Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism

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For those who have read Kevin Phillips' American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury, many of the themes in the current work will sound familiar. In this book, as well as American Theocracy, he reminds us that previous empires such a 17th century Spain, 18th century Holland, and the late 19th and early 20th century Britain all succumbed to financialization as their global power reached its peak. He argues the the United States is now in a similar position. In the last 30 years financial services have grown from 11% of GDP to 21%, and manufacturing has declined from 25% to 13%. A reversal of roles that Phillips sees as very unhealthy.

This huge growth of the financial sector was not without adverse consequences: in the last 20 years public and private debt has quadrupeled to $43 trillion. How this came about has been expertly explained in another book called The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash by Charles Morris. There was easy money as the Federal Reserve was lending money at less than the rate of inflation. Money was risk-free for the lender since they collected fees up front and sold the securitized loans to investors. When this process was repeated millions of times, one ends up with hard-to-value securitized debt throughout the global economy. Then when housing prices start to decline and homeowners start to default on their mortgages on a grand scale, you have a global crisis of American capitalism. (Bear Stearns alone was estimated to be holding $46 billion worth of bad money.)

As in American Theocracy, Phillips writes that the oil industry is another component of the current crisis. In the US oil production peaked in the 1970s, on a global level it is peaking right about now. And with the ravenous appetite for oil from newly industrialized countries such as China and India, prices will continue to go up. The US still gets "cheap" oil relative to Europe since oil is priced in dollars, but that advantage may soon disappear. The weakening dollar is forcing OPEC countries to move to Euros and other currencies. And some oil producing countries such as Iran and Venezuela are moving to other currencies for reasons other than economic.

The author began his career as a Republican strategist, but he has long since disavowed them. Having a monetary policy of free money, a fiscal policy of tax cuts and increased spending, and an ideology of unregulated market fundamentalism, the Republicans have lost most of their credibiltiy. This does not mean Phillips has gone over to the Democratic side. He believes that Bill Clinton was instrumental in the financialization of the economy, and that currently Hillary and Obama are beholden to investment bankers and hedge fund managers. What used to be the vital center in Washington is now the "venal center."

The conclusion of this volume is very gloomy. Phillips believes that we are at a pivotal moment in American history when the economy has been hollowed out, we are saddled with trillions of dollars of debt, and our political leaders are dishonest, incompetent, and negligent. Given that all that may currently be the case, it may be instructive to further meditate on the empires of the past. Spain, Holland, and Britain all managed to survive and even thrive, hopefully the US will do the same.

"Bad Money" is about the insecurity of America's future given a debt-gorged financial sector, and vulnerability caused by expensive dependence on imported oil. The term refers not just to the depreciated dollar but also dangerous attitudes and flawed financial products.

Phillips points out that over the last 30 years, financial services have nearly doubled to a record 20% of GDP (and an even greater share of corporate profits - 54% in '04), while manufacturing's share has halved to 13% (10% of profits), greatly imperiling the economy. En route, Washington has provided government bailouts and/or liquidity when financial institutions or methodologies got themselves into trouble (eg. S&L crisis; Citibank forced into technical failure, but allowed to stay open; bailing out junk bond investors by lowering federal funds rate; etc.), encouraging bigger problems down the road.

The positive impact of borrowing has declined about 60-70% from the 1970s-80s when such monies would mostly be used for factory and highway construction, compared to today's increasingly likely use for increasing leverage for LBOs, M&A, and hedge funds. Meanwhile, the negative likelihood of families experiencing a 50% drop in income has increased dramatically from 1970 - resulting in a greater probability of default.

Cognizance of our problems has been somewhat covered up with revisions to the CPI (understating costs of home ownership) and unemployment measures (not counting those who gave up and quit looking). Thus, the 2-4%/year CPI increase 2005-2007 would have been 5-7%/year, and unemployment would have been 8%.

Early millennium results include the housing sector (including its "ATM effect") providing 40% of the nation's growth in GDP and employment (an unsustainable rate achieved through financial gamesmanship that set the stage for the current financial and construction crash), while imported petroleum outlays rose from $100 billion in '02 to $302 in '06.

Observing from a distance, OPEC has reduced its foreign-currency reserves held in dollars from 75% to 62.5%, and Iraq and Venezuela began selling oil in euros and yen (admittedly for political purposes, at least at first). Meanwhile, the U.S. has antagonized major oil producers (Iran, Russia, Venezuela), and effectively dismantled Iraq - raising the risk of nations being unwilling or unable to supply the U.S. as supplies grow tighter.

Declining oil supplies, rising demand, global warming, our recession, and global loss of confidence in American financial markets are all converging and demand strong political leadership. Phillips, however, is not optimistic that this will emerge based on strong financial sector support for the Democratic Party and political failures in other nations needing dramatic change.

Phillips makes numerous comparisons between the U.S. today and the Great Depression (Eg. Total indebtedness was three times the size of GDP in 2007, higher than the prior record set in the years of the Great Depression), as well as the declines of Rome, Holland, Spain, and Great Britain. Regardless, no predictions are made about how long or deep our current downturn will be (though his writing hints the more severe possibilities), and he gives little or no attention to the steady amassing of dollars in Asia and associated growing unemployment of Americans. Finally, readers must also keep in mind that throughout the book he refers to $70 oil - obviously outdated vs. today's nearly $120.

Interesting Side Issue: Phillips states that food represents about 14% of the U.S. CPI, vs. 33% and 46% for China and India, respectively. Doesn't auger well for biofuels continuing to take 28% of the U.S. corn crop.

Kevin Phillips dedicates his latest insightful work of political and economic history to his grandson. It's a fitting tribute since, by the author's reckoning, the aforementioned young man might be well into his forties, and the U.S. deeply into its post-imperial senescence, by the time the mischief explained in the pages of Bad Money is fully digested by the earth's economic system.

Instead of reflecting upon and compensating for the turn to an unprecedented expansion of finance capitalism that today supersedes manufacturing in this nation by at least six percent of GDP, Wall Street, our empire's "coliseum," chose instead to gamble upon the promulgation of an unregulated class of investments known as derivatives, the size and scope of which, particularly in terms of their capacity to hedge against risk, could only be guessed at. So much for the efficacy of market deregulation.

In a similar context, it was sadly hilarious to hear former Treasury Secretary Robert Rubin state recently that no one could have guessed the present debacle. Or, to recall that Hillary Clinton had proposed a blue ribbon committee, presumably to be chaired or co-chaired by Allan Greenspan, to address the situation.

Warren Buffett has been on record for denouncing derivatives as "weapons of financial mass destruction" since at least 2003. Even so, to paraphrase Pete Seeger, "the big fool(s)" at Citibank and Bear Stearns, "said to push on." Privatize the profits and socialize the losses.

At present, these so-called derivative financial "instruments" are embedded deeply in every sphere of global economic activity, from domestic pension funds to the portfolios of credulous investors throughout the world who believed in the transparency of the U.S. market system. Their ramifications add up to a disaster, aided and abetted at every modern-day turn by America's government, under both Democratic and Republican leadership.

Through his incisive and perceptive use of charts and tables,and,in his exceptionally clear narrative, Phillips makes the case that our government lies to itself as well as us. Now, we are fifty trillion dollars in debt. Go figure. Better yet, read and be ironically comforted by the truths contained in this quietly patriotic book.

I have just ordered this book, but based on the excerpt published in this month's Harper's, it is a must-read for anyone concerned about our nation's economy and our position in the world. It appears to be lucid and well written, and it is not a political screen. (The bad guys are every administration in recent memory, not just the Bushes.)

Simply put, over the past 30-40 years, various administrations have changed the statistical bases of economic analysis. If consistent standards were used, inflation and unemployment would be shown to be much higher and the GNP much lower than we believe. We are losing the economic battle, but do not understand the extent to which we are because we have succeeded in lying to ourselves.

The brilliantly unclothed emperor has long been a popular tale: it's lesson is, of course, that delusions (while affording some key players progress) do not always compensate for reality (ultimately leading to the believers downfall on the realization of nakedness).

That tale may have to be altered if one reads this work. It profiles the triumph of financial services over manufacturing, the 2007 mortgage melt down (before the 2008 fiasco), the `Consumer Price Index' (subverted to assure retirees receive minor adjustments by absenting traditional components), the lack of monetary circulation reporting, peak oil production, and several other aspects of the current economy.

Though shorter (and less worthy) than the author's recent books (American Theocracy, American Dynasty, Wealth and Democracy), this work worth reading. If the reader believes inflation is about 3% (as the BLS CPI publishes) and does not want to brave facts and statistics that may prove otherwise, they should not read this book.

Does the mortgage credit crisis bother you? Are you concerned about high oil prices? Do you get the feeling that Wall Street is largely a high-stakes casino, where insiders collect billions on winning bets, and also collect billions on losing bets, payed off with taxpayer bailouts? Do you want to understand why this is happening and how the game works? Then go find a different book. The author of this book is a "big idea guy", and he does nothing to elucidate his major points, all of which I was painfully aware before reading page one.

The writing is in a churning stream of consciousness style, looping back over the same topics several times, in no particular sequence, as if hoping that some meaningful connections would appear just from the proximity of the paragraphs. Most annoying, is the habit of introducing an interesting topic, promising, "more on this in a later chapter", then repeating the introductory comments without pushing further when the later chapter arrives.

There is no way to deny that the problems outlined in the book are important and deserve attention. Most of the positive reviews here award 4 or 5 stars based on that alone. But not only are no solutions offered, the problems themselves are not broken down and explained in any meaningful way. The comparisons of recent American history to the declines of previous empires is interesting, but superficial. If the thesis is that an over-emphasis on financial services leads to decline, I want to know why. I believe it could be true, but I don't understand why. No help here.

I do know that when the government takes the downside out of risky behavior, by promising taxpayer bailouts for failed lenders, that it's a recipe for disastrously risky behavior. That's obvious. Why is it allowed to happen? Who can stop it? Somebody please give me the name of a book that can help.

One would expect that a book subtitled "Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism" would answer two basic questions: (1) What is wrong with the economy, and (2) How did it get that way? As a bonus, we might also like to know just who is responsible for the incipient Great Depression II, so that we can begin erecting gallows and fashioning enough nooses, and we might like to entertain suggestions as to how the crisis might be solved, but it turns out that Dr. Phillips knows no more about economics than do you or I or your local greengrocer. As a result, the book meanders in a desultory manner around various topics that are at best only tangentially related to our financial woes, and most are irrelevant.

In place of specifics about the economy, Kevin Phillips rambles about under the pretense of giving us the "Big Picture" or a "Historical Perspective," and thus we are treated to an entire chapter (chapter 6) on not merely what happened during the first Great Depression, but a complete overview of European history, as well. "In 1618, the fall of a weak Spanish first minister led to a burst of activism, and several years later . . ." And blah, blah, blah, followed by an analysis of the situation in Holland in the seventeenth and eighteenth centuries. It's all absolutely fascinating (NOT!), but the trouble with this is that, if one digs hard enough, one can discover any lesson from history that one's looking for, and when does Phillips get to the economic situation of 2008? He doesn't. If the fact that in the fifth century the capitals of both Rome and Spain were moved to different cities (pg.157) is pertinent to our present situation, then what, if anything, can be considered irrelevant? Rin Tin Tin? Cameron Diaz? Jujubees?

Throughout "Bad Money" Kevin Phillips refers again and again to his previous books (he wants you to buy them), and since he has little information to share with us about the present economic crisis, he begins writing those old books all over again. We get many pages of his American Dynasty, including the scintillating revelation that "John Quincy Adams was elected president in 1824, . . . twenty-four years after his father, John Adams . . ." and that "Benjamin Harrison was elected president in 1888, forty-eight years after his grandfather, William Henry Harrison . . ." (This in a book about the economy.) Phillips has a Mencken-like animosity toward the Christian Right that he vented in his American Theocracy, so he here he spends a chapter placing the blame of our financial situation at the feet of the devout.

Because it's easier to write about than specifics of the financial system, an entire chapter is devoted to the debate on whether the world has reached Peak Oil production or not, but now (November, 2008) that the price of oil has fallen below $50-per-barrel, all that has been rendered moot for the time being.

I would fain admit that on random occasions, the stream-of-consciousness Philips writes in stumbles briefly into economic matters, but much of this is material that you have already read in the same papers and magazines that Kevin Phillips reads. There are many graphs and charts from The Financial Times and many quotes from that British journal. Unfortunately, Phillips adds little to the quotes, and he doesn't clarify the more abstruse terms. This book desperately needs a glossary, and before you read it (not that I'd recommend that you do) you should first become familiar with such terms as brouses, derivatives, credit default swaps, mercantilism, deleveraging, fixed-leg features and two-step binomial trees. (If you don't know what those are, don't feel bad, neither does Kevin Phillips.)

There is some new and startling information in "Bad Money," but much of it is of a dubious nature and is merely mentioned in passing. Our nation's conservative masses have followed the lead of their mob masters (turn-on any radio) and are blaming "minorities" (you know who) for the financial crisis, because these high-melanin types purchased homes they couldn't afford. But what about the "Ninja loans" that Phillips mentions? These were loans eagerly given to people with no job, no income, no assets. Are the brown people to blame for those, too? Unfortunately, Phillips cites such loans only in passing. Which lenders made them? How many such loans were made? Sorry, no further information is available. Likewise, Phillips mentions bonds that were backed by delinquent credit-card accounts. Phillips informs us that these bonds were given a rating of AAA, but that's all he knows.

Phillips provides a stunning revelation when he quotes several sources about a shadowy Plunge Protection Team within the Federal Reserve that may (or may not) have been manipulating the market by secretly buying and selling stocks and futures. On the other hand (pg.60), "There's never been any official confirmation of this." That's quite a serious charge --the Federal Reserve, a government within the government, buying and selling stocks to influence the market-- and I for one would like to learn more about it. Is it happening or not?

Alas, Phillips admits, "I have no personal firsthand knowledge and am not interested in becoming a conspiracy investigator." In other words, he doesn't know. It seems that there is much that Kevin Phillips doesn't know about the economy. Read this book and you, too, will know just as little.

I have bought my share of books from Amazon over the years, and yet have never written a review before. Most of the books i bought were excellent, yet some weren't. However, even for these duffers, I never felt compelled to write a review. So what made me write my first review for this book?

Two words: OBFUSCATION and FRUSTRATION.

"Bad Money" isn't bad, it may even be great, if reading it weren't so darn difficult. I found Mr. Phillips writing style burdensome. I was left with the distinct impression that Mr. Phillips was more interested in showing others how intelligent he was, instead of making sure he communicated his ideas clearly.

Maybe others will not have the same opinion as I did, and I do not want to persuade others from buying the book. I just wished he wrote a little more like Ernest Hemingway, and less like William F. Buckley, Jr.

The short message from this book is that the U.S. economy is in trouble and that trouble is about to get worse. Why? Private and government debt and spending are out of control and the chickens haven't come home to roost yet in terms of higher interest rates and higher costs of imports, the government lies about inflation, the credit crisis isn't over by a long shot, peak oil production will cause prices to shoot through the roof, our manufacturing base is gutted, economic growth is going to be lousy, foreigners aren't going to keep taking dollars, and nobody likes us outside of the country. Are you ready to become a second-rate country?

Unless you want to see some of the excellent tables and charts in the book that document these points, you don't need to read the book. Mr. Phillips doesn't add much to that brief message except to make continual references to prior histories of other nations. You would do better to spend your time working on solutions to the problems.

The book is also very dated, focusing on the conditions of August 2007 and the levels of oil prices and debt problems then. As we all know, those were the good old days compared to June 2008.

The writing style is also annoying in that Mr. Phillips doesn't assemble his points into a logical pattern to "prove" what might come next. It's an overly qualitative and anecdotal approach to issues that have quantitative implications.

There's not a bit of advice in the book about what you can do to help secure your future: This book seems to be totally aimed at setting the agenda for the next president of the United States.

Kevin Phillips' latest book - Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism - is not an easy read and not an easy book to review. To properly review it would take more space than is practical in this format. What I truly want to do with this review, then, is to convince people how very important this book is and, as other reviewers have noted, how important it is for anyone willing to tackle its complex subject matter to read it _now_. It will truly change your perception of what is happening in the US economy and in the US political scene. And, also as other reviewers have noted, it is in the end quite depressing as to how bad our current situation and how bad our prospects for the immediate future are.

Reading Phillips' books, I often get the feeling that I have walked
into a classroom where the professor is delivering his third lecture on
the subject and I must scramble to follow what he is saying. Bad Money is
no exception. I wish his editor(s) had pushed him to put in a few well
laid out examples that would endable the reader to properly understand
just what a CDO or an SIV actually consist of, how they function, how
they're handled in the marketplace and so on. Again, this is not an
easy read.

That said, however, the points Phillips makes are well backed up in
economic analysis and facts, and in historical relevance, both of which
areas Phillips is intimately familiar with. He is sounding an alarm to
anyone willing to listen, and what he lays out in this book is very
disturbing to anyone who has noticed the growing chaos in our financial
markets, the rising insecurity of our economic situation, and the
seeming inability and unwillingness of our political leadership to deal
with these growing problems.

The preface, with its subtitle "The Political Economics of Deception",
starts with these paragraphs that lay out in startling clarity the
central concern of the book:

"The most worrisome thing about the vulnerability of the U.S economy
circa 2008 is the extent of official understatement and misstatement --
the preference for minimizing how many problems there are and how
interconnected they are... Whether the U.S. government and the
Republican and Democratic parties can remedy the debt and oil-related
transformations of the last two or three decades is dubious enough. Far
more worrisome is the possibility that neither Washington nor Wall
Street is willing to confront the deeper problem -- the ascendancy of
finance in national policymaking (as well as in the gross domestic
product), and the complicity of politicians who really don't want to
talk about it."

One important point Phillips makes is one people can instinctively
relate to: the debasement of government statistics. People know from
their daily lives that the economy is not good, that prices of almost
everything are on the rise, that jobs are harder to come by, and that
overall, things just aren't as good as they once were. But at the same
time, the government keeps insisting that unemployment and inflation
are low and that the economy is growing, citing figures that people
can't reconcile with what they're experiencing every day. The reason is
because the numbers have been cooked to support the government's claims
and no longer represent any meaningful measure of the things they are
supposed to relate to. And the numbers they can't cook, they suppress.
For example:

"Beginning in March 2006, the new Fed chairman, Ben Bernanke, ordered
that the government cease publishing data on changes in the broadest
measurement of the U.S. money supply, the so-called M3. It was
expanding at a 10-12 percent annual rate in 2006; outsiders calculated
that as of August 2007, that growth had accelerated to a high-powered
14 percent.... Continued publication of M3 reports would have undercut
the assertion of Bernanke... that the inflationary expectations of the
public had been safely 'anchored' at a low level by the tame core
CPI... For 2007, the U.S. M3 numbers show runaway inflation in the
annual range of 14 percent."

Another point Phillips makes in the book is that our growing financial
problems are compounded by our energy and political problems:

"the prior eminence of the United states in global petroleum matters
has left not only an outdated infrasturcture but a spectrum of
disabilities, unwarranted smugness, vested interests, and booby traps.
These range from currency vulnerabilities and lack of a serious
national energy strategy to apparent policy inertia in Washgton, where
many officeholders seem unable to understand how much has changed for
the United States over the last decade."

Other warnings include the rise of oil consumption by countries like
China and India and the extent to which oil-producing countries are
already re-directing their output towards those markets.

"In the wake of the unpopular U.S. invasion of Iraq, the Saudis showed
their displeasure... continuing to reduce oil sales to the United
States... after peaking at the equivalent of 1.7 million barrels per
day in 2002, Saudi sales to the United States fell to 1.1 million
barrels per day in May 2004... China soon jumped ahead of the United
States in oil exports from the Saudi kingdom... the demand for oil in
China alone will, before long, equal the entire production of Saudi
Arabia... China stands to be the world's largest oil market of the
2030's, possibly replacing the United States in that capacity by 2025."

Phillips also touches on why the political leadership seems both unable
and unwilling to deal with the array of problems the country is facing
and shows how this same deadly political inertia has afflicted other
great powers in history, citing examples from the Spanish, Dutch and
British economic empires that preceded our American economic empire.
The comparisons are fascinating and disturbing at the same time.

Again, in looking at what I have written, I know that I have barely
scratched the surface of all there is in this book that merits being
read. All I can do is urge anyone who wants to understand why the
economy seems to be in such bad shape, why the government figures seem
to be so contradictory with what is happening, and why our political
leaders seem neither willing nor able to deal with the problems, this
is the best book you can possibly read and the time to read it is
_now_, before the election, so you can see through the utterly
meaningless drivel that politicians are putting out instead of talking about the very real problems we're facing, about what our options - however painful - are, and about what the consequences to us as as nation are if we continue to do nothing.

While this book makes some very insightful and valid points, unfortunately those points are buried in a pile of words in dire need of an editor. Just read the preface and skip the rest of the book. The preface is a quick summary of the entire book - mostly word for word of major points. Better yet, read the preface while standing in the bookstore and save yourself the $25.

Phillips' book Bad Money is one of the most poorly written, tedious books I have ever tried to read. It has a lot of disturbing facts through-out; things the american public should be informed about, and elected officials should be held accountable for. But GEEZ! Why doesn't the author abide by basic writing principles, for example having one main subject per paragraph, clear and concise language, etc. The book reads like a rough draft.

What are we supposed to DO about the problem??? No help here.

Kevin Phillips is a national treasure, and, surely by temperament and style, both on the page and in person, is the antidote to the Reagan/Bush era, an era many claim is now at its end. I say that because Mr. Phillips projects a formal, slightly grumpy aura, tempered by a wicked sense of low key humor, which I find refreshing after the Gipper and Crawford Ranch scene. We don't get too much of a biography of him, but I like to imagine him as an old New Englander, hard to fool, the type of teacher that we hope our students will still encounter in their studies. For agree with him or not, you have to take Mr. Phillips seriously. After all, Phillips, 67, a prolific author, has traveled through a good range of our political spectrum, from the right side in 1969 with The Emerging Republican Majority, to his American Theocracy in 2006, and now Bad Money, in 2008, which places him just to the left of center, although he might dispute that and claim that it's the center that has migrated so far to the right since 1980, not him. He is now a registered Independent voter.

The deep frame of Bad Money is the warning that utopian illusions can emerge (and have) in America from the right side of the political spectrum as well as the left, which is where most of our 20th century political dialogue had preferred to locate the threats. Phillips has previously described his 1960's views of the excesses of the left of that era. Now he is horrified at some of his own progeny on the Right and what they have wrought, especially in the realm of the American economy. He lays it out directly in the Preface entitled The Political Economics of Deception: "The most worrisome thing about the vulnerability of the US economy circa 2008 is the extent of official understatement and misstatement - the preference for minimizing how many problems there are and how interconnected they are."

Like all exercises in self-examination, this is a difficult undertaking about a nation which emerged towards the end of its "American Century" as the world's only superpower, and one which has seen itself as a "City Upon a Hill" and has to carry the additional burden of "American Exceptionalism,' which tends to get in the way a bit of a searching national dialogue - especially in a presidential election year, and even one in which large majorities poll that we have gotten seriously "off track." Phillips details just how far we have gotten off track, picking up and expanding upon the final section of American Theocracy, called "Borrowed Prosperity." It seems he wasn't going to write another book for the 2008 election - but the deepening financial crisis of 2007 and a head-in-the-sand attitude by officialdom led him to do it. And I'm glad he did.

He is a patriot in the best sense of the term...not pugnaciously posing as the Patton of market fundamentalism/nationalism, like Larry Kudlow on CNBC, but rather as the prophetic author of Staying on Top: The Business Case for a National Industrial Strategy (1984). That title tells you a lot about what has gone wrong as the FIRE sector (Finance, Insurance, Real Estate) has displaced manufacturing as the leading node of our economy. If it was on a sound footing, we might not be singing the blues, and worse, today. But it's not. Instead, what has emerged is called the "shadow banking system," or the "financial Wild West," or a "liquidity factory," much of it "over the counter" and off the bank's books, unregulated or casually regulated at best. The mortgage crisis, then, was no mere random walk of fate: "Lenders needed to woo high risk borrowers for the good commercial reason that there weren't enough low-risk borrowers to meet the volume demanded by the big commercial banks, investment firms, and other packagers, all pursuing the lucrative fees." So much for the old term "conservative as a banker," now surely one of the great oxymorons of the English language.

While much of the conservative establishment, and a good portion of the Democratic Party as well have wanted us all to obsess over the national debt and federal deficit - public debt - Phillips points out that it is really the frightening growth of private debt - personal and institutional - that is the real problem, having grown from $11 trillion to $48 trillion between 1987-2007. Phillips comments that "`Risky' doesn't begin to describe this new focus in the American economy. Bingeing on debt is reckless, and financialization has a long record of being an unhealthy late stage in the trajectory of previous leading world economic powers." The disturbing thought that "American Exceptionalism" might be subject to the same deep historical forces at work for Spain, the Dutch and the British Empire is necessary but tricky ground to navigate - try calling that notion in to Rush Limbaugh on some slow afternoon at the Credit Default Swap trading desk.

Phillips believes that both parties have testified for this sector as the very essence of the market at work, treating it, in reality, as the key American "mercantilist" sector in the globalization race - one to be bailed out officially or otherwise, whenever it gets into trouble, which is often and expensive, although the market fundamentalists cannot bear to hear it described this way. Here's the vintage Phillips' prose to give you the picture, heading into 2008: "These are not circumstances in which a nation should put faith in an overgrown and overextended financial sector, with its bankrupt mortgage lenders, hotshot hedge funds, and reckless megabanks, several of which (fined years back for colluding with a scheming Enron) wouldn't know a civic obligation from a parking ticket."

The burdens of civic obligation, however, don't fall just on the financial instrument "factories," which are variously described as reckless, malfeasant, dishonest, incompetent and negligent, to give the range of Phillips' wrath. Civic burdens also fall on the citizens' shoulders, a refreshing notion in an election year where families are invariably described as "hard working." He pointedly contrasts the level of economic literacy during the 1890's agrarian Populist Revolt of the south and west, when "periodicals like the National Economist had a hundred thousand subscribers...Compared to early-twenty-first-century torpor and lack of financial debate, the nineteenth-century agrarian civic engagement had an almost Fourth of July quality." Despite all the alarming ingredients being tossed into what would become a witches-brew of financial trouble between 1987-2008, he says these regions of former Populist discontent have been "anesthetized...The principle ethers at work were evangelical, fundamentalist and Pentecostal Christianity, infused with preoccupation with terrorism, evil and Islam that greatly strengthened after September 11." Also noted is the rise of the "Prosperity Gospel" (the religious cousin of the more secular "miracle of the market") among many of the most prolific new churches and its kinship to the religious/prosperity fervor of the Roaring Twenties - and we all know what followed after that.

American consumers scratching their heads in the spring of 2008 over the glaring contrast between the rising prices they face in everyday life and the more soothing reports of the official Consumer Price Index would do well to chew a bit more on that savory title from the Preface - The Political Economics of Deception. The reader is rewarded with a tour of the origins of fiddling with the CPI constituent parts and definitions - and of the possible motives, focused on keeping Social Security and labor COLA clauses down. We learn about one critic - and the critics are growing in number - John Williams, whose work at ShadowStats.com leads to the conclusion that if 1990 CPI methodology were used today, "the government would have been reporting 5 to 7 percent inflation between 2005 and 2007...instead of...2 to 4 percent." It would be enough to have brought the economy close to recession - that's the magnitude hinted at with the difference in these numbers. We also learn that in March 2006, the Federal Reserve dropped "M3," perhaps our best indicator of the overall money supply, and one that would better measure what was going on in those secretive liquidity factories, with the notation from our author that "for 2007, M3 numbers show runaway inflation in the annual range of 14%." No wonder so many of Milton Friedman's remaining disciples are fuming.

And that brings us to Phillips' treatment of the "Plunge Protection Team's" alleged intervention into the futures' indexes to stabilize the stock market at times of extreme turmoil. (A cautionary note here: any consideration of the resemblance between this line of inquiry and the plot line of "The Wizard of Oz", where Dorothy learns that behind the curtain is... hereby formally deferred to a later time...). It was founded in 1988 by Reagan's presidential proclamation as the President's Working Group on Financial Markets. He's doubtful we'll ever get official recognition if indeed these actions happened, due to the lawsuits such a confession might trigger. And, after all, a tactic like this can be financial death to those shorting the market - and also acknowledgment that things are worse than they seem and the "free market" far more dependent on government intervention than market utopians would ever be comfortable with. Phillips disclaims that "I have no personal firsthand knowledge and am not interested in becoming a conspiracy investigator." But he does look closely at the possibility that the team more broadly represents a commitment to a sector too important to fail, worthy of the grandest stretches in existing policy instruments - witness the ground covered by Fed. Chairman Bernanke in the rescue efforts of March 2008. He notes, glumly, that our manufacturing sector received no such considerations of magnitude or imagination during the decades of its long deathwatch.

This review will close with a call to pay close attention to a worry Phillips broaches in Chapter 5, "Peak Oil." This call comes in May, 2008 with oil prices hovering near $125 a barrel, prices which are mesmerizing a nation still stuck on overseas sources. Please consider Phillips' long track record of accurately anticipating our troubles, and listen carefully to the background drumbeat of many not too subtle administration voices pointing to the evil Iran has in store for us and others in the Middle East. It's a time to ponder Phillips' warning: "Political imperatives being what they are, the temptation of conservative civilian leaders in the United States to pursue oil-related military action against targets like Iran is easy to understand...The tinder is almost perfect for a war or military strike rooted in the frustration of a great power in decline."

There is no surer way to usher in the specter of 1929-1933 than to head down this oil strewn path, with all due respect to the powers, real or imagined, of the Plunge Protection Team. By clearly naming the threat, let us all hope we can head it off.

William R. Neil
May 12, 2008

Phillip's book is similar to several other books currently available that show how the deregulation,especially of the banking and financial services sector, and privatization polices,started by Carter in 1978 and continued by all American Presidents since then ,has converted the United States of America into a speculator type economy where financial sector firms seek to extract a profit by the manipulation of balance and income statements .The goal is to make a return without any actual production of goods or services.
There are two minor shortcomings in the book.First,Keynes's chapter 12 in the General Theory(1936)explained exactly how the USA had been converted into a speculator economy during the 1920's.There is no mention of Keynes's contribution anywhere in the book.Second,Adam Smith was perhaps THE major proponent in history of a heavily regulated banking and financial services sector.Smith warned against allowing banks to make any loans available to projectors(Keynes's speculators and rentiers),prodigals ,and imprudent risk takers.Smith warned of the very serious consequences that would probably result if such loans were made-the aggregate savings of the nation would be"... wasted and destroyed..."[Smith,1776,Wealth of Nations,pp.339-340,Modern Library (Cannan) edition].Smith,contrary to Phillips, was not a believer in laissez fairy land.Smith was, in fact, the last of the Scholastic philosophers.He improved Scholastic thought and brought it up to date through the 18th century .The warnings of Smith and Keynes concerning the dangers of allowing speculators to run economic policy have been ignored.I have deducted 1/2 of a star from my rating because Phillips has ignored these warnings also. Nevertheless,I recommend this book .

This is a scholarly, intellectually courageous and very timely expose of the rise and fall of America's twenty-five year experiment with unfettered laizze faire capitalism, and it's destruction of the U.S. economy, the U.S. dollar, and the U.S. standard of living.

He shows how Greenspan, the Bushs, and the Clintons, essentially turned America into a nation of debters.

For example, Phillips shows how Greenspan and company quietly and unilaterally lowered social security benefits by replacing the original Consumers Price Index or CPI which measures inflation with a completely bogus index that understates the tue inflation rate by half or more. This not only reduced the COLAs to which retirees are entitled to by law, but also reduced the pay checks of tens of millions of working people, while making it appear that the Fed was sucessfully controlling inflation while inflation was in fact completely out of control. Wait till the social security and AARP learn how they have been cheated out of their full and rightful benefits.

Phillips discusses in depth and in detail the creation of the housing bubble in which the Fed and banks actually orchestrated the defrauding of millions of Americans who now own houses that are worth less each month than they owe on them. He presents a range of possibible outcomes, non of them good, and all of them already overtaken by actual events, i.e. the continued collapse of house prices with no end in sight. (See [...] for daily updates of the housing bust.)

He documents how the Fed under Greenspan repeatedly rescued the rich and powerful, using the tax money of the middle-class, which enabled the rich to become even more rich while impoverishing the middle class.

Phillips discusses the trillion dollar student loan industry, unique to the U.S. No other country requires its students to mortgage their futures to get advanced education and in fact neither did we until very recently. I would have appreciated a more in depth and detailed discussion of the student loan racket, such as provided by Marty Nemko, the author of COOL CAREERS FOR DUMMIES who says the problem with the student loan program is that the colleges and their lobbyists manipulate legislators into increasing govt-funded financial aid, which merely allows the colleges to raise their prices more i.e.the taxpayers are lining the colleges' pockets while providing the student borrowers with a TERRIBLE education.

Nevertheless, this is a must read book.

This book is very very heavy with flowery rhetoric and very light on supporting evidence of the sort anyone could use in conversation. I found American Theocracy to be exactly the same way, so if you read and liked American Theocracy, you may well like this book also.

I am pretty sure the author and myself would agree on most points he makes in this book, so my complaint isn't that I just fundamentally disagree with his world view. My complaint is the ratio of adjective-laden, highly loaded language to usable fact is so high, it makes listening to it a fast-forward experience.

I am not a fist pumper who mainly buys books in order to hear my own preexisting suspicions about a subject confirmed and amplified by an author. If I am going to spend my time reading I want to walk away having increased my knowledge on a subject and hopefully been fully loaded with memorable supporting evidence. I am not going to say there's no facts in this book, I am just saying the sheer quantity of empty rhetoric made listening to this a punishing experience. If you're going to say something, marshall some supporting evidence. This book is closer to being an exercise in name-calling.

I give this book a low rating because its on a timely and important topic that deserves serious collective contemplation and people who buy books looking for understanding deserve better.

From a less lofty perspective, I want to be the interesting guy at the dinner party who can back up his arguments with facts, and this book didn't further my ambition at all.

Kevin Phillips, you have done it again. I don't know why you morphed from a Republican strategist into a harsh critic of right-wing, robber barons' assault on the welfare state and its dream of economic justice. But you hit the nail on the head time-and-time-again: entrenched interest groups, the collapse of real political debate, the transition from productive to financial capital, the politics of oil, the protection of Wall Street by the Fed. giving rise to meltdowns rather than tamable booms and preventable busts, the shift of wealth from those who labor or save to those who speculate, financial gambling in the form of derivatives and other synthetic securities which reward their inventors and defraud both latecomers and the public at large, the embrace of moral hazard which is a subsidy for those too big to fail and happen to be friends and peers of the government officials who are supposed to regulate them. I know someone who hustled subprime mortgages for speculators by knowing how to work the computer programs lenders use to assess mortgage risk; his clients had absolutely no equity. There was so much money to hustle, lenders were not interested in due diligence. They chopped the loans into little pieces, packaged them to disguise risk and sold them as equities. I am not sure the broker is not in jail. He was small potatoes. How about the Mertons, Greenspans, Bernankes and legions of Ph.D.s from MIT who claimed they were diversifying risk only to discover when things went wrong they were gambling on air and there was no liquidity? A fixed roulette wheel does not help when too many people learn how it is loaded. See Bookstaber's excellent A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation. As Phillips points out, a good deal of finance in the US is a giant subsidized Ponzi scheme. Only in a world of greed and class oppression would labor be taxed more than return on capital.
It is a pretty shabby picture but unfortunately 90% of the voting public has little ability or interest in understanding it. No wonder, as Phillips points out, Obama's backers will swallow his hedge fund contributors without noticing what their presence in his camp means. Although Joe Biden may bring a white bread image to the Democratic ticket, he also brings the bipartisanship which makes it impossible to honestly name, if not solve, both foreign policy problems and the increasingly skewed distribution of wealth in the US. If I were to talk to my middle/upper-middle class friends about how much we all benefit from the set up as it is, they would either not listen or regard me as attacking them.
Kevin, you have the courage to tell it like it is. But is anyone listening?
Besides the fact that the book is a bit repetitive and, having listened to it as a book on tape, the narrator is overly dramatic making each nugget of corruption sound like an apocalypse, I find some of the overarching historical comparisons a bit of a stretch. The declines of Rome, Spain, the Dutch Confederation, and finally Britain are interesting background, and some aspects are reminiscent of what is happening to
America now, but each had its own very individual causes. Metropolitan Spain, the master of a great empire, was always a debtor. That is how it fought its wars. New World silver and gold just made it possible to fight nastier wars of the counter reformation. Indebtedness was not some declining empire phenomena. Italian and German bankers were paying for the conquest of Granada years before Columbus sailed. Similarly depopulation and decline don't really fit either England or Spain. Spain had plenty of poor from denuded Andalusia to get rid of and opportunity lay abroad. Besides wool for the Low Lands, wine and olives, Spain had little industry and needed less when the geld started pouring in. And, at the height of the industrial revolution, England was exporting it street ruffians and poor to Australia. There was no place for them at home even though industry needed surplus labor to keep wages down. It had all the displaced, barefoot Irish it needed. England only really bankrupted itself in WWII. Where its decline began is hard to say. It may have been initiated way before coupon clipping and remittance men of Edwardian England became subjects of literature. How about sometime between the Crimean and Boer wars? An interesting take on Britain is in Correlli Barnett's reactionary book Collapse of British Power (History/20th Century History). He sees the decline as a function of free trade, public schools' crippling of ruling-class moral fiber, post WWI pacifism, and the greater cost of defending the empire and Commonwealth in comparison to its military return especially during WWII. As for the Dutch Republics, I guess I need to find a good economic history of them. From I had thought their small population and increasing cost of shipping made them hopelessly outflanked by their larger English neighbors. The Dutch had prospered by early textile manufacture, shipping cheaper (paying their sailors less in the Baltic trade) and stealing weaker Portugal's overseas entrepots. ( See Charles Boxer, The Dutch Seaborne Empire 1600-1800 and John Keay The Spice Route: A History (California Studies in Food and Culture).) In the end the Dutch Republics were outcompeted and outfought by England.
Despite the shortcoming in Phillips' comparative history, his clarion call of decline is well taken. I like to think of Fulbright's "arrogance of power." We are headed for a fall, but maybe not the apocalypse Phillips trumpets. Our increased productivity from the US lead in computers has a lot to do with the wealth generated since the late 1980's. That is production, not finance. It just was, and still is, being lopsidedly distributed leading to private splendor (fed much by finance) and public squalor. The consequences of Lyndon Johnson's guns and butter and the 70's oil boycott stopped middle/lower-middle class growth and Reagan reached into their pockets and gave their subsidence to the upper/middle and upper classes along with a giant share of the new productivity. More people should read Phillips' books. But then it is not in many peoples', who know better and vote, interest to advocate for his implied solutions. It might preclude million dollar houses, jet-setting and three Volvos in the drive way . And as for the lower classes who might really profit from his criticism, they are too busy paying their subprime mortgages, watching television, playing video games or shopping at Wal-Mart. So we have a world of unnecessary conflicts and economic injustice. Remember Tolstoy's description of the Russian nobility ignoring Napoleon's advance on Moscow. Rather than Götterdämmerung, we have the twilight of our empire which is OK because of all the harm to which our arrogance has led. Our successors, the Chinese, don't give any sign they will dominate the world any more fairly.
Charlie Fisher author of Dismantling Discontent: Buddha's Way Through Darwin's World

The thesis statement for Bad Money: In modern America wealth can be increased without creating or manufacturing anything, but just by "moving paper (e.g., debt instruments) around" [p.96].

According to Kevin Phillips' bio page on Wikipedia he has reliably cranked out a book every 2-3 years or so since 1969. And while there are exceptions for the most part they have been either the-sky-is-falling screeds about the American economy, faux populist rants about social class and ad hominem attacks against people he doesn't like.

And says Phillips, the American elite's belief in "market triumphalism" [sic] [p.180] leads to a blind arrogance and that this all shows what becomes of an economic superpower that leaves its destiny to the vicissitudes of the marketplace [p.181-2]. And leading this charge of the lemmings is an entrenched but dissipated class of elites who clog up Washington, D.C. lobbying after their own interests [p.156]. Phillips also hates religion, conservatism, unearned wealth, the wealthy in general and the Bush family (or Dynasty) in particular [p.72].

The only thing that really gives Phillips any credibility at all is his extensive research and documentation complete with original graphs and charts that purport to prove his points. So far so good. However another look at Mr. Phillips' bio page shows that he went to a fancy East Coast prep school, Colgate University and Harvard Law so who is he to point fingers about entrenched elites in American politics and commerce? Takes one to know one I guess.

Phillips' reformist critique would be very persuasive indeed (or at least more plausible) if he could refrain from expressing his views in such a caustic manner and refrain from the ad hominem attacks and paranoid conspiracy theories which don't seem very believable no matter Phillips' excellent research complete with graphs, charts, footnotes and appendices.

The Fed's Plunge Protection Team buying the S&P during market drops is accurately described here. I'd love to see a satirical TV spoof of it in action. Kevin Phillips is great at supplying the doomsday data and analyzing it coherently. I hope Barack will read this soon to guide him in the decisions he must make next year.
Perhaps we are set to decline like Spain, the Dutch and England (as wonderfully explained) but are those folks really so unhappy? Maybe we can be content without money buying the latest high tech gizmo or having someone else wait on us hand and foot. Is passing wealth to our offspring alone to be our life's priority? Our Renaissance after the debt crash will focus on essentials and be our socialization with each other based on fairness and community, and not on perceived opulence.

I have spent four decades reading Kevin Phillips' books. In other forums, I have identified him as one of my favorite authors and analysts.

In my mind he has authored at least brilliant books: The emerging Republican majority, The Politics of Rich and Poor: Wealth and the American Electorate in the Reagan Aftermath and Wealth and Democracy: A Political History of the American Rich. It is difficult for me to say, this book does not measure up to his early high analytic standards

He is not known as a flamethrower. In the past he offered clarity where there was confusion. These books provided my first exposure to emerging national trends. He was trained as a lawyer. His research is meticulous; his arguments convincing.

But he is wrong.

His argument ignores an essential trait of the American people: we are practical; we pride ourselves in being problem-solvers. Each day at work, we are asked to place a size 13 foot into a size 10 shoe. Not only are we good at the "impossible," we love the challenge.

In his latest book, Phillips argues what he terms "megafinance"-- the perilous interaction of debt and financial recklessness coupled with cost of oil dooms us to a crisis. Readers familiar with his work, already recognize he has lost one evil leg of his previous argument in American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21stCentury - the danger of what he termed "Patriot Pastors." Those of us who are not quite so alliterative know them as right-wing evangelicals. The American voter dispatched them during the last mid-term elections.

I am not positing everything is rosy. It is not. As a country we face serious problems. What I am saying, however, is that anytime during the past 40 years Phillips has been analyzing the American scene he could have seized on any number of problems at the time those books were published and come to the same this book's conclusion.

But it did not happen.

The American people rose to the occasion and conquered the problems they faced. I have no doubt they do the same this time.

Phillips, as he always does, delivers a skillful and thought-provoking argument against dynastic leadership. The book is worth reading. According to Phillips, Americans will knuckle under. I believe they will rise to the occasion.

The book brought forth a significant message about what ails America and how/why the dollar is facing collapse. The problem is that Phillips writes in a high-brow academic style and with an assumption of knowledge probably not possessed by the average reader. He has been poorly served by his editor/publisher in this regard. This important and timely work could've delivered the same message to a much wider audience had he written in plain English. Phillips gets an 'A' for concepts/ideas/analysis, but a 'C' for rendering his thoughts in a marketable manner. Pity.

I may change this review, becuase I am only about 2/3 of the way through the book. I got this book because this is the subject of America. This financial takeover of the country is killing America, or at least the American people, and the hidden part of it is killing democracy. I can see that and I wanted to find out more about this problem, who is behind it and who might have ideas on how to stop it and turn it back.

What I get from page 1 is a lot of out of context quotes seemingly with nefarious intent. Numbers and statements with no broader background. History out of sequence.

Unless Kevin Phillips pulls all of this together in the last few chapters of the book this book will be pretty much useless in terms of any criteria you look at it with, except maybe the far left who just wants to find thing that look bad and say "see, I knew things were screwed up".

Well, I think 85% of the country knows there is something wrong, and I think Kevin Phillips has the problem narrowed down to the financial takeover of almost, no all, aspect of the country. The financial expansion that has gotten rid of America's industrial base, and forsaken its people unless they can afford to invest abroad, and even then, most of them.

The problem is that this book does not tell you who the players are, what they have done. All it does it wind the reader up with lots of hot air and leave them with nothing to do.

The writing style of this book seems to be like he might have taken a historic document and put it in a shredder and then put it back together in the present form. There is no linearity or logical sequence or flow to this information. It is almost 100% out of context out of time quoations and statistics.

If anyone knows of a better book on this subject that is not some conspiracy theory, please let me know. So far I am disappointed in this one.

I read this book after hearing the author, Kevin Phillips, give a radio presentation to the Cambridge Forum. Phillips was familiar to me as a spokesman for conservative perspectives over a span of decades, a perspective that I never shared. Thus, I was a bit skeptical when I first heard his presentation on this topic. However, I was quickly impressed by his careful, scholarly analysis, and have come to agree that he is exactly right. Phillips' central point is that the United States has abrogated its leadership position in the world by virtue of having stopped being a nation that produces goods and services of real value and becoming a nation who's primary business is the manipulation of financial markets and debt. He cites earlier examples of the Maritime Dutch republic of the 1700s, Great Britain around the time of WWI, and even Rome. The sobering point is that once a nation has gone this route, the course is irretrievable. He finds lots of blame for this situation, and it is not all deposited on any single political party...there is plenty to go around! He discusses our biggest product, Credit Debt, the root causes of the rise in oil prices, and the impact of right-wing evangelicals on the administration's feeble approach to dealing with our major challenges. This is not a feel-good book, but it is an important contribution to helping Americans understand our current situation. HIGHLY RECOMMENDED

The American political scientist Kevin Phillips' new book "Bad Money" is subtitled "Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism," and if you are a liberal -- which would be the only ones buying this book -- you need not read any further because this book tells you exactly what you know is wrong with America today.

First and foremost the American economy is dominated by speculative capital, as evidenced by the recent Internet bubble and the subprime fiasco. But much worse America's financiers gamble without any risk -- because right now in America finance and politics are too entangled. Washington believes that American finance must be encouraged and protected, and Wall Street is a big giver to political campaigns. As a result America has become debt-ridden, and a very unequal society where the rich just get richer.

Making things much worse is America's problems abroad. First, America has lost much of what political scientists call "soft power" with the Iraq invasion -- the world no longer feels that America is good and noble. This has consequently lead to a big spike in the price of oil, a commodity that Americans are completely dependent on. And worse of all oil is in the control of some of America's arch-nemeses -- Russia, Venezuela, and of course Canada. Even the once reliable Saudis have turned against America.

In Kevin Phillips' analysis America is merely following the path of other great powers -- Hapsburg Spain, Holland, and Britain -- in its decline, and he spend a lot of time drawing historical parallels between America and these past empires. He concludes that there will be an inevitable re-balancing of power from America to Asia.

Given that every liberal holds this analysis to be the new faith Kevin Phillips will be indubitably lauded in the liberal press: The New York Review of Books, New York Times Book Review, and the New Yorker. But this is a very flawed book. It's merely a re-hashing of Kevin Phillips' previous books: "American Dynasty" and "American Theocracy." Moreover, I had to struggle to get used to his clunky academic writing. But it's the analysis itself which is most problematic.

First, let's talk about one of his arguments, an argument that is in his eyes is so obvious it's an assumption -- that the 21st century belongs to Asia. Mr. Phillips, with all due respect, have you been to Asia?

The idea that the global economy will roar on, and leave America is totally absurd. The American consumer is what drives the global economy -- if America goes into recession then so does the rest of the world. If the American dollar collapses then World War III will just be around the corner.

Consider America's trade deficit with the rest of the world. America buys oil from the Saudis and McDonald's toys from China, and America pays using Treasury bonds -- which is long-term debt, which is in itself no more useful than toilet paper. By last count America owes $1.3 trillion dollars to China. Does China have a prayer in the world of collecting on this debt? No chance in hell. But who else is going to buy Chinese goods? And China has 1.3 billion people -- that's a lot of people to have to keep employed. Like it or not China is stuck because Americans are the only ones materialistic enough to want what they manufacture. So if China and America stopped trading with each other American consumers can only buy one new shirt per year instead of 100 from Walmart. But China's unemployment problem skyrockets, its manufacturing base collapses, its assets bubbles burst, and the country goes bonkers.

Even with George W. Bush as president America cannot fail. America is just too wealthy -- it has too many resources and too many talented individuals -- plus if it's ever in trouble it can just decide to take over Canada. And America is just too resilient -- its greatest advantage is that it's constantly ability to transform itself without violent revolution (the one exception is of course the American Civil War). But America is dangerous because the wealth and strength of the global economy is completely dependent on America, and America -- ever since the collapse of the Soviet Union -- has chosen to be greedy and irresponsible. And the real effects of an American recession will be felt less on main street America and more in the factories of China and the oilfields of Saudia Arabia.

Keven Phillips is a very intelligent man. He is extremely well read. Somewhere along the way, however, he has decided that nothing can save America from its own terminal idiocy.

Here is his argument in a nutshell. America is doomed. We are a declining empire, whose rapid descent into powerlessness and shame is probably unstoppable, in any event, but which is utterly inevitable given the idiocy and buffoonery of our leaders. What dooms us, says Phillips, is a combination of an economy increasingly devoted to parasitic financial speculators, instead of companies which make real products, vast levels of debt, both private and public, the imminent double-whammy of oil running out and global warming, the domination of the Republican Party by know-nothing evangelicals and the absolute and total horror of the Bush Administration.

It is customary, in books of this sort, after demonstrating the evils of whatever the author is denouncing, to then move on, in the last chapter, to at least a brief description of how we could fix everything, if we would simply listen to the author's wisdom. Phillips will have none of that. We are DOOMED, doomed, don't you understand, and he does not bother trying to discuss how the descent into hell could be slowed.

There are, of course, many aspects of his analysis that are well-grounded factually. The excesses of our financial system, at this point, are obvious to everyone. The issues that he raises about oil shortages are certainly quite real and worth serious thought. On many points of detail, Phillips has and presents an excellent understanding of current political and economic events.

The overall tone of the book, however, is absurd. We must fail, because all empires before us, the Roman, the Spanish, the Dutch and the British, all failed. What a load of pompous nonsense! The Roman, the Spanish, the Dutch and the British Empires have almost nothing in common with each other, never mind with America. Phillips' whole effort to state a grand theory of history is simply a provincial re-hash of the old "decline of the West" thinking. American power might well fail, but, if so, it won't be for the same reasons that the Romans, the Spanish, the Dutch and the British failed; there is no common thread running through all of these stories, except perhaps the universal truth that all human creations fall apart sooner or later.

Phillips has no appreciation of America's ability at self-correction. Yes, the housing bubble, following on the internet bubble and prior bubbles, was a disaster of epic proportions, for which Alan Greenspan and George W. Bush have much to answer. But the system has already liquidated every single sub-prime lender and most of the bulls on Wall Street. We are past that piece of insanity, and it seems quite unlikely that we will be going down that road again any time soon. Could the Roman, Spanish, Dutch or British Empires change course this quickly? One little difference between us and them.

And, if Bush was elected, because the know-nothing bozos in the South, who are dumb enough to still take the Bible seriously control our elections, how was it that Barack Obama won in 2008? Obama, in many ways, is the polar opposite of George W. Bush. Our system elected him after Bush. Does that sound like a doomed, dying empire, unable to change course or to correct mistaken policies?

And, of course, Phillips takes it for granted that the whole world hates us for the abysmal failure of Bush's criminal policy of invading Iraq to grab its oil. Phillips, of course, is far too sophisticated to be taken in by that liar Bush's empty pretense that the war in Iraq might have something to do with democracy and ridding the world of tyrants. As I write this, Iraq is concluding its provincial elections, in which every major group in Iraq participated and which were carried out peacefully. And in which the religious extremists parties appear to have lost, big time. Something tells me that George W. Bush's bad public opinion ratings in Norway in 2004 will not matter much, to future historians, if Bush has in fact succeeded at creating a lasting democracy in the center of the Arab Middle East. And it is kind of hard to see America as a doomed, hopelessly declining power, when we achieve feats such as these.

Beneath Phillips' intelligence and erudition, this book stinks. If you want an explanation of the current crisis, there are many better ones out there. But Phillips' real concern is not the current crisis. His real perspective is the latest in a line of gloom and doom prophets reaching back to Paul Ehrlich, and the various authors who told us that Japan was going to take over the world. Jews are familiar with the odd phenomena of the "self-loathing Jew." Phillips is an example of that odd sub-species, the highly educated and extremely successful American who prides himself on his ability to see how shallow, ugly and tacky America is and who takes tremendous pleasure in predicting American decline. Sorry, Mr. Phillips, but betting against America has always been a bad bet. We have come through worse things than this, and something tells we will come through this one, too.

I thought I did a good job of keeping up with the collision of international finance and politics, but reading Bad Money made me realize how little I know. This book has completely shifted my perspective on the world economy and the U.S. diminishing role in it. Since finishing the book, I read and hear world news stories almost daily that confirm Phillips' insightful analysis (like the way that China is using its vast reserves of U.S. dollars to buy world influence and control the distribution of other countries' oil, just as the U.S. once did).

The world has changed and, until reading this book, I never realized how much. I just heard the door slam on the predominant global influence of the U.S.

Since there are so many long reviews of this book that pretty much cover most of the salient points, I'll keep mine fairly short. This book is interesting if you are one of those people that suspect there is something wrong with the way our country has been doing things, and there are a number of important ideas you may not have heard about or thought about in the way they are presented. I have only a couple of small complaints. As others have pointed out, the style is often extremely dense, especially when dealing with economic issues, and sometimes he seems repetitive. A layperson will feel like he or she pretty much has to trust the author because he uses so much jargon and brings in so many complex examples that there is no way a non-expert can evaluate his arguments. The book is mostly a rehashing and updating of his earlier book American Theocracy which might make more interesting and easier reading. The book is quite recent, yet it seems quite out of date because it pretty much assumes Hillary Clinton will be the Democratic nominee in 2008 and barely even mentions the actual nominee in an aside. Finally, as others point out, the author doesn't really give any hints of where he thinks it will all lead or what we should do about the problems we face. Part of this is by design and he gives an explanation of why he doesn't do it, but in my opinion, this leaves the book open to many interpretations, and it is easy to jump to severe conclusions. On the positive side, the author does briefly point out, without dwelling on it, that the US does enjoy some potential advantages in geography that previous empires did not, and he also mentions that many of those previous empires now enjoy a relatively successful existence as a non-empire.

This book is relatively short so it's woth checking it out if you are interested in the topic. You might want to read his book American Theocracy first.

Mr. Phillips hardly needs another glowing review, but his analysis will make you want to pull your money out of whatever U.S.-based investment it is in now, and stick it in the mattress (Don't! Inflation will eat it up). What blows me away is that Mr. Phillips wrote the book I wanted to publish. In fact, the prospectus I wrote at the end of last year to interest my publisher in such a work eerily echoes almost all of the major themes hammered on in "Bad Money."

What Phillips does best is profusely illustrate and provide evidence for the complicity of the traditional Wall Street firms, the "shadow" banking system (private equity and hedge funds), and the US Government (Federal Reserve, Secretary of the Treasury, etc) in perpetuating the myth of U.S. economic well-being. What you are led to conclude is the economic crisis we are currently experiencing, not even close to bottoming out, is simply the five year delay of the collapse of the dot.com, telecom, and energy (e.g., Enron) sectors, caused by the same financial shenanigans perpetrated by the same financial engineers.

The only weakness I can see in the book is that Phillips only hints at who these people are and how they seem to move comfortably from one economic crisis to another. He provides a glancing history of how other world powers were felled by their infactuation with financial mercantilism, facilitated by migrant financial engineers. While he acknowledges that there's more here the reader needs to know about, it seemed painfully obvious to this reader that he felt this was a line in inquiry better left to others.

Thankfully, Phillips sets aside any poliitcal and economic ideology. He is unsparing in his critique of politicians from all sides of the spectrum and shows how this crisis has nothing to do with party affiliation and everything to do with the crony-capitalism that has reduced free-market economics to a shadow of its former self.

Every American with an inquiry mind should read this book.

Jason Makansi, author of "Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You."

Phillips' book contains much information on our 21st Century economy that is not easily available elsewhere. There are some startling statements on the connection between Wall Street and the Democratic Party that I have found nowhere else. I think it is an important work that commands the attention of the American public.

The book is short in pages but long in comprehension. It is a pity that the work is so badly written, as are the other books of his that I have attempted to read. Where are the editors when you need them? Is there a "Maxwell Perkins" for this modern-day "Thomas Wolfe"? Since his editors have abandoned their posts, to Mr. Phillips I offer some advice: one thought, one sentence. Also, use standard English constructions and stay away from (what I assume is) Wall Street jargon and linguistic peculiarities. And best wishes for an easier read on your next book.

Phillips has written an informative introduction to the financial meltdown. (He's got a review and update in the May issue of Harper's Magazine.) Phillips is not an economist and it is clear that he has recently made it his business to gain basic literacy in matters economic. Parts of the book read like a very good term paper. Still, Phillips is a smart guy and the novice has much to learn from this book. It would have helped had Phillips placed his analysis in the proper historical and economic context: after deindustrialization both the U.S. and the world economy have been plagued by excess capacity in key productive sectors like automobiles, steel, shipbuilding, petrochemicals and others. Hence the turn from using money to profit from production to using money to profit from using money (to create worthless paper assets). Phillpis does rightly see the financial crisis as a more general crisis for capitalism as a global economic system, which you will not find in the writings of most commentators. The reader will not be disappointed.

This book could have been a nice 10 page pamphlet. The other 190+ pages are just a repeat of the same arguments, sometimes using the same words. And, after hearing the author on Bill Moyers PBS program I expected more and perhaps even a prescription for how to get out of our 2008 financial meltdown. Unless you are a pessimist and see the end of American capitalism this book is not for you.

I admire this author, very much, and consider him to be one of the more thoughtful public intelligence minutemen--sadly, the media has failed us, as have the think tanks, and we who wish to know the truth of any matter are left very much on our own.

Here is the short version of this book (ending with NO on the bail-out) courtesy of and with permission of Sterling Seagraves, co-author of GOLD WARRIORS:

Many Continental European banks ARE stronger than USA banks, because they have more experience with disaster in past centuries. As do some current EU governments like France, Spain and Germany. But they are exposed for 2 reasons: 1, they found it easy to borrow money from USA banks, so they became somewhat addicted to easy money, and are now having to adjust to that source of money drying up. 2, most big banks not long ago set up divisions in Paris (for example, SocGen, CredAgri, Paribas) that were to play the investment game of derivatives and short-selling. In the case of SocGen, this was exposed recently but blamed on only one man, a trick to protect many others. With CredAgri, all their regional commercial banks are very solid, but their newer Paris investment division is in deep shit because of emulating New York and London corrupt practices.

The basic problem is that citizens must have a secure place to put their savings. Conservative banks initially use this money to make conservative investments, but as time passes the young and ambitious "upstarts" (arrivists) begin to make crazier investments to advance their careers and enlarge their private wealth -- but still speculating only with the savings of citizens who trusted their bank. Eventually, these upstarts went crazy. But they were encouraged to do so by their bosses, and then by the Reagan, Bush Sr and Bush Jr administrations. During the first year of the Bush Jr administration, it had such a terrible reputation and the US economy was in such terrible condition, that it was decided to increase "housing starts" (home construction) by giving mortgages to everyone (even if they could not pay-back) because the statistics would look good on paper. This soon became a "feeding-frenzy" by the Piranha, creating a global feeding-frenzy by almost all big banks, including UBS and CreditSuisse.

The reason none of the "authorities" sounded the alarm is because they, and the politicians, and journalists, and professors, are all tied together like black slaves on a slave ship. If one goes overboard, they ALL go overboard. So they protect themselves by protecting "the system". The proposed 700-billion US$ bail-out was simply the final robbery by the Bush admin, shared with all the big bank owners. In fact, the ECB has given that much to banks in the last two weeks to "increase liquidity" (put money in the pockets of the malefactors), so the Bush/Paulson bail-out was just a way of feeding their personal friends.

The people who are cheated are the citizens who trusted the banks with their savings. It is better to have the criminal banks crash, because only that will provoke a serious reform. I hope we are getting closer to the time when citizens will rise up and get violent. It is very healthy for governments and politicians (and bankers) to get their asses kicked, to be put in the tumbril and sent to the guillotine. This must be done every several generations to keep them afraid, because nothing on earth will keep them honest except fear. The Bush regime postponed the guillotine by mis-directing the fear of citizens toward Muslims, and avoided a quick military coup at home by sending most soldiers to Iraq and Afghanistan where they are no danger to Washington. I may have put this very simply, but there are times when things need to be put simply.

END SHARED INFORMATION

Here are books that are easier to read and make the same case, but please note that all of this can be traced back to Senator Phil Gramm (R-TX) and his deregulation of the financial industry with a 200+ page amendment that none of the other Senators read. Clinton "went along" because "easy money" was a popularity enhancer.

The Battle for the Soul of Capitalism
The Soul of Capitalism: Opening Paths to a Moral Economy
The Shock Doctrine: The Rise of Disaster Capitalism
Confessions of an Economic Hit Man
The Manufacture of Evil: Ethics, Evolution and the Industrial System
Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It
Breach of Trust: How Washington Turns Outsiders Into Insiders
The Global Class War: How America's Bipartisan Elite Lost Our Future - and What It Will Take to Win It Back
Screwed: The Undeclared War Against the Middle Class - And What We Can Do about It (BK Currents (Paperback))
Election 2008: Lipstick on the Pig (Substance of Governance; Legitimate Grievances; Candidates on the Issues; Balanced Budget 101; Call to Arms: Fund We Not Them; Annotated Bibliography)

`Bad Money' tends to jump from subject to subject but the main point is that increased financialization is a sign of a nation in decline and the U.S. is traveling a path previously taken by other world powers including Britain, Spain and Holland. Mr. Philips writes that in the 1980's "elements of the U.S. government decided... that finance, not manufacturing or even high technology, had to be the sector on which Washington would place its strategic chips" The wisdom of the "efficient market" is seen as the apex of decision making and with enough creativity and guile Wall Street believes it can literally create money from thin air. The evidence of finances most favored status is all around us. Financial services have shot past manufacturing as a percentage of the GDP and finance is the one sector of the economy that the Feds have decided must be preserved at all cost.

It is within this protective cocoon that financial institutions have operated with reckless abandon knowing that the rules of the game are heads they win, tails the rest of us lose. Quoting the author, "over five years, the housing sector seems to have provided some 40 percent of the growth in U.S. GDP" but the cost of that growth has been devastating. Lenders felt free to engage in incredibly risky loans knowing that they had little if anything to lose. The author is not the first person to suggest that the Federal government was complicit in growing this bubble as lenders let rationality fly out the door in their mad quest for profits. In fact like an overprotective parent the Federal government has demonstrated that it will go to extreme lengths to shield the market from bad news. In 2005 the Feds changed the criteria for calculating inflation lowering it by 2 points. Of course the classic is the absence of food and energy costs in calculating inflation.

The middle of the book is jam packed with descriptions of money making schemes cooked up by Wall Street. Reading through the myriad of acronyms, confusing loan setups and baffling hedge funds left my head spinning but that's kinda the point. Finance has become so obfuscated and non-transparent that debacles like the sub-prime mess are inevitable.

The Bush administration seems to have two settings, wild overreaction ala Iraq and Social Security and near total disinterest as in global warming and Katrina. I firmly believe that it is the administrations stubborn refusal to address global warming that will damn them by history but as the author writes Bush has pretty much put the country in neutral for the past eight years particularly when it comes to Bad Money's other main topic, peak oil. The author suggests that the invasion of Iraq may have been the sum total of Bush's oil strategy.

`Bad Money' is really an extension of the ideas presented by Kevin Philips' in his previous book `American Theocracy' with updates for recent events. This book is significantly shorter than his previous effort which is fine with me. One change in the authors is to push the threat of religion to the back burner as much larger looming problems of financialization and peak oil take center stage. I was a little bothered by the authors' `a pox on both houses' desire to blame both Democrats and Republican's for this mess particularly when it comes to alternative energy sources. The Dems may put up modest resistance against some oil exploration but the Republican's have been absolutely manic in refusing to address peak oil and global warming. I was also getting a little tired of the constant parallels between the U.S. of today and previous nations in decline. After `American Theocracy' and this book I kinda got the point.

It's a very good book if a bit unfocused. The author tosses out some major accusations including implications that the Federal government personally pumps money into Wall Street in times of worry and a suggestion that the Bush administration may be actually pursuing a weak dollar strategy (may not be so far fetched). I wish the book had spent a bit more time on these two topics.

I found parts of this book to be very difficult to comprehend and enjoy, i.e. the details of the financial industry and their various methods/schemes. However, the chapters on Peak Oil and the Politics of Delusion were outstanding! In fact, I would recommend the purchase of the book for the Peak Oil chapter alone. Every American should read that chapter; especially those who think we're fighting a military war with the rest of the world. In fact, we're fighting an economic war with the rest of the world and we're losing it; partially because of the slow, steady drain that fighting a military war brings with it.

The fact that Joe "I'm-mortgaged-to-the-hilt" is now living in a car he can't afford to move may mean more than a temporary adjustment in the credit system. That's according to author Phillips, and his book makes good sense. As he shows, our financial underpinnings are rickety, to say the least. Worse, our financial bubble no longer rests on an industrial foundation, but has become the economic foundation itself.

Now talk of "foundations" has slipped out of fashion with the rise of post-modernism, and certainly Phillips does not himself use the term. Instead, he talks about an economy that lacks its former variety, and as a result has come to put too many eggs in the financial basket, as it were. Thus, when the various financial shocks including oil pricing reverberate, there are few other sectors to cushion the blows. Thus, the US may be on the way to losing leadership of the capitalist world to the fast rising industrial economies of Asia. This, I take, to be a major thesis of the book.

I want to suggest a slightly different perspective on the current financial shake-up than the book's more narrowly internal one. A moment ago I alluded to an economy of goods and services resting on an industrial base. The reason for suggesting such is that historically the concept of industry implies a working class in a way that the concept of a financial world does not. And, it's the relative absence of a labor component to the analysis that I believe detracts from the book's overall framing.

It's no secret that wages and benefits for American workers have been stagnant or in decline for some time. The trend has spread across administrations of both major parties. Moreover, the proportional share of wealth gained from productivity has also declined for wage-earning Americans. These I take to be uncontested facts that reflect the widening wealth disparities of the last 30 years or so. The agents and effects of this decline are more central, I believe, to the current crisis than a basically conservative commentator such as Phillips allows for.

At the most obvious level a better paid workforce would have less need for risky sub-prime and credit card gimmicks, other factors being equal. Indeed, homes and products were within the pay-check reach of most wage-earners for several decades in mid-century past. Unsurprisingly, real wages and proportional shares for blue-collar America also rose during that same period. Much of that prosperity came from rising shares in the nation's wealth distribution, while those shares were largely kept in place by the clout of organized labor at both the work site and in the nation's capital. In an important sense, I would argue, strong unions acted as a break on capital's natural tendency to over-reach and suffocate effective demand by pushing down wages.

However, a number of factors conspired to weaken organized labor, whose presence was never really accepted in the halls of power, anyway. The inflationary spiral of the 70's, the off-shoring of the Clinton-Bush years, along with the albatross of Taft-Hartley, all contibuted heavily to labor's decline. The point here is that people who could formerly shop at Safeway and May Co. were soon faced with a choice. With a shrinking wallet, they could either go to Walmart or take out a credit card, while for many, the situation meant doing both. In short, a fast receding American Dream not only jeopardized those working people reaching out for it, but also those who had already attained a measure. Put broadly, the relative loss of purchasing power among wage-earners opened up a fertile field for the credit exploitation and the financial speculation to come.

There's a second and much less noticed factor at work here. This one has more indirectly to do with what Phillips calls the crisis in American capitalism. And that is the sudden demise of Wall Street's great rival, the Soviet Union. Ironically, in my view at least, that so-called socialist system (really a state-capitalism) acted as a foreign brake on the Wall St.'s most aggressive and adventurous tendencies, such as the risky deregulation campaigns of the Clinton-Bush era, a direct precursor of the credit fiasco.

Now, whatever it's real life failings, the Soviet system did present an alternative to American style capitalism, and one whose worker-peasant appeal resonated among Third World nations. Thus the ideological competition was intense. At a policy level, Washington was forced to remain concerned with the general health of wage-earning America. After all, vast tracts of middle-class suburbia, along with abundant, affordable consumer goods amounted to an important component of America's overseas appeal. On the other hand, large numbers of people seen living in cars or getting kicked off welfare or retiring without pensions or getting sick without health insurance, would have cancelled much of that appeal. And image mattered to the rivalry.

Of course, a Soviet presence couldn't stop the Vietnam disaster, nor prevent industries from relocating along the Mexico border, nor halt partial deregulation under Reagan's aegis. Nonetheless, it's hard to conceive of even a Bush Jr. embarking on an Iraq adventure with a counter-force so close by, or de-industrializing the economy by taking manufacture out of the country, or ignoring pressure from a Soviet backed PLO to finally settle that 60-year running sore. In fact, the Soviet collapse, whatever its true benefits, disastrously freed Washington's most aggressive corporatists from their boardrooms and think tanks. Now, those strategists could reach for global empire without an over-concern with domestic repercussions. And it's those effects that are now being felt in a shrinking dollar, a debt crisis, and a Wall St.-led Democratic Party as committed to world hegemony as the Republicans.

The irony is that the very economics accentuated by the global power grab are not only undermining the grab itself, but threatening to undo the primacy of American capital. Phillips is right to be alarmed. But a labor perspective is much more important to the picture than Phillips provides.

By avoiding completely America's habitual junior high school political patriotic pep rally approach practiced universally by politicians and pundits, Phillips provides uncompromising realism necessary to stem the relative and self-immolative economic decline of the U.S.

His book demonstrates overwhelmingly that the few, but not the people, benefited from what he terms the "financialization" of the economy over the last few decades at the expense of neglecting the manufacturing sector. With lots of hoopla, the expanding financial service sector was sold in the media while the manufacturing sector was neglected. Unrelentingly, the statistics prove that the manufacturing sector has been shrinking and that the massive financial service sector has been expanding, so that the latter now constitutes 20 to 2l percent of the GDP while manufacturing shrank to about 12 percent. This transition is correlated to a similar historical one between the agricultural and manufacturing sectors which started more than a century ago. No doubt major changes could not have been avoided in this transition, but the scope and overpromise of financialization was irresponsible, tragic and a giant fraud.

Co-joining this economic transition was an explosive growth in private debt while the media and pundits focused far too much on the public debt. Credit market debt quadrupled from 11 trillion to 48 trillion in the last few decades, massively outpacing public debt.

"Malfeasance of money" was maximized and revealingly "socializing of risk" (sort of what Walter Heller already formulated in the sixties as privatizing the profits and socializing the losses) was institutionalized with the aid of the Presidential Working Group on Financial Markets created in 1988 after the '87 crash. It included Fed Chair Greenspan, the Treasury Secretary, etc. Colloquially termed the Plunge Protection Team it enacted "Wall Street Socialism" and "socializing the risk" domestically and "financial mercantilism" abroad. 44 percent of corporate profits came from shuffling money around while only 10 percent came from manufacturing.

New debt instruments, CDO, SIV, derivatives of one sort or another, etc. enabled this pattern which was also boosted not just by Reagan but also by Clinton's Financial Services Modernization Act of '99, which dissolved the constraints and legal separation between banking, insurance and mortgages. (Clinton's patron was billionaire financier, Ron Burkle, who first contributed to him hugely and later hired him as a consultant, while Chelsea also was employed by a financial corporation after Hillary became a Senator of New York.)

Inflation statistics were changed so that they understated the inflation rate between 2 to 3 percentage pts. and overstated GDP growth. Under Bush, Jr. wars were declared while Bush urged consumers, unlike during previous wartimes, to continue to spend and travel. M-3 was eliminated by Bernanke in '06, though it was the ultimate indicator of inflation and was growing between 10 to 12 percent in '06 (by the way causing the Chinese to object to the dumping of M-3 since they could not gauge U.S. inflation accurately.)

"Bad Money," though not well-written and too narcissistic, does include illuminating and highly relevant statistics and graphs. Phillips places the horrible economic evolution into an historical comparative framework by referring frequently to Spanish, Dutch and British historical economic precedents. For an economic historian, this is a delight, though it falls short of being truly scholarly. But Phillips is not trying to write economic history. He is merely enlisting historical fact to shed additional light on recent U.S. economic events. And sure enough, historical comparisons aid tremendously in understanding the evolution and facts of America's current economic malaise.

Greenspan, for example, was impressed and seemingly highly influenced by the rising house prices of '75 and '79 when cashing out home equity provided massive consumer demand. Phillips believes that this aided in Greenspan's advocacy in encouraging the subprime mortgage mess and repeating, on a more massive scale, generating consumer demand by expanding enormously home equity loans between '01 and '06. Well, maybe Phillips did not fully gain insight into the Greenspan-Roland Arnall connection since Arnall with Greenspan's personal and monetary support started Ameriquest, one of the worst practitioners in the subprime mess.

In August '07, dramatic changes materialized, and the subprime mortgage bubble burst. In spite of having two oil Presidents and one oil V-P, oil's role was neglected as was manufacturing. Free markets were advocated, though not practiced in reality, and the mess was confronted by powerful and emerging foreign state oil corporations, foreign Sovereignty Funds, etc. which had all massively accumulated dollars and used them for nationalistic economic policies while America was under the false belief that the rest of the world would quite naturally follow America's wonderful capitalistic economy which, in reality, was undergoing economic self-immolation and suffering from imperial financial and military hubris.

Phillips's tome is interspersed with plenty of citations from those who advocated the financialization of our economy, including the religious Right which advocated "God Wants You To Be Rich" as well as those who warned of its consequences. Among the latter are the BIS in Basel, Switzerland, Kurt Richebacher, Alex Weber, Bert Ely, Hyman Minsky, et al.

The book cites Robert Reich's good point of ending treating hedge fund and private equity manager's income as capital gains and advocates, quite correctly, emphasizing "high value-added manufacturing and exporting" like Japan, Germany and Switzerland. Abandoning the hubris of military and financial imperialism would also help, Phillips adds by way of concluding, since both are drags on the U.S. future. In compliance with the Austrian School of Economist's notion that all credit expansions are followed by busts, the U.S. economy is now confronting another major example of this concept. All in all, Phillips' book is right on the mark serving the highly commendable purpose of dismantling enormous self-deceptions and delusions and rectifying massive fraud as well as re-orienting economic processes into a far better direction. Former IMF head Koehler seems to agree with Phillips when he recently judged the financial markets as a "monster."

This review covers the audio version of Bad Money, which runs 8 cds. I am a fan of Kevin Phillips, so this audio book was a major disappointment. I found the text disorganized, ill-focused, pompous, and too long by a half. It wasn't until well into disk 2 that he stated his major thesis, then he went off AGAIN on some tangent or another, jumping forward and backward in time, disgressing repeatedly, alternating between being descriptive and analytic. I couldn't follow "the plot" and quit listening mid-way through disk 3. Scott Brick, the reader, manages to overdramatize much of the text, further exacerbating the unpleasant listening experience. The 8 CD set of Bad Money is a waste of money and in my opinion Kevin Phillips should quit writing any more books and stick to a career as talking head.

I'd give this 3 1/2 stars as I found the content fairly well presented but felt some of the issues were too rushed and could be more deeply examined analytically. It felt like the publisher's deadline was the more important criterion. Also, I appreciate that this was not a political partisan or ideological diatribe. Phillips is pretty fair in assigning failures to the people in control.

The loss of a star was due to the Kindle edition not linking footnotes or the index to their references in the text. What use is an index with no links or location numbers? Thus, as a non-fiction work for future reference it fails poorly. How about a revised Kindle edition that previous buyers can upgrade to?

I've heard if you place a frog in a pot of warm water and raise the temperature slowly the frog will just sit and die. When I read this book I felt like the frog in the pot of water. Mr. Phillips points out that while average citizens have been consumed with raising personal debt to record amounts, our political and financial leaders have led us into a "Perfect Storm" of increased public debt, peak oil, declining dollar, an under regulated and self serving financial sector, and political disasters.

It's disturbing to read politicians on both sides of the isle have allowed hedge fund managers income to be treated as capital gains and taxed at 15% while average income citizens are taxed at a much higher rate. It's more disturbing to think we don't have an energy security policy in the US as do other countries and our political leaders lack the veracity needed to create one.

If I had to make any negative criticism of the book it would be Mr. Phillips repeated references to his previous books to make a point. He does such a great job of bringing facts from diverse sources together to flesh out a point it would be more consistent to avoid using his own past book references.

Overall the book made me more aware of the toxic relationships at play in the world that impact us all.

In this brilliant book, Kevin Phillips, a long-time student of the USA, exposes Wall Street's greed, criminality and stupidity. He also exposes the governments which thought they had `picked a winner' in Wall Street as a whole. They passed laws keeping finance outside the law and gave hedge funds a licence to create debts which acted as money.

The USA's bloated financial sector grew from 12% of GNP in the 1980s to 21% by 2005, at the expense of manufacturing industry, which fell from 25% to 12% of GNP. The market does not help industry by its bets on changes in asset prices.

The problem is still Wall Street's toxic debts in banking, insurance, real estate and securities. From 1987 to 2006 the USA's total credit market debt rose from $11 trillion to $44 trillion, 340% of GDP. Wall Street has borrowed $15 trillion since 1983. Derivatives were $615 trillion in 2008, up from $14 trillion in 1993. Mortgage debt doubled to $10 trillion.

Obama has cosseted, not controlled Wall Street, aiding even greater concentration of economic power. The bailouts rescued the five biggest commercial banks (Citigroup, JP Morgan Chase, the Bank of America, Wells Fargo and Wachovia), and the five biggest investment banks (Goldman Sachs, Bear Stearns, Morgan Stanley, Merrill Lynch and Lehman Brothers), the top four mortgage firms and insurance giant AIG.

But Obama has not required the banks to lend to the real economy. Instead, federal dollars are funding gross bonuses and salaries.

Phillips goes on to show how the new seven sisters are not private US firms, but state-owned oil companies: Saudi Aramco, Gazprom (Russia), PetroChina, the National Iranian Oil Company, Petrobras (Brazil), Petronas (Malaysia) and Petroleum de Venezuela. They control 75% of world petroleum reserves. OPEC is moving towards pricing oil in euros not dollars.

Phillips shows how the attack on Iraq led to soaring oil prices, transferring vast wealth from the USA and Britain to the oil-producing nations. He stresses the need for energy security and calls on Americans to abandon `the hubris of military and financial imperialism', to strengthen their manufacturing industry and curb their bankers.

This quote from page 195 pretty much sums up what you will find in this book; "In the United States, political correctness, religious fundamentalism, and other inhibitions sometimes dumb down national debate." If that doesn't immediately ring true to you then you probably won't like the book because Phillips takes a non-partisan approach towards explaining what the future looks like for American exceptionalism (it ain't pretty). It's this hard-nosed, fact based and pragmatic look into the future that Phillips utilizes that makes me give it 5 stars unlike the 4 stars for Fareed Zakaria's The Post-American World. I highly recommend it.

The author shows that the actual debt bubble can only be compared to the huge debt bubble of 1933, just before FDR devalued the US dollar with 40 %. In 1933 the total credit market debt as a share of US gross domestic product reached 287 %, whereas in 2006 this was a staggering 335 %. Just as in the `30s, the US are entering a new era of Great Depression, but this time, it is very likely it will mean the decline of the US Empire. This amazing thought is well supported with historical and current evidence by the author.

Now, it is important to understand that no "invisible hand" of the market was responsible for the debt bubble of 1933. This was actually planned and produced by the Fed. Read Griffin The Creature From Jekyll Island: A Second Look At the Federal Reserve for more details. The absurd credit market expansion that was created in the US in the last 20 years was likewise planned, by the Fed, under Greenspan's administration (1987-2006). The credit market exploded from $11 trillion (in 1987) to $44 trillion (in 2006). Greenspan didn't act on his own, of course. He is just a puppet, the visible head of a system we could call "Wall Street state capitalism". Obama, elected because he promised "change", not only supports this state policy fully, but even went so far as to actually classify 19 banks as TBTF ("too big to fail"). Citibank - Phillips calls it an "überbank" - has failed in 1982, in 1991 and in 2008. In a free market economy, they would already have disappeared 27 years ago ! In the US where free market capitalism has long ago disappeared, they will always be rescued, no matter how much they fool around and behave irresponsible.

Who do you think will pay for the 780.000 million dollars Obama miraculously produced "out of nothing" ? You will. All the taxpayers will. Everybody will, because this money expansion leads to a "hidden confiscation of wealth through inflation" (dixit Greenspan, in 1966, before he became corrupt).

In the meantime, the decline of the US has been evident when observing the "real economy". Manufacturing slipped from 25 % of GDP in 1980 to 12 % in 2005, whereas the financial sector rose from 11 % to 21 % in the same period. When the credit market imploded, this also meant that the US not only lost the biggest "export product" they still had, but it also meant that the position of the US dollar as the reserve currency of the world has severely been undermined. China decided from then on to build up their reserves in the form of gold. If you read Griffin, you will understand that this is a very wise decision.

The oil price is still expressed in dollars, but Venezuela and Iran insist to change this to the euro. This will probably become reality quite soon. Saudi Arabia was not amused by the invasion of Iraq either, and doesn't only export oil to China, but buys also weapons from them, as do a lot of oil exporting countries to China, like Iran, Oman, the United Arab Emirates, Kuwait, and Yemen.

China will definitively emerge as the next global Empire. They are exporting much less now, and are investing in infrastructure, raising the general standard of living of their own people at an amazing speed. They built 30,000 miles of expressway in the last 10 years. Compare this to the US interstate system which totals 47,000 miles. They also make the right technological choices at this moment. They will be producing the new technologies the world urgently needs : electric cars and solar panels. Compare this to the Obama policy of... not changing anything at all... He just set the "new" emission standards for vehicles that were already *surpassed* by Europe and Japan in the... 20th century... Corporate interests have totally corrupted the US government. Not only are creative solutions kept in the vault, if they show up, they are actively opposed. Look at the DVD Who Killed the Electric Car?. GM had developed the EV1 ten years ago, but instead of taking advantage of this major step forward, they decided - under pressure from the oil companies - to withdraw and destroy it. They preferred to launch the Hummer... Now, they are bankrupt. Phillips shows through a lot of historical examples that the standstill is typical for empires just before they collapse...

The author shows the scary side of the financial panic of 2008-09. America focused on selling financial products to the rest of the world, and those obligations were not as stellar as they should have been. With the current financial meltdown, much of the rest of the world along with the United States if facing the prospects of a global recession/depression as the trillions of dollars of these obligations are sorted out. Meanwhile Wall Street has made its millions and passed the debt to future generations.

The author also talks about peak oil, dynasic politics, and financial and marketplace corruption. When one looks at one's debt along with the government's obligations, one wonders whether the United States has ever gotten smarter following the Great Depression.

This is a scary book about the bad choices America made as a nation. Hopefully all Phillips has said does not come to pass. If it does, America will be in a bad position. A good read.

If you are a Bush hater you will like this one. Too many statistics though. The author does have some interesting ideas about the current economic crisis and I look forward to learning more and deciding which I think are true.

Kevin Phillips describes immediate problems with the economy, that is, energy shortage, dollar decline, and mushrooming debt. Few are thinking about what it will take to avoid major recession and how badly a recession will be compounded with huge debts.

The end result is loss of control. Growth of debt and credit industry leads to public loss of control of its economic future - a result of higher inflation coupled with higher interest rates producing enormous debts. The financial sector now dominates the industrial sector. The Federal Reserve Board would play a major role in determining the future, yet it is controlled in part by the banking sector which is not elected.

Phillips' style is arduous yet candid. When style is compounded with the bad news this can be a trying book. Phillips makes up for it with a multitude of important points.

Bad Money on CD is read by Scott Brick. He has a somewhat intense and annoying delivery which soon becomes intolerable since he uses the same level of emphasis in every sentence - even those which merely reference material in later chapters. It makes him sound like he lacks any comprehension of the material he's reciting. I kept thinking he must be under time pressure because he's just reading this, not trying to convey what it means. I couldn't make it past the second CD in the set but I'll get the book because it sounds worth reading.

I just finished The Revolution by Ron Paul on CD read by Bob Craig. It was wonderful! Craig has a great voice and I was convinced he empathized with the material he was reading. I would be tempted to get anything read by Bob Craig.

I gave up reading this book after 90 pages. The author dwells on the escalation of various forms of U.S debt over the past 25 to 30 years. This is very sobering, but it's kind of like the financial analyst who looks at a company's balance sheet and ignores the asset side of the sheet to obsess about its various liabilities. Most of the obsession is in the form of analogies and conspiracy theory which do not come together necessarily to prove economic disaster awaits us all.

I have now read the author , Kevin Phillips' books : Wealth and Democracy, American Dynasty :
The Bush Family, Bad Money, and finally, The Politics of Rich and Poor.

I would be interested in learning more about Mr Phillips' experience as a GOP strategist under
President Nixon's administration. Mr Phillips' prose bashes Republican values and free market enterprise from beginning to end. I was particularly amused that he considers capital gains, dividends, rental income, and common interest as "unearned income". Suffice it to say that risk-taking does not involve work and effort ? My definition of 'unearned income' is synonymous with the IRS's definition. Unearned Income is a tax credit and subsidy for those who do not have income.

I consider his comparison of 17th century Spanish, 18th century Dutch, 19th century British, and 20th century American economics to be brilliant in scope. I thought this was his insight until I noticed that he credited it to another author in his book, Politics of Rich and Poor. However, he does expound well on this theme of economic demise. Mr. Phillip's criticism of 'Paper Entrepreneurialism' is spot on.

However, his expose could use a more balanced posture other than it's constant left-leaning stance. The author fails to mention the socio-economic effects of labor unions, excessive and progressive taxation on productive people, excessive government regulations, and restrictive environmental laws. In his book, Bad Money, he blames the private sector for the entire sub-prime crises but makes no mention of the Congressional and Senate Finance committee's role in passing and enhancing the Community Re-Investment Act. Upon examination, one finds that this particular act mandated that GSE's Fannie-Mae and Freddie Mac's loan portfolios include a substantial percentage sub-prime mortgages. Formerly, Fannie and Freddie only accepted prime mortgage loans. Mr Phillips is too well informed not to include this aspect of the crises and must, in my opinion, be in denial.

Granted that the Rich do not excrete marble. Nevertheless, Capitalists can only grow types of business that the political and economic climate of the country permit. Implications that the poor deserve more government support, merely by virtue that they are poor, do not ring true and seem unsupported throughout Mr Phillips' text. Margaret Thatcher has been quoted as reminding us that, Socialism fails when the last of other people's money has been spent.

On a lark I picked this book up in the Las Vegas airport last summer and during the flight I couldn't believe what I was reading. It was a well written and cohesive analysis of the U.S. (and World) economy at the precipice. An unbiased mind couldn't argue it... you had no place to go. It brutally laid out the facts and then systematically connected the dots. Needless to say, I pulled most of my money out of the stock market and a few weeks later it tanked. Kevin Phillips is one of the few people who truly understands the state of the U.S. economy. This is easily the most lucid analysis of the World economy out there. You can't give this book less than 5 stars... it predicted the future with eery precision.

The United States currently enjoys the status of the premier economic and military power in the world. It has not always been this way, and it must eventually end. But I don't think most of us realize that, as author Kevin Phillips argues, decline may be just around the corner. The housing and credit crisis, converging with the specter of peak oil, are two of the central problems for the U.S. economy that together combine for a bleak prognosis.

The housing and credit crisis finds its origin in the shift in the economy over the past few decades from one dominated by manufacturing to one dominated by finance. Moving away from post-Great Depression suspicion of finance and debt, the administration of Ronald Reagan ushered in an era of "minimally fettered capitalism." This was a radically new view of economics that viewed debt as rational, the markets as efficient and self-correcting, and therefore economic deregulation as desirable. Phillips uses the phrase "the socialization of credit risk" to illustrate a policy adopted by the U.S. government beginning in the 1980s, whereby in a series of a dozen financial sector bailouts, it clearly showed that this was the sector of the economy where it was placing its strategic chips. Of course these government bailouts encouraged further financial recklessness and speculative innovation. One wonders, had these bailouts not occured, if perhaps a chastened and discredited financial sector might never have begun its 1990s ascent into the stratosphere.

With the ascendancy of finance has come the huge growth in the scope of credit and debt in the United States. Between 1987 and 2007, credit market debt roughly quadrupled from nearly $11 trillion to $48 trillion, which, in terms of relationship to the GDP is an inflated percentage not seen since the 1930s.

American infatuation with debt led to the extension of mortgages to all sorts of unqualified buyers with the creaton of unbelievably foolish innovations such as sub-prime mortgages. Between 2001 and 2006, as housing prices skyrocketed, an unprecedented number of Americans used their homes as ATMs. They refinanced their homes when interest rates went down to 1%, but instead of putting the money into anything housing related, they just spent it. This strategy to create spending was actually designed by Alan Greenspan of the Federal Reserve, and others, who noted that the housing bubble could replace the assets lost in the collapse of the tech bubble, which had cost about $7 trillion. But now nobody knows to what extent the crash of the housing bubble will have repercussions because it plays into so many facets of the economy.

All of this is going to be exacerbated by the growing reality of peak oil, which deals with the eventual exhaustion of global petroleum resources. There is the strong possibility that in anywhere from 10-25 years world production of oil will have peaked such that each subsequent year will see a declining amount produced. This will certainly force the price way up. Some say the peak has already been reached in 2005 or 2006. The price of oil is also being pushed up by the growing demand from the huge growth of the middle class in Asia and Latin America. In addition to growing price stresses, the United States is facing increased insecurity of oil availability. The major U.S. oil companies such as ExxonMobil and Chevron do not have the access to overseas oil fields that they once had and have been overshadowed by the new big ten, all of which are state-owned national oil companies. Diplomacy and new economic alliances will play a bigger part in future American access to oil. Saudi Arabia, for one, since the American invasion of Iraq, has begun to decrease sales to the United States and increase sales to China.

In 1974 the U.S. agreed to an oil price increase by OPEC with the understanding that OPEC would require that oil be bought and sold internationally in U.S. dollars. Further, the OPEC nations would recycle their petrodollars, the money they received in payment, by investing it in treasury debt or other related American bonds. This, for a time, made oil support the dollar. But the ballooning of oil prices during the five years after the invasion of Iraq from $25 per barrell to the $100 range was both the cause and the effect of a steady slippage in the value of the U.S. dollar. It was a cause as the burden of having to import two-thirds of the oil it consumed became more and more costly. It was an effect as the OPEC nations raised prices in response to declining profits measured in a weakening American dollar. There is now increased interest in OPEC nations of pricing oil in another currency or combination of currency, the effects of which, Phillips argues, could be painful.

In summary, the United States is not in the position it was when it emerged from World War II. In 1950 it was the world's leading creditor, the world's leading oil exporter, and the world's leading exporter of manufactured goods. Today it is the world's leading debtor, the world's leading importer of oil, and the world's leading importer of manufactured goods. Maybe there is some understatement when Phillips says, "to institutionalize the dominance of minimally regulated finance at this stage of U.S. history is a bad idea." He draws a precedent from the fates of Hapsburg Spain, maritime Holland, and imperial Britain, observing that "financialization has a long record of being an unhealthy late stage in the trajectory of previous leading world economic powers." And yet it is a subject that nobody will talk about, at least nobody in positions of influence in American politics. As world wealth continues to realign to Asia, Phillips is convinced that the inevitable decline in American influence and economic power will be that much more painful to face for a country that thinks it is somehow special and free to pursue a "history-ends-with-us millennial capitalism."

"Bad Money" is the most brilliantly written analysis of the economic situation we confront today. I purchased it and read it thanks to Bill Moyers' recommendation and his interview with Kevin Phillips, the author. As enlightening as it was, and terrifying--it was also entertaining. The prose style, the apercus, the freedom of the content--made for aremarkable--even stunning read. I can not recommend it more highly.

This book is very well researched and much of the financial market is playing out in the ways predicted by the book. I found it informative and very useful for a group discussion that my coworkers had on the topic as part of a Staff Ride.

My only critique of the book is that it is big on problems but short on solutions. He tries to express the silver lining and talk about the ways out at the end of the book but it is a little late after a largely depressing look at where our country and economy are.

I would recommend "The Post American World" if you are looking for a good complimentary book.

"Guns don't hurt people. People hurt people." It's the same in shadow finance. If you invest for yourself, or if you want to invest for yourself, but you don't trust a system that keeps the middle class investors in the dark, that over-extends its borrowing to crisis levels, that sells questionable contracts & mortgages not only to naive Americans but to unsuspecting foreign institutions (buyer beware), then you will find the root causes of our 2007 financial lock-up in BAD MONEY useful. Like Roger Lowenstein's books describing earlier lock-ups, Kevin Phillips' book outlines how people we trust repeatedly let us down. Notice that I use the phrase "lock-up" & not "sell-off". From the early 1990s to the present, Lieberman, Greenspan, Paulson, Gramm, etc., all have fought against transparency in the financial markets by turning the discussion towards the fear of more regulations. Buyer beware!

If you love words and sentence construction then you will really appreciate Mr. Phillips' writing style. It's a pleasure to read popular nonfiction written above the ususal boring high school level. Yes, his style takes active reading at first, but then your brain becomes used to it and savors each passage as a refreshingly delightful and active experience.

I am SO glad to have read this book. I feel much better prepared for the future.

This is a stunning book. If you wondered why your gas prices have tripled over the last year, why your jaw drops every week when you see the cost of groceries at the store, and yet the government says there's no inflation, this book explains *everything*. Before, I just couldn't get it. I thought I must be missing something obvious. But it's not obvious. You and I have been very carefully duped. The real story started almost 35 years ago with an agreement between Saudi Arabia and Nixon. They would be allowed to set oil prices if they would sell oil in dollars and then buy our national debt in the form of treasuries. Our dollar has been on a de facto oil standard ever since, and now the house of cards has collapsed. Phillips explains this and how it all ties together with the credit crisis, the housing bubble collapse, and a dozen other issues you probably thought, like I did, you couldn't understand. I promise, this book will open your eyes.

The reason Bad Money had to be updated is because Phillips' work is so prophetic and so seminal all his 2008-09 readers watched its analysis and predictions come faultlessly true for two years, and we want to know what's happening tomorrow. He totally got it right that Washington "banked on" financialization as the economic sector to carry the US through globalization. He correctly analyzed it as a "mercantilist joint venture with the US government." He correctly layed out our economic future in 2006, and it all came to pass. Many saved fortunes and made big money in bad times because they read Kevin Phillips in 2006. Now, America ignores Kevin Phillips at its peril.
All that's left is to discover how China will take over the world economy in the next forty years. Phillips lays out several roads, and they all go through Peking. Washington plays rhetorical games with Adam Smith vs. J.M. Keynes vs. John Birch--blind to historical, global, economic reality.
Washington cannot fix what they pretend doesn't exist, and all we get from Republicans in pandering about how far right of laissez faire we should direct our broken economy. Then, all we get from Democrats is wallpapered re-regulation of the financial sector that leaves the same bad apples and spoofed theories in control such that we might make money the old way for three more years. Then, we shall surely crash thereafter due to this 20 year con game and gutless political inability to extract ourselves from control of the damaging sectors: financial, oil and war-making.
Two years ago I read the original printing and said, "We are doomed." I search this update in hope that I was wrong. We are double-doomed.

An excellent read to understand the transition of the US econony and migration to financial services. There is a quote in the book that paraphrases thus,
Money that is made from value addition in the form of manufacturing fades in insignificance to the volume of the money that is made from shuffling money around. The table on financialisation depicts this shift in the number and volumes of the money.
This book is a more current account of the more practical context of the Gresham's law and how financial innovation played a large role in the transformation. A good book to read along with the Niall FergusonThe Ascent of Money: A Financial History of the World

I bought this book as a concerned American wanting to understand what has brought us into this financial & economic quagmire. While I am able to basically discern what Mr. Phillips is explaining in his much-lauded book, I often find myself getting lost in the terminology. Concepts like collateralized debt obligation are introduced without explanation, assuming the reader already has knowledge of such things. I might have to look for another informative book that is geared more towards the average reader who does not have a scholarly background in finance or economics.

After reading all the reviews, there is not much I can say that has not already been expressed. If you are an investment professional, you may find some of the book useful and some of it may kill you. I think the book is geared more toward average Americans who are concerned with their personal finances and want to increase their awareness of what the banks have done and how it may potentially impact our future.

Getting past the negative review comments on how Phillips is disorganized and does not explain things in micro detail, for the laymen what he does very well is draw attention to the true nature of inflation and how it is savaging our personal wealth. He also draws attention to the frailty of our global financial system, the illusion of our money and wealth, and many of the risks we will likely face in future.

Yes, the global economy moves quickly and some of it is now dated. Yes, there are semblances of "conspiracy theories", but conspiracy is real and without going too far has a valid place when discussing finance. People may not agree with the author's politics, and may complain about his broad strokes, but regardless he offers many educational and valid points that people should become aware of, and on this level the book is a major success. I suggest people also read "The Creature from Jekyll Island" for a greater understanding of fractional reserve banking and the formation of the Federal Reserve.

Many readers already admire Kevin Phillips's previous books, with their incisive analysis of U.S. politics. In this treatise, published just before the 2008 presidential election, his main concerns are the dangerous dominance of the financial sector in the U.S. economy and the fiscal implications of peak oil. Phillips covers many other hazards, from securitization to the real estate bubble. He provides historical background to explain modern financial circumstances, whacks both the Bush and Clinton administrations, and offers his take on everything from imperial England to the efficient market hypothesis. After he explains how and why the U.S. is teetering dangerously on the brink of disaster, getAbstract is relieved to report that Phillips also offers some ideas about how it might rescue itself by going back to strong manufacturing, solid education and better regulations. This seems to be a fairly hasty overview of bad times, but the author can see beyond the immediate storm to the possibility of a brighter day.

I don't agree with everything in this book but I found it well-reasoned and backed up by startling facts and historic comparisons. It changed my mind regarding the economic value of finance versus manufacturing of goods.

As I write this review in January of 2009 we are still at the crossroads of the biggest financial crash since the Great Depression. Daily we claim new lows in unemployment, retail sales falling, car sales off, consumer confidence at all time lows, interest rates to low, record government and personal debt,low stock valuations and so on. If you are interested in understanding who caused this, and what lead to this crisis then this book can answer most of your questions from a historical perspective.
The author shows how we as a nation began to rely to heavily on the financial sector for our GDP. How the housing bubble was created and allowed to get completely out of hand. Also you will see how the securitization of mortgages lead to the most reckless risk taking in corporate history. You will see how the peak oil theories started to play out in the markets last year. Did the world peak out on oil production in 2005 and are we now just in a steady decline?
I found the authors perspective on the Unites States emerging as a super power based partly on its incredible oil production at the beginning of the 20th century very interesting. I found the comparison to Great Britain's Coal production in the 18th century, Spain's gold after the discovery of the new world and the Netherlands domination through wind power using its fleet in the 1600's all interesting food for thought. He also shows how as empires and nations move away from real productivity to becoming mainly financiers to others is the beginning of the end for their power. The U.S. has gone from the largest lender in the world to the largest debtor in just 60 years or so.
This latest pillaging of Wall Street with CEOs walking away with hundreds of millions of dollars in bonuses as their companies are bankrupted or ruined has made even Alan Greenspan rethink his belief in how capitalism works,and whether companies can be trusted to operate in their own best interests. I have been a capitalist my whole life, and this latest show of greed and lack of control by executive boards has changed my faith in the system. Now our government has decided to through over a trillion dollars of good money after bad. This book will enlighten you to the big picture over the last few years and covers a great amount of topics.
"Financial Shock" by Mark Zandi is another great book, even more current than this one.

Kevin Philips has written an excellent book describing the current meltdown of the US economy and building a strong case that the US may well be headed towards a second great depression.

He also makes the connection with scarcity of cheap oil, arguing that this is one of the reasons that the US may fall from its position of leadership.

The facts presented are chilling, but present only part of the story.

For years, Americans have been ignoring one of the most serious problems they face, and that is how population growth makes inevitable a scarcity of resources.

Quite recently the population within the US has been growing at about .9% per year, meaning that all resources (water, food, oil and oil substitutes) must grow at .9% per year for the average standard of living to remain constant. Population growth within the US is almost entirely due to illegal immigration and the increased fertility of illegal immigrants.

In spite of all of the press coverage of first the ozone hole, then global warming, then peak oil and its consequences, virtually nobody makes the connection that overpopulation is the underlying cause for all of these problems.

The reason is that it would demand that the US adopt policies that stop illegal immigration and give a full range of family planning options to all who wanted them, and these issues are highly unpopular in the first case with the left, in the second with the far right. Both policies are opposed by religious groups, who have in effect prevented an informed discussion of population issues.

The basic thesis of this book is correct: depletion of oil sounds the death knell for US supremacy in world ecoomic affairs.

For decades we have been pretending that population growth does not matter because it can be superceded by technological progress and the resulting economic growth. For several decades, the "green revolution," largely based on the increased productivity that oil products could provide in food harvests, has enabled us to ignore population growth. For decades we were able to borrow from the Chinese and create arcane derivatives based upon mathematical models understood by only a few savants, thereby enabling a false sense of wealth among US consumers. Realizing that we were running out of the resource that made this pyramid scheme possible, we invaded Iraq, in an attempt to further delay the day of reckoning.

Now we must pay the piper. The results will not be easy to bear. In the period 1929-32, the Dow lost 89% of its value and unemployment rose to 25%. This time around, the collapse will end with a much lower average standard of living for US citizens, as they indeed begin to compete with an unlimited number of Indians and Chinese who are willing to do their jobs for pennies on the dollar.

There is simply nothing better for understanding the mess we are in and what we will have to address if we really hope to dig our way out of this very deep hole. Required reading for all Americans. It is surprisingly readable for the information and deeper understanding Phillips is giving us. Puts things together so well you end up feeling like every other source of information or commentary sees only part of the elephant. Pair this with "The World is Flat" by Tom Friedman and you've got the ideal gift for each of your children, teenage or above, to prepare them for what's ahead.

This book details the possibly fatal indebtedness of the US to lenders throughout the rest of the world. The only major omission is a discussion of the instruments that may be the final nail in our coffin, Credit Default Swaps.

Mr. Phillips wrote a very thorough and complete review of the reasons why America and the world community are suffering during the current fiscal crisis. This book should be read by all who aspire to public office and by all who are in a position to put this knowledge to good use by correcting the monumental failers of our government leaders and the ruthless criminals who were the Corporate bosses that brought the failure to fruition. As an aside I will not be satisfied until they have been stripped of their ill gotten gains and sent to prison to rot.

This book is prophetic esepcially in light of the events of the last couple of weeks and earlier this year (Bear Stearns and the rest) though I did find it sometimes a bit repetitive.

Also with the rather rapid changing events in the financial market some of the information is a bit outdated, but that it endemic with any book that really is trying to capture a moving target - as of the writing of the book it was more on point in terms of timeliness, but regardless of that fact it does offer insights as to the factors which were/are causing issues - oil, mortgages and the rest that we have become all too familiar with.

Despite the shortcomings the book is still very worthwhile in providing an overview of the situation and is a springboard for you to learn more about the issues facing the U.S. economy.

Kevin Phillips' BAD MONEY receives Scott Brick's excellent acting skills as it provides a solid non-fiction account of oil troubles, debt, and the bursting of the American financial bubble. Any collection strong in nonfiction economics listens needs BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM.

I don't have much to add to the other reviews except that, as a professional writer and editor, I think Phillips's style is pretty smooth and non-fatiguing, considering the complexity of the subject. He does as well as anyone can explaining such man-in-the-moon concepts as collateralized debt obligations. It is true, though, that Bad Money is probably not the ideal introduction to the story of our colossal economic undoing for any reader who is entirely unfamiliar with modern financial terminology and practices.

I mentioned this book in a blog posting: <[...]>.

The book is excellent, the research appears unbiased and objective, and the delivery of the information is direct without being dogmatic. The mainstream media should be so honest about the mess we're in!

The book brings to the surface the dealings of political and financial matters that people need to be informed of. I recommend

It was very informative. The author was non partisan and objective, not placing blame on just one group or party.

bad money is an insightful analysis of the financialization of the US economy over the past 30 yrs ( a harbinger of decline in past world powers ) and its effect on politics. the only criticism i might have is that Kevin Philips writing style is a bit dense. not an easy reader. about halfway between a popular and academic work.

After listening to this audio book I felt like I was beginning to understand some of the financial quagmire big money has gotten our country into, perhaps it will make me a wiser investor. I have bought this book for several of my friends.

Good book. I was surprised at how right on he is. We are even studying this book as a companion to our Bible Study (who would have thought).

This book should be read before The Predator State is read. It is a less detailed, somewhat bias claim the understand the current situation in our economy but it lacks the meat that Galbraith covers in the Predator State.
I do believe that is is worth reading so that some understanding of what we are doing by borrowing so much at this time has caused. We seem to need a good recession to get back our ethics and begin real growth sometime soon. We are in very bad shape and now that the problem has become so large, we cannot just keep feeding the greedy. We need taxes and punishment for the white collar stupid managers that got us here. If only we had the ethics that were in place before the Yuppies and Yippies told us they wanted change but forgot what they were doing due to drugs, we might have been better off today. They failed and they failed by huge amounts.

Aside from going overboard a bit on the vocab, I really liked this fast paced, easy to read, and easy to understand book. The author paints a dark picture of our financial system, and you will have to make your own judgments as to what his analysis means, but as far as the facts the author is spot on.

Phillips does a great job of describing the specific causal factors for the housing bubble and its related credit bubble. These are not frequently written about in the popular press and the "experts" (Paulson, Bernanke, et.al) don't talk about it either. Phillips shows that the debt instruments that brought down the financial system were chimeras, figments of value, that reflected no real value at all. Our economy has been operating a giant Ponzi scheme and all of us were suckered into it. The only real wealth in it is the gazillions that the creators of the debt instruments have run away with. This should be "must" reading in business school finance and economics courses.

Arrived in excellent condition. You can't go wrong with Kevin Phillips' books--well researched, well written. Everyone in America should read this and other of his books.

This is a fascinating and illuminating book that spares no blame for anyone who has contributed to the financial mess we now find ourselves steeped in. Democrats, Republicans, and financiers are all justifiably pilloried.

Some readers have unfairly characterized Phillips's writing as inaccessible or devoid of solutions. I would urge the former group to get past trying to absorb all the details on the first reading and just take note of how vast an issue this is and how negligent our leaders of both parties have been in trying to understand and address it. It's a complex topic that's been under-discussed, but any reader should be able absorb at least the main points here.

As for those seeking solutions, I am afraid Phillips might just have to say, "you tell me, and then we'll both know." As we're seeing right now it's going to take a lot of work to get us out this mess.

Phillips has a thorough understanding of the subject as is evident from this and his earlier works. He add others saw this mess coming, and while they can take little comfort in saying "I told you so," readers can gain valuable insight from his writing.

I wish I listned to it the day it came out. I would have saved myself a lot of money!!!

In spite of too inspired historiosophy, this book is an absolute must.

If you haven't studied (or educated yourself on) things like GNP, GDP and securitization this book isn't for you as the author implicitly assumes some knowledge of these things. I majored in economics in college and have worked in securitization and I enjoyed this book a great deal. It ties together some trends like massive increases in private debt levels, the mechanisms that allowed this increase, and how a lot of new and unregulated products like credit default swaps, plus massive debt levels, set up our country for the financial game of dominos we are in today.

I've already purchased "The Trillion Dollar Meltdown" and will read it next.

A well researched view of how the United States has come to be a seriously indebted, precariously troubled economy which could lead to the end of our role as the world's dominant nation. Everyone should read this book to understand our present situation and what the future will likely be for the U.S. Unless we begin to deal with the issues Phillips details, our children and grandchildren will face a far different world than the one we have enjoyed and they will wonder why we allowed this to happen to them.

Reading this book requires some background knowledge in economics and finances, but it's great. It's packed with statistics (hence the subject matter) and it has a kind of academic vibe, so it's not for everybody. But it's very insightful and a great critique of what American capitalism has become. A supplemental read for those interested in solutions to our environmental and economic woes, should read "Natural Capitalism: Creating The Next Industrial Revolution."

if you read the 'prize' and alan's 'the age of turbulance' you will definitely like this book. this book provide a new perspective to the petro-dollar by analyzing the development of financial industries in USA.

Explains, to a regular person, what it is that banksters say "we" "wouldnt understand". Makes the idea of the Masters of the Universe being "brilliant" look absurd

I think many of the reviews here have done an excellent job of giving the interested readers a good overview of the subject matter in the book as well as some thoughtful insight into the author's background. So I will not attempt to give a summary but just my personal opinion of the book.

I do not have a strong background in finance or history so at times the book's subject matter was hard to grasp, but thankfully the author has obvious theses to every chapter and hits on the main themes of his book several times. I really enjoyed the chapters on finance, bullnomics, securitization, and oil. I will say that some of the numbers he gives are absolutely astonishing. It is scary to think what the future may hold for the US and its burgeoning debt.

I would recommend this book to those interested in understanding the background of the current economic climate. For the average layman (such as myself) this book can be a difficult read, but I guarantee that if you stick with it you will be rewarded with some priceless gems of knowledge that most Americans are completely unaware.

Kevin Phillips has made some brilliant predictions in his long career and and like all prognosticators,some bad ones. In this tome, he hits the target by clearly showing the growth and eventual overwhelming influence and control Wall Street has on the Congress. While this book was out before the death of Lehman Brothers, he predicted the scenario of an over leveraged market and how taxpayers would be expected to bail the crooks out. I would recommend this book to those who want a background on the how finance become more important than manufacturing in this country, which is a very bad occurrence. A more up to date reading is Inside The Great American Bubble Machine by Matt Taibbi at Rolling Stone. Marketing Me Book: How to keep your job in any economy

I picked up this book with the hopes of learning a little more about the roots of today's economic crisis. I made two major errors in my selection: first, this book was written in April, before the downturn really took off. Second, this book is extremely difficult to understand. The language is very flowery, and (to me) Phillips' writing is often quite disorganized. For economics-minded people who readily recognize acronyms like CDO and CMO, this might be a great read. For the average layperson, it was tedious. I'd recommend Paul Krugman's Return of Depression Economics as a good intro into this topic. Reading Phillips did boost my vocabulary, though!

This is a great book about the origins our our current financial straits. It's not a light read but compelling and thought provoking to be sure.

It details America's rise as global financial hegemon and offers predictions about what the future of the global economy will look like. Phillips offers four predictions for the future of the world economy namely that (1) Asia will dominate the global economy by 2030 (2) China will be the dominant player within Asia (3) Some city with a large Chinese population will eventually emerge as a financial capital, rivaling London and New York and (4) the leading currency in Asia will have a global reserve function by 2030 (p. 182).

There are also a number of interesting facts sprinkled throughout the book. One figure I found fascinating was the ranking of principal suppliers of crude oil to the US. It turns out that Canada is our leading source of oil, accounting for 1.85MM barrels per day. It's followed by Mexico, Saudi Arabia, Venezuela, Nigeria, Angola, Algeria, and Iraq (p. 139).

A great book, and one I could see myself re-reading again in 6 months.

This is a must read for any elected pol who thinks they know whats going on.

Kevin Phillips once again gives clarity to a complex issue. This book should be required reading by anybody involved in financial decisions in the public and private sectors.

If you intend to invest in property,now is the time. Read this book and find out why. The markets are headed down as globalism continues to outsource the wealth of working Americans. Read this book and find out who set this down ward spiral into motion. There is plenty of information to cover anybody's political preferences even for a left leaning author, he hits all the bases.

The reason you would want to read a book like this is if they can go into more details or background that the newspapers don't get into but this book doesn't do it. It's like a group of newspaper articles strung together seemingly to take advantage of the attention on the credit crisis. If you keep up with the news it's just rehash but it's harder to read. It constantly uses quotes and references which simply refer to other articles but don't really flesh out details. The chapter on CPI takes a strong position that it's too low but doesn't really explain it. Instead you have a quote from so and so and so on with all the () [] and jumbled symbols. Anybody can see lately that certain items have been going up like food or oil, but others like clothes or computers are constantly falling so it's not clear how that evens out. He criticizes the way the government accounted for computers but it actually makes sense. You do get more for less! Did he write on a typewriter? How could he not know that?