Reddit reviews Boomerang: Travels in the New Third World

I just started reading Boomerang. The first chapter is devoted to Iceland. One of the main points is the feeling of deservedness felt by the Icelandic investment bankers who had been fishermen days before. One says on his first day of his first banking job (no training) his job was to advise on currency hedging. The overall feeling in Iceland was that the Icelandic people were particularly well suited to investment banking.

Paul Krugman has a nice summary here. Experts will disagree about how Krugman begins his analysis, and where he goes, but I think this is as good a place to begin as any. A longer treatment, but a more controversial one, is Boomerang by Michael Lewis.

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I think it is controversial because of the way Lewis paints citizens of any one country with the same brush. Claiming Germans have characteristic X while Greeks have characteristic Y, and the interaction of X and Y contributed to the Euro crisis is not exactly a formal treatment of the subject. That said, his ability to tell an interesting story about boring things like the IMF and fiscal policy is astounding.
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Once you've finished the Krugman piece, I think The Economist is the good place to keep up with current events. (See this for example.)

Moving beyond journalism, I would browse through the articles at VoxEU. While I wouldn't call the work there popular writing, it is certainly accessible. (As an example, this piece on Spain is worth a read.)

I meant being willing to actually read a full article, or in this case LRonPAul2012's excellent post. How many crazy Austrian economics articles have you read, just to try to understand the opposing point of view?

But yes a basic macro textbook would be a good start.

Edited to add: I would be up for starting a EPS book club of relevant books if anyone is interested.

I just started "Boomerang" by Michael Lewis.

For questions 1 and 2.

1. If you are packing the loans into a CDO, they are being sold on the open market. Once it achieves a AAA rating, as most did even though they were mostly subprime, alt a, or arm, it is sold and shipped off the originator's books (While the originator of the CDO collects X% in fees)
   
   Basically how the originator makes their money is by X amount of CDOs they sell. There was no incentive to pick and choose the best borrowers to sell a loan to because how the CDOs were sold they achieved the best rating regardless of the borrowers credit risk.
   
   Due to this model, people are going to try and get as many people into the homes and sell the CDO asap. This caused questionable lending practices to result, NINJA (no income, no job, no assets) loans, manipulating borrowers income, assets, etc.
   
   Things that could be changed to help not have this occur again:
   
   a) Feds monetary policy was pretty meh during this period, due to low interest rates the banks had pretty much an endless supply of money and when all the reasonable ventures dried up they had to explore other opportunities to lend.
   
   b) Ratings agencies need an overhaul in how they receive their commission, preferably they should be being paid by the investor not the person issuing the security. This will help to eliminate the bias that results.
   
   c) Having X% (2-5) remain on the institutions books who created the CDO will help to make them responsibly lend. This is because if they are required to have it remain on their books, they will make better longer term decisions in who to lend to.
   
   I'm pretty sure all of these issues are discussed in Nouriel Roubini's book Crisis Economics
   
   Another Great book already mentioned in this thread is by Michael Lewis The Big Short
   
   If your interested in the European Crisis Michael Lewis also just came out with Boomerang

Yeah, they really are. I don't see any path for them that is not full of pain.

Since you liked it, I thought I'd mention that that article was part of a series, which was compiled in the book, Boomerang

I think the entire book, via individual articles is available online. The one on Iceland is a good read. Well, so far, I've only found:

Wall Street on the Tundra

>I know there is something huge going on there, but I don't know what.

The Greek people were incredibly greedy after joining the Eurozone, and spent themselves into bankruptcy on the strength of the German economy which props up the Euro. And now the free-money-faucet's been turned off and THEY WANT MORE FREE STUFF!!!!!!!!!!

http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0393081818

Ireland fell from the seduction of cheap credit which allowed them to overextend themselves into oblivion. Does that sound familiar? For a more detailed understanding I recommend you read this. It's an excellent book. Instead of asking me to defend my position why don't you show me one instance where Keynesian economics has been right in the long term? The cyclical nature of real world economics will make that task difficult for you. What you seem to not want to see is that by every measurable metric the system has failed, and that it is a system predicated on Keynes ideas.

I'm going for that walk now where I will explain to a 3 year old in great detail that you can't turn one acorn into two using fractional banking, and hopefully I can make the lesson stick.