Role Of Insanity In Boomerang
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Einstein once said that the “definition of insanity is doing things over and over again and expecting different outcomes”. Michael Lewis gives a clear depiction of Albert’s Einstein definition of Insanity in His book Boomerang. Each country portrayed in Boomerang, ignored their red flags of the economic catastrophe which later impacted the world financially. All of the five countries ended in the same disastrous states because a fool and his money are soon parted.
Iceland was the number one country in the United Nations’ 2008 Human Development Index until it all went up in flames. In 2003, Iceland’s three biggest banks went from a few billion dollar in assets which accounts to 100 percent …show more content…
In the late 90’s, Greece wanted to be treated like a Northern European country and in order to be accepted, the government started to statistically manipulate their numbers. The Greek government lowered their budget deficit by moving expenses off the books. Also, they lower inflation by freezing prices for things like electricity and cut taxes on goods and services. To stay in the euro zone, the government hired Goldman Sachs to make up deals that hid their debts. The investment bank also taught the government how to use future revenue receipts, like highway tolls and airport landing fees for cash up front. The Greeks would be able to disguise their true financial state for as long as (a) lenders assumed that a loan to Greece was as good as guaranteed by the European Union and (b) no one outside of Greece paid very much …show more content…
The government had swapped a worthless lake for 73 prime Real estate properties worth a billion dollars. The new government under George Papaconstantinou realized the financial crisis the country was in was worst’s than expected. Greece’s national railroad paid $400 million annually in wages but only generated $100 million in revenues. The three government-owned defense companies are billions of Euros in debt. The country’s public health-care system spends far more than the European average for supplies. Every day, George and his staff at the General Accounting Office would discover new debt that was kept off the books. By the end of their discovery process, Greece’s projected deficit went from 7 billion to 30 billion Euros because there was no Congressional Budget Office. Greece’s problem is not only that its government mismanages money but also that it can’t collect taxes. A vast majority of Greece’s self-employed population, who make up a large percentage of the work force, cheat on their taxes by claiming much lower wages. Greeks all cheat by insisting on being paid in cash. The cheating means that about 30 to 40 percent of Greece’s economic activity that should be subject to income tax goes unreported. Also, the Greek citizen avoids paying high real estate taxes by reporting the low computer-generated appraisal