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

[bronxiteforever]

By Tim Rutten, Los Angeles Times Staff Writer
April 16, 2008

Kevin Phillips' new book, "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism," Phillips locates malaise in two structural factors: Over the last three decades, financial services have expanded from 11% of America's gross domestic product to a record 21%, while manufacturing has declined from 25% to 13%. The author rejects the notion that this shift simply reflects a healthy adaptation to a "post-industrial" economy. Instead, he argues that the emergence of hedge funds and ever-more exotic bundles of financial derivatives amounts to a "financialization" of the American economy that has facilitated a ruinous expansion of private, as well as public, debt. Failed energy policies -- or rather, the avoidance of any policy -- have made the United States vulnerable to what may be the coming peak in oil production, thereby further weakening the dollar, which is essentially backed by the global petroleum economy.

"My summation," Phillips writes, "is that American financial capitalism, at a pivotal period in the nation's history, cavalierly ventured a multiple gamble: first, financializing a hitherto more diversified U.S. economy; second, using massive quantities of debt and leverage to do so; third, following up a stock market bubble with an even larger housing and mortgage credit bubble; fourth, roughly quadrupling U.S. credit-market debt between 1987 and 2007, a scale of excess that historically unwinds; and fifth, consummating these events with a mixed fireworks of dishonesty, incompetence and quantitative negligence."

Phillips' strongest point as a political commentator always has been that he really understands the political and economic histories of the United States and Western Europe, which adds force to his musing on whether America now finds itself on the cusp of the sort of financially induced decline through which Bourbon Spain, the Dutch Republic and imperial Britain once passed.


http://www.latimes.com/features/books/la-et-rutten16apr16,0,4337030.story

[demwing]

1. NPR has an audio link to an interview w/ the author

Happy listening!

[bronxiteforever]

2. Thanks! I heard Phillips this am on NPR. I think he nails it.

[DemReadingDU]

3. It was excellent!