Michael Lewis's latest piece of financial-disaster travel journalism lands close to home.
WELCOME TO VALLEJO, CITY OF OPPORTUNITY, reads the sign on the way in, but the shops that remain open display signs that say, WE ACCEPT FOOD STAMPS. Weeds surround abandoned businesses, and all traffic lights are set to permanently blink, which is a formality, as there are no longer any cops to police the streets. Vallejo is the one city in the Bay Area where you can park anywhere and not worry about getting a ticket, because there are no meter maids either. ...
Back in 2008, unable to come to terms with its many creditors, Vallejo declared bankruptcy.
Vanity Fair has put the whole thing online here. Also included: Riding bikes on the beach with Schwarzenegger, chatting with Meredith Whitney and sitting through a city council meeting in San Jose.
Near the end, Lewis returns to the central metaphor he's used to describe the global credit boom: people alone in a dark room with a pile of money.
It's not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They'd been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.
Here's how Lewis spun out the metaphor for Iceland and Greece in an earlier story:
Icelanders wanted to stop fishing and become investment bankers, and to allow their alpha males to reveal a theretofore suppressed megalomania. ...
As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.
And from his story on Ireland:
Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction. ... Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another.
Planet Money interviewed Michael Lewis earlier this year. And see Lewis's Vanity Fair pieces on Ireland, Iceland, Greece and Germany. The pieces have been collected in a new book, Boomerang.