Economic Perspectives with Hopeton Hay on KAZI 88.7 FM in Austin, TX

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

Review By Travis Kent 

Kevin Phillips nailed it. During the fall of 2007, Phillips was in the process of writing what would eventually be called bad_money1Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. The original hardcover edition was released in the Spring of 2008  and his criticism of derivative mortgage products, excessive personal debt as an economic driver and the rise of the financial sector as a major piece of the gross domestic product, would, in less than six months, serve as a haunting premonition of what is now thought of as a global economic crisis.  The paperback  which was released March 2009 and is the subject of this review, is equipped with a preface that serves as a well deserved, if not subtle, “I told you so.”

Bad Money now serves as an excellent course study in what has led the America and world economy to their current floundering state. Namely, the failures of the Bush and Clinton administrations to hold Wall Street accountable for the products they created and an in depth analysis of how politics has paved the way.  Phillips also examines post-9/11 financial policy, the factor of oil in our economy, and makes haunting comparisons between the Internet bubble that burst just after the turn of the millennium and the Housing bubble which has burst right in front of our eyes.

This book can be summed up from its preface as Phillips writes about the rise of the financial sector from roughly 11% of the U.S. gross national product in the 80’s to 20% by 2005. During that same period, manufacturing fell from 25% of GNP to just 12%. Most of all, Bad Money is a history lesson, political expose and staunch warning of things to come all rolled into one. It is not for everyone but its lessons will are sure to enlighten.

Travis Kent is an underwriter in the surety bond industry.

NOTE: Kevin Phillips was interviewed on the April 20 edition of Economic Perspectives.  To listen to the interview click here: Kevin Phillips Interview 

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