America needs to hit bottom “like an addict” to rebound from its economic woes, according to Michael Lewis, author of Moneyball, The Big Short and other books that have been optioned for movies.
“At every level of the society we have been willing to basically sacrifice our long term interests for short term interests,” Lewis told Bloomberg TV’s Tom Keene in an interview Wednesday. “It’s not sustainable and I think what happens is we have to hit bottom first, like an addict.”
And where is the bottom, according to Lewis, the darling of Wall Street traders, politicians and writers alike?
“It’s some level of unemployment, slow growth, what we’re going through now and people say ‘enough already I want the truth and I want our lives to be organized differently,’” Lewis said in the interview.
Lewis explored Americans’ relationship with debt through the prism of California cities that built themselves up during the housing bubble and are now on the verge of -- or have already entered bankruptcy -- for a recent article in Vantiy Fair.
“What California shows the country is that the problem is individual behavior and attitudes,” Lewis said in the interview. “People want public services and they don’t want to pay for them.”
Other cities point to a crisis in state and local governments as they aim to come out from under debt they acquired but can no longer pay back. Central Falls, Rhode Island filed for bankruptcy last month and Jefferson County, Alabama agreed to settle its sewer bond debt last month, narrowly avoiding the largest municipal bankruptcy in U.S. history.
Though Lewis was critical of Americans’ relationship with credit, he said circumstances beyond their control may be to blame, citing both banks willingness to provide easy money under sometimes fraudulent or misleading terms and the jobs crisis. Employers added no jobs in August, as the unemployment rate held at 9.1 percent.
“Their economic lives aren't meeting their expectations and the reason that’s happening is the real economy is not providing the jobs,” Lewis said in the interview.
Lewis, who just released a collection of essays about the European debt crisis, got to the California story by starting in Europe, he said in the interview. The region remains locked in the midst of a sovereign debt crisis.
“If you look at what’s gone on in Europe, it really is a crisis of faith as much as anything else,” Lewis said in the interview. “The word spreads that Greece is going to have problems repaying its debts, its interest rates go through the roof and all the sudden its a self-fulfilling prophecy. The question to me was, what’s the equivalent in the states?”
On Wednesday, German Chancellor Angela Merkel said that the country would help banks recapitalize, according to Reuters. Germany agreed last week to expand the powers of the Euro bailout fund in order to help Greece, Italy and others solve debt crises.