Analysis of Michael Lewis' articles on the Economic Crisis in the World!

Katie Dowis

Lewis Analysis

Comm. 337

10/30/11

            Editorial writer for Vanity Fair, Michael Lewis has made sure that his works have maintained a consistent theme and all can be linked to one another. The articles that I found the most similarities and relation between one another were “California and Bust”, and “Beware of Greeks Bearing Bonds.” The amount of similarities that the state of California’s fiscal situation has with the downfall of the Greek economic system is surmounting. California seems to be heading in the same direction as the nation of Greece, which would mean now that instead of just one nation having to bail out another (i.e. Germany and Greece) it would be one state having to bail out another (Texas or Colorado to California) creating animosity between states within the union, and I think we all know what the outcome was the last time that happened. 1860’s anyone? 

            “California and Bust” begins with the experience of Meredith Whitney, who simply did research on the municipal bonds and her findings concluded that there was a problem that will be American people. Seems like a vague enough statement right? Well, people believed or at least paid attention, so she became the target for the financial advisors who feared she was messing with people’s faith in the market, which could be very detrimental. No one wanted to recognize the problem and called Whitney “a fire starter” of sorts. Regardless of people denying a problem in the muni-bond system, it was still brewing and Whitney just pointed out the discrepancies that would cause cities and counties to feel the financial strain being pushed down from the federal, to the state level and state on down until it’s the citizens being dramatically affected. Then the article switches gears. The first portion will give the reader and professional opinion and also, show the fear and panic that can be evoked from Americans when it comes to possibly losing their money. The next portion gives a deeper perspective from someone who has been power and knows the inner workings of state finance, Former Governor Arnold Schwarzenegger. This is the guy who had the power to change the direction the state was going (or at least we all thought so. Arnold explained how California’s legislation is structured to be irrelevant and self-destructive. If the Governor wanted to pass a bill, they could be vetoed by the House, and vice versa. So, in basic logic, that makes it very difficult to get anything done. Plus, throw in the fact that citizens want to continue social services but not pay for them; these facts create a serious fiscal problem for cities. The “Governator” acknowledged the issue openly and wanted to make it known that he tried to curb the effects of overspending and little revenue. If the state didn’t have the tax money, they couldn’t maintain public services to the extent that the people are used to. Arnold couldn’t understand and seemed frustrated that he couldn’t change the people’s attitude. This part of the story relates to the “typical, American sense of entitlement” and seems to juxtapose the attitudes many foreign countries have toward America because of this deserving attitude; ironic how it’s lead to the foreboding position California is in now.

            The story shifts once again in the interview with Mayor Chuck Reed of San Jose, California. This perspective gives the reader the point of view from the city level. A bug’s eye view so to speak. San Jose, “owes much more money to its employers than it can afford to pay, that it could cut its debts in half and still wind up broke.” San Jose’s main mistake was the continuous concessions being made to the public safety unions and their demands. These concessions kept coming until there was such a schism between the citizens and public safety officials that no one felt like they could trust each other. While interviewing Mayor Reed, Lewis made a connection when Reed said, “We’re not as bad as Greece, I don’t think.” Well, not quite, however it definitely resembles a smaller scale version of the Mediterranean nation.

            Lewis appeared to be intrigued with the similarities between California and Greece’s economic downfall, so of course he made the long journey to the riot stricken country. This time however, his subjects would be much different than he was accustomed to. He was entering into a world that was rife with a mix of apathy and violent rage. Greek citizens have enjoyed high incomes, low or no taxes and generally publically provided social services for so long that now the hangover has set in. People are beginning to realize the amount of trouble the economy and their country is really in. Germany even offered to try and curb the blow, but it was out of the question for Greek Finance Minister Papconstaninou Germany, and the IMF, International Monetary Fund, have been struggling to bailout the newest members of the Euro Union by basically taking them to raise. “Greece has been removed from the free financial markets and become a ward of other states” (Lewis, 5). But this only temporarily solved the problem as it was Greece’s government had racked up over $800 million dollars in owed pensions alone that it could not pay, hence the riots in Athens. The citizens of Greece, much like California, had grown accustomed to the benefits of society but did not want to have to pay for them. Lewis uses the words “waste” and “theft” as the two descriptors of the Greek economy. People of Greece expect to pay bribes in order to get anything done. These frivolous mistakes have created a population who is indoctrinated to believe that thieving and underhanded deals are the only way business is conducted.

            Also, another problem within the system is that the Greek people have never had any consequences for not paying the determined taxes. “The Greek people never learned to pay their taxes because no one is ever punished”, said the Finance Minister. After all, he is the guy whose job it is to clean this mess up. It’s his perspective that Lewis uses to give the reader an image of the inner workings of this disaster. He is the one who is being ultimately held responsible for this crisis and whatever repercussions come along with that. “”George, we know it’s not your fault, but shouldn’t someone go to jail?””(Lewis, 6) The stigma attached to being the “Greek” representative to the world was surmounting and the minister could definitely feel the pressure. But with all of the corruption, most would consider somewhere nicknamed “the holiest place on earth” to be a safe haven from the thievery however, this particular monastery has quite the scandalous record. The monks of the Vatopaidi are accused of buying a low cost piece of land with a lake, and then trading it for much more valuable property and reaping the benefits from it. It is odd however. These are monks, these guys are supposed to be opposed to the material because they are so overwhelmed by the spiritual. “We work for others. The Greek newspapers, they call us a corporation. But I ask you, Michael, what company has lasted for 1,000 years?” Father Arsenios asked Lewis (Lewis, 14).

            It seems the motives of the monks were simply to restore their monastery to its former glory. Their ventures in real estate began when the church was attempting to reclaim lost property from all the way back to the 1400’s. This lot of land with a lake seemed to be a plain investment but for one reason or another the monks wanted to be bought out of their property for much more than it was worth. The Finance Ministry couldn’t just give the monks money for nothing. How about a trade? This was the next initial response from the monks, they wanted out of this land and onto something more stable. They somehow convinced the appraiser that the land with the lake was worth 55 million Euros more than previously apprised and no one knows why. The amount of corruption and devious dealings that have been occurring in Greek has permeated everything and everyone, even the holiest of men. The capitulations that Greece must succumb to with drastically change the social structure and the economy of the nation which in turn will most likely shake the dynamic of the Greek people and the European Union’s relationships within itself.