Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
by Kevin Phillips
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Book Summary Information
Author: Kevin PhillipsEdition: Hardcover
Audio: English (Original Language); English (Unknown); English (Published)
Published: 2008-04-15
ISBN: 0670019070
Number of pages: 256
Publisher: Viking Adult
Book Reviews of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
Book Review: The decline of the US Empire
Summary: 5 Stars
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 ("to big to fail"). Citibank - Phillips calls it an "?berbank" - 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...
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Summary of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
The bestselling author reveals how the U.S. financial sector has hijacked our economy and put America's global future at riskIn American Theocracy, Kevin Phillips warned us of the perilous interaction of debt, financial recklessness, and the increasing cost of scarce oil. The current housing and mortgage debacle is proof once more of Phillips's prescience, and only the first harbinger of a national crisis. In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. America's current challenges (and failures) run striking parallels to the decline of previous leading world economic powers-especially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.
"Bad money" refers to a new phenomenon in wayward megafinance-the emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also "bad" are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the world's other currencies. In all these ways, "bad" finance has failed the American people and pointed U.S. capitalism toward a global crisis. Bad Money is the perfect follow- up to Phillips's last book, whose dire warnings are now proving frighteningly accurate.
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