having a financial crisis; it’s accurate. They haven’t. Why not? Maybe they will some day (as t->inf, they will with probability 1), but not right now.

      I didn’t really read the Irish article: my brain shut off after her got the “Gaelic in the parliament” wrong, and after all the turd and dumb fisherman jokes from the previous two articles, I didn’t feel like hearing Leprachaun potato jokes.

      • Johnny Highcrotch said, on November 2, 2012 at 8:13 pm

        Yet again the underpants. Apparently when one write while wearing only underpants, one can write anything and never have to stand for it later.

        Lewis is blatantly racist, and you could draw a map with racist intent increasing the further east you go. The couple of times he mentions Eastern Europeans, one can only cringe, although you Germany defenders provably think the same and thus don’t even notice,

        • Scott Locklin said, on November 2, 2012 at 9:46 pm

          I’ve not noticed any such stuff, though I try not to read Lewis when I can avoid it. Examples?
          Personally, I prefer my vacations in Eastern Europe.

  23. ToNYC said, on August 31, 2011 at 3:53 pm

    Your deadly sin is showing! Michael Lewis kicks. You have no books anybody cares about but those you support.

  24. 10 Tuesday AM Reads | The Big Picture said, on September 1, 2011 at 12:20 pm

    [...] Homes Surge in U.S. (Bloomberg) • Why Michael Lewis is a great writer but a terrible journalist (Scott Locklin) • Fed Psychology: Bernanke and Buffett try the feel-better approach (LA Times) see also Bernanke [...]

  25. Hubert said, on September 2, 2011 at 2:02 pm

    Agree with both, Munkie and you. Put it this way: Germany certainly did have a financial crisis. Its public just did not find out. How about trees falling in the woods …..
    Even bigger point: Lewis gets an Interview with (and takes pictures of) Asmussen – the one person most responsible for bringing Germany into this banking-shit – and never even mentions it. As it he had not at least googled the guy he was going to write about. Asmussen as an underling of Eichel and Steinbrück (both SPD) wrote all the regulations that let the German banks and SIVs into this Wall-Street-Mass-Slaughterhouse. Then he sat on the board of IKB and watched it. Then he got a promotion and serves under the other party (CDU). His name is mentionned as next German finance minister …. Now having this person in front of me, as a journalist or even as a fiction writer, I would find some interesting questions to ask …….

  26. matt said, on September 3, 2011 at 12:08 am

    The only thing I’ve ever read by this guy was the Irish article. I remember thinking that the driver was a complete bullshit character that he inserted in order to get out a few stereotypes on paper. Pasty ex-rugby players wrecking the banks? Fine. Fairy rings that farmers are afraid to disturb… hmmm…

  27. [...] In praise or hate of Michael Lewis. I kinda agree with Scott Locklin, who wrote this post, but I also think Lewis is damn fun to read. [...]

  28. [...] In praise or hate of Michael Lewis. I kinda agree with Scott Locklin, who wrote this post, but I also think Lewis is damn fun to read. [...]

  29. [...] In praise or hate of Michael Lewis. I kinda agree with Scott Locklin, who wrote this post, but I also think Lewis is damn fun to read. [...]

  30. Roger Bigod said, on September 3, 2011 at 10:29 pm

    Lewis is in entertainer. Any information he provides is a side effect. He has a pose as a wide-eyed newbie surprised at what the adults are up to. This worked in Liar’s Poker. On the European stories, it works on turf the readers don’t know much about. But there was no drama in the German material, even though he did a reasonable job of packing 4 or 5 interviews into a few days. So he threw in the business about the German national character as inflexibly rule-following with a guilty fascination for poopy. I couldn’t see anything uniquely German about the behavior of the Landesbanks. US pension funds can be equally dumb. And the theories about caca don’t shed any light on the economic crisis.

  31. [...] In praise or hate of Michael Lewis. I kinda agree with Scott Locklin, who wrote this post, but I also think Lewis is damn fun to read. [...]

  32. Peter Csathy said, on September 4, 2011 at 3:13 pm

    The preeminent financial writer of our times is Matt Taibbi of Rolling Stone … yes, THAT Rolling Stone ….

    • Scott Locklin said, on September 4, 2011 at 8:49 pm

      Taibbi is a good writer, who unfortunately wouldn’t know a fact if I slapped his cheek with one. His fundamental insight that the US has become a banana republic run by rapacious oligarchs is correct (and probably obvious to anyone who lived in Russia when he did), but he’s not good enough at facts to figure out who they are for the rest of us.

  33. [...] Why Michael Lewis Annoys the Bejeepers out of Me [Scott Locklin] [...]

  34. human mathematics said, on September 20, 2011 at 6:54 pm

    Cleverly put, and I needed my balloon popped because I was getting a little too high on Lewis lately.

    Here’s a view on why Germany will bail Greece out (not from me; from a German):

    As long as the world accepts the Euro–and there are too many countries holding a lot of it for it to be rejected (same with the dollar)–the EU will survive intact. The media is making a bigger deal of this than it is. Merkel is everyone’s only hope, and she is going to hold those slaggard countries’ feet to the fire. They have no other choice than to accept the beating, and learn never to do it again.

    The EU countries are quite willing to accept a more fiscal federal union–like the US–in order to keep things together. I guess you would have had to be here when the switch to the Euro came about to see the incredible positive it was for everybody. Even Poland is progressing for the first time since Hitler conquered it back in the late ’30’s. Poland was a wasteland before the EU. Same with Romania, Czech Republic–and Spain. Don’t know about Greece, but these countries do not have negative GDP, they have positive GDP–Spain higher than the US!

    Americans cannot possibly analyze foreign nationals. Americans cannot conceive of life or economics any way other than what is done in the US. If it is not done the US way, then all those economies are doomed, according to Americans. Europeans care about their brothers and will feed and take care of them. Americans say, pull yourself up by your bootstraps BY YOURSELF or fuck you: eat shit and die. Americans do not understand that Europeans actually act more Christian than the so-called Christians in America who proclaim that America is a uniquely pro-Christian country like no other on Earth, when people here would rather see people die than take care of their brother, as the Bible demands. IMO, that is why Europeans willingly accept higher tax rates than Americans.

    • Irishman said, on December 7, 2011 at 8:36 pm

      Well as a resident of the famine fringe(Ireland), let me add my two cent.

      Ireland had a terrible economy from independence to 1960. Then a good one until 1973 when it joined the EU while coincidentally the oil crisis hit. We missed the 80s party completely had a tiger economy from 92-99 then a housing bubble of epic proportions.

      What did the EU have to do about that? Well they shoveled a lot of money to farmers(lots and lots of money) and built a few roads. That’s about it.

      Ireland’s main export markets are the US, the UK and the rest of the non EU world. Our economy is relies on FDI from those places not the rest of the Eurozone to export to places not in the Eurozone. Do you know what the Eurozone has meant for us? A currency which went from about $0.80 to $1.40 killing our manufacturing base while simultaneously flooding the country with cheap credit. Some blessing.

      Fiscal union won’t happen. Paddy is thick but Paddy is stubborn as a mule. It won’t pass a referendum. People have had enough.

      • Scott Locklin said, on December 7, 2011 at 9:17 pm

        May this come to pass.

  35. [...] European financial crisis seems absurdly complicated to the outside observer as well as to some inside observers. But the reality is fairly simple if you look at it the right way: Leave all ideology and economic [...]

  36. Quora said, on January 10, 2012 at 7:55 pm

    Does the Vanity Fair article on Germany’s role in the financial crisis misrepresent Germany?…

    Personally, I have zero time currently. But as the article has been published months ago by now, other people have done that for me, enough in English. Bottom line: Lewis writes for entertainment, take it as that. Truth and hard facts are used very spa…

  37. jamie said, on May 16, 2012 at 8:36 pm

    THANK GOD – someone actually sees Lewis for what he is. Mr. Locklin, I thought I was the only person in the world who recognized the ridiculous and totally innacurate claims about the Irish Parliament, which were obviously only put forth to form a basis for the claim that the Irish left Ireland because they hate themselves. Who is protecting this man? He is literally just a fiction writer. Isn’t there some national association of authors or journalists or unnoficial oversight board – even gov’t agency – that can call this fraud’s BS or maybe even catch him and his publishers for false advertising? It is kind of scary actually. Ultra-rich, privileged, prep school, ivy league, completely unnacomplished guy that leverages his one apparent skill illegitimately – without a peep from the mainstream media? What is scarier still is that this guy’s stereotyping and factual innacuracies can be pieced together so as to clearly allow a view to his state of mind: He is a dangerous bigot masquerading as an author. It is one thing to say Icelanders are inbred – this is partially true, and significant; but it is quite another to weave innacuracies together IN ORDER TO PUT FORTH A RIDICULOUS, HISTORICALLY INNACURATE, NEGATIVE PORTRAYAL OF AN ENTIRE PEOPLE. And he has never even had to answer for these repeated acts. That this brat can get away with things without question is what scares me about this country. Where are those ‘scholars for equality’ at his alma-mater now?

    • Scott Locklin said, on May 30, 2012 at 7:00 am

      Two things:

      1) He’s a really good writer, and does what all modern famous writers on technical subjects do: he flatters the reader’s intelligence by telling him a dumb fairy tale. This is the trick for “science” writing these days. Most people are insecure about their intelligence, so they’ll declare you a genius for explaining in a way that doesn’t make them feel stupid. Even more so if you make them feel smarter than the great and the good. Basically: you have to perform a trick of status marxism on the reader. Correct explanations are shorted. Ones which make the reader feel smug and clever: lever up on those. This is why I will never be a famous writer. I like the truth too much.

      2) He doesn’t make fun of designated victim groups. If he made fun of stupid women or brown people, that would be the end of him. Jared Diamond does the same thing in “Germs, Guns and Steel:” pretty much saying that Western Civilization succeeded because honkeys are dirty germ bots who were born in a fortuitous place … oh yeah, and they’re also dumber than people from New Guinea. Personally, I enjoy the occasional ethnic joke, but I don’t think they’re rigorous enough to be useful in understanding the world. And if you’re going that route as a serious argument, you better have superior data to that of guys like Murray and Herrnstein.

  38. Dez said, on August 13, 2013 at 4:54 pm

    Scott,

    Loved your analysis, and as an Irishman, calling out Michael on the stereotyping undertones in the VF article. The subheading “the drinks cabinet” and the pointless anecdote around the parliamentarian vaulting from the gallery were particularly irksome.

    However, reading it again from the perspective of 2013, his general summation does stand up, and he gets most of the detail pretty much bang to rights.

    The fairy ring superstition is true. Most fairy rings are the archeological remains of iron and bronze age settlements.Obviously no one believes in fairies, but it was and is still considered the height of bad luck to plough over them and tear them apart. Consider it equivalent to smashing a mirror while walking under a ladder and kicking a black cat at the same time!

    He also missed some of the humour. The “DOWN WITH THIS SORT OF THING” placard is a shout-out to one of Ireland’s most popular comedies Fr. Ted where a hapless protest by Ted against a blasphemous movie only encourages the locals to attend it. http://www.youtube.com/watch?v=6-F2HKLzB6c

    He seems perturbed by the fact that Fianna Fail was still being in power after all their misadventures. What did he expect? A coup? The article was published in March 2011, yet it misses the fact that Fianna Fail were pretty much annihilated in the general election several weeks earlier in mid February, and the pre-vote polls would have shown this was on the cards as well.

    While it is a painful article to read, it pretty much synthesises the amateurism, bullshit and pretention that lead to our bust, I’d like to have seen what he made of the most recent disclosures of the Anglo Irish senior management running rings around the and government as they laughed all the way to get the bailout that has destroyed this country.

    http://truth-out.org/news/item/17409-caught-on-tape-irish-bankers-laugh-about-never-repaying-bailout

    • Scott Locklin said, on August 17, 2013 at 1:06 am

      Like I said above, I didn’t read enough of the Irish one to form a strong opinion, and my opinions of the place come from hanging around with relatives who haven’t been there for 4 generations, but it seemed pretty silly. The German one though; just no.


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