Excerpt From 'Boomerang'

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. The windows of city hall are dark but its front porch is a hive of activity. A young man in a backwards baseball cap, sunglasses, and a new pair of Nike sneakers stands on a low wall and calls out an address:

"Nine hundred Cambridge Drive," he says. "In Benicia."

See also: Interview with Michael Lewis.

The people in the crowd below instantly begin bidding. From 2006 to 2010 the value of Vallejo real estate fell 66 percent. One in sixteen homes in the city are in foreclosure. This is apparently the fire sale.

Back in 2008, unable to come to terms with its many creditors, Vallejo had declared bankruptcy. Eighty percent of the city's budget — and the lion's share of the claims that had thrown it into bankruptcy — were wrapped up in the pay and benefits of public safety workers. Relations between the police and the firefighters, on the one hand, and the citizens, on the other, were at historic lows. The public safety workers thought that the city was out to screw them on their contracts; the citizenry thought that the public safety workers were using fear as a tool to extort money from them. …

The people who had power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with police officers and fire-fighters isn't a public-sector problem; it isn't a problem with the government; it's a problem with the entire society. It's what happened to Wall Street in the run-up to the subprime crisis. It's a problem of people taking what they can, just because they can without regard to the larger social consequences. 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.

Also of interest: State governments face budget deficit crisis. >>

Reprinted from Boomerang: Travels in the New Third World by Michael Lewis © 2011 by Michael Lewis. Used with permission of the publisher, W.W. Norton & Company, Inc.