Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism | 
 enlarge | Author: Kevin Phillips
Creator: Scott Brick
Publisher: Penguin Audio
Category: Book
List Price: $29.95
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Avg. Customer Rating:  36 reviews
Sales Rank: 231270
Format: Audiobook
Media: Audio CD
Edition: Unabridged
Number Of Items: 8
Pages: 9
Shipping Weight (lbs): 0.5
Dimensions (in): 5.8 x 5.1 x 1.5
ISBN: 014314328X
Dewey Decimal Number: 330.973
EAN: 9780143143284
ASIN: 014314328X
Publication Date: April 15, 2008
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| Customer Reviews: Read 31 more reviews...
 Losing Control July 22, 2008
1 out of 1 found this review helpful
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, good book July 21, 2008
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: <[...]>.
 Sound Message, Poor Writing July 18, 2008
1 out of 1 found this review helpful
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.
 Bad Money Tedious, no solutions July 17, 2008
1 out of 1 found this review helpful
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.
dismantles economic myths and self-deceptions July 10, 2008
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."
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