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Bad Money: The Inexcusable Failure of American Finance: An Update to Bad Money (A Penguin Group eSpecial from Penguin Books) Paperback – March 31, 2009
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-Alan Brinkley, The New York Times
"An indispensable presentation of the case against things as they are."
"Sobering . . . positively alarming."
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Top Customer Reviews
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.Read more ›
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.Read more ›
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%.Read more ›
Most Recent Customer Reviews
Phillips appears to be an honest Republican. The country needs more of that.Published 7 months ago by Appalachian Son
Comprehensive, well-written, informative and entertaining. This book traces all the major trends that led up to the 2008/9 financial crisis even though it was published before the... Read morePublished 10 months ago by AdamScott
[audio book version]
Anytime an author keeps referring to his previous works, you know that you, the reader/listener are in for a hard, hard, slog. Read more
Starting out as a rabid Conservative, Kevin Phillips has never stopped thinking and feeling. Anyone who has traveled the inner road he has is someone to be cherished.Published 15 months ago by Imma Wanker
Very revealing as to what is going on in today's economy.Published 16 months ago by Rickey James Richardson
Someone needs to write Kevin Phillips' biography. He who, along with Harry Dent, invented the "southern strategy" of Richard Nixon has spent the second half of his life so... Read morePublished on December 21, 2013 by G. Budrikis
I saw him being interviewed on OPB and wanted to get his book to learn more about the financial crises of recent past; and, the history leading to this. Read morePublished on November 22, 2013 by Linda L Sanderlin
This book is one of the most important books that I've ever read. Especially in these days of economic upheaval, it's nice to have more of the perspective that this book can give.Published on March 9, 2013 by Robert V. Rose, retired education researcher