Boomerang: Debt and Bankruptcy in the World's Cities and Countries

Many of you may be aware that the City of Stockton is on the verge of filing for bankruptcy ("Stockton, A Former Boomtown, Teeters on the Edge of Bankruptcy"). If it does, it will become the largest city in the U.S. to go under. It isn't the only city in California to find itself in trouble. Vallejo declared bankruptcy in 2007, and San Jose is struggling with an increasing debt burden that has led it to lay off a large percentage of its employees ("Making Sense of San Jose's Pension Mess"). Most of this debt is a combined function of unwarranted spending on public projects that were funded through bond issues, incredibly generous retiree health and pension benefits, and the subprime mortgage crisis that led to a collapse in the real estate market and a decline in city and state revenues.

It is, of course, more complicated than that, and the tale of the debt woes of U.S. cities as well of several European countries is hilariously recounted in Michael Lewis's most recent book, "Boomerang: Travels in the New Third World," which begins by focusing on a series of European countries that are struggling with overwhelming amounts of debt (e.g., Ireland, Germany, Iceland, and Greece) and ends with a look at the struggles of California cities, in particular, San Jose and Vallejo. Lewis's previous book, "The Big Short: Inside the Doomsday Machine," is also a great read, as it explains in humorous detail, what the subprime mortgage crisis was all about. You may recall that Lewis is also the author of "The Blind Side" and "Moneyball."