Very important read, although "Wealth and Democracy", written back in 2004 is Phillips's absolutely seminal work. Basically Phillips (historian and former political advisor to Richard Nixon) establishes critical linkages between debt, overreliance on finance, peak oil, and political corruption. It is masterful in its historical sweep, demonstrating that America is not the first empire to tread through these roads. In "Bad Money", Phillips expands on some of these key themes that are common to his prior works, but with a focus on Wall Streets practices, particularly over the past 10 years.

The discussion on financial instruments like CDS and other forms of derivative trading is concise and to the point. He also discusses how the repeal of Glass Stegall and other 1930's era regulations allowed the banks to get into speculative enterprises like hedge funds and other forms of stock trading.

Phillips' central thesis is that any nation that relies excessively on finance, to the detriment of manufacturing and other productive enterprises, begets chronic instability resulting from the creation of fictitious capital. This a cancer that spreads into the rest of the economy. He cites the Roman, Dutch, British, and Spanish experiences as examples of finance gone awry.

This crisis which Phillips mentions through his book really began in Wall Street, where it weakened the stock market, which impact the real wealth of the middle classes. It's interesting to note that the stock market's value, when adjusted for inflation, is worth only 54% of its notational value from 2000. That's value, capital, that has evaporated due to excessive debt and the debasement of the currency. The economic panic broke out in the banks that sold derivatives.

The real significance of the collapse of Bear Stearns and Lehman Bros. is that it exposed broad systemic problems with the credit markets, which have yet to fully recover from those convulsions from last year. The banks remain overleveraged with bad debt and derivative contracts that they cannot ever hope to repay. The big banks are profitable only because of government guarantees, but that's not a long term strategy and is in fact a productive drain on the broader economic system.

I wish that Phillips would provide a better discussion on solutions to the problem: how we can change our economic development strategy. My take on it is that we need to build on the things that we do well, where we still have a competitive advantage. One of the few sectors where this dynamic is still evident is high-tech and the semiconductor industry. Why is it that Silicon Valley, the Research Triangle in VA and other magnet regions for hi-tech still doing relatively well while other areas that based their growth on RE and banking (FL, NV, AZ) are doing very bad? We have to build upon the things that we do well. I think that low interest loans to small businesses and startups in these sectors in particular, directly guaranteed by the Treasury, would be a excellent start. It would certainly be a better use of monetary resources (creates capital, jobs, etc) than spending it on guaranteeing bad debts. Furthermore, we need to rebuild the manufacturing base of the country by encouraging the growth of leaner moderately sized businesses using similar techniques to the ones stated above.

In short, the wealth needs to start flowing from the top down rather than from the bottom up. That's my take on it, short and sweet.

This is stuff that a lot of people would rather not discuss. People everywhere today have an attitude of "there's nothing to see here, move along" when it comes to this crisis. But ignoring it won't make it go away, and it isn't a "crisis of confidence" as former McCain economic advisor Phil Gramm claimed last year. The problem is wide, systemic and related to overleveraging of bad debt that cannot be wished away. Cash for clunkers, TARP, and other government "solutions" will only make the problem worse, as all of these programs involve taking on more debt to pay for bad debt. The threat of a compound debt trap is real.

But there is also hope for recovery. That can only come about if we're first HONEST about where we stand and then confronting it with prudent and equitable solutions. Otherwise, we will just continue jumping from crisis to crisis without any strategy.

Many readers already admire Kevin Phillips's previous books, with their incisive analysis of U.S. politics. In this treatise, published just before the 2008 presidential election, his main concerns are the dangerous dominance of the financial sector in the U.S. economy and the fiscal implications of peak oil. Phillips covers many other hazards, from securitization to the real estate bubble. He provides historical background to explain modern financial circumstances, whacks both the Bush and Clinton administrations, and offers his take on everything from imperial England to the efficient market hypothesis. After he explains how and why the U.S. is teetering dangerously on the brink of disaster, getAbstract is relieved to report that Phillips also offers some ideas about how it might rescue itself by going back to strong manufacturing, solid education and better regulations. This seems to be a fairly hasty overview of bad times, but the author can see beyond the immediate storm to the possibility of a brighter day.

The author shows the scary side of the financial panic of 2008-09. America focused on selling financial products to the rest of the world, and those obligations were not as stellar as they should have been. With the current financial meltdown, much of the rest of the world along with the United States if facing the prospects of a global recession/depression as the trillions of dollars of these obligations are sorted out. Meanwhile Wall Street has made its millions and passed the debt to future generations.

The author also talks about peak oil, dynasic politics, and financial and marketplace corruption. When one looks at one's debt along with the government's obligations, one wonders whether the United States has ever gotten smarter following the Great Depression.

This is a scary book about the bad choices America made as a nation. Hopefully all Phillips has said does not come to pass. If it does, America will be in a bad position. A good read.

This book is very very heavy with flowery rhetoric and very light on supporting evidence of the sort anyone could use in conversation. I found American Theocracy to be exactly the same way, so if you read and liked American Theocracy, you may well like this book also.

I am pretty sure the author and myself would agree on most points he makes in this book, so my complaint isn't that I just fundamentally disagree with his world view. My complaint is the ratio of adjective-laden, highly loaded language to usable fact is so high, it makes listening to it a fast-forward experience.

I am not a fist pumper who mainly buys books in order to hear my own preexisting suspicions about a subject confirmed and amplified by an author. If I am going to spend my time reading I want to walk away having increased my knowledge on a subject and hopefully been fully loaded with memorable supporting evidence. I am not going to say there's no facts in this book, I am just saying the sheer quantity of empty rhetoric made listening to this a punishing experience. If you're going to say something, marshall some supporting evidence. This book is closer to being an exercise in name-calling.

I give this book a low rating because its on a timely and important topic that deserves serious collective contemplation and people who buy books looking for understanding deserve better.

From a less lofty perspective, I want to be the interesting guy at the dinner party who can back up his arguments with facts, and this book didn't further my ambition at all.

Keven Phillips is a very intelligent man. He is extremely well read. Somewhere along the way, however, he has decided that nothing can save America from its own terminal idiocy.

Here is his argument in a nutshell. America is doomed. We are a declining empire, whose rapid descent into powerlessness and shame is probably unstoppable, in any event, but which is utterly inevitable given the idiocy and buffoonery of our leaders. What dooms us, says Phillips, is a combination of an economy increasingly devoted to parasitic financial speculators, instead of companies which make real products, vast levels of debt, both private and public, the imminent double-whammy of oil running out and global warming, the domination of the Republican Party by know-nothing evangelicals and the absolute and total horror of the Bush Administration.

It is customary, in books of this sort, after demonstrating the evils of whatever the author is denouncing, to then move on, in the last chapter, to at least a brief description of how we could fix everything, if we would simply listen to the author's wisdom. Phillips will have none of that. We are DOOMED, doomed, don't you understand, and he does not bother trying to discuss how the descent into hell could be slowed.

There are, of course, many aspects of his analysis that are well-grounded factually. The excesses of our financial system, at this point, are obvious to everyone. The issues that he raises about oil shortages are certainly quite real and worth serious thought. On many points of detail, Phillips has and presents an excellent understanding of current political and economic events.

The overall tone of the book, however, is absurd. We must fail, because all empires before us, the Roman, the Spanish, the Dutch and the British, all failed. What a load of pompous nonsense! The Roman, the Spanish, the Dutch and the British Empires have almost nothing in common with each other, never mind with America. Phillips' whole effort to state a grand theory of history is simply a provincial re-hash of the old "decline of the West" thinking. American power might well fail, but, if so, it won't be for the same reasons that the Romans, the Spanish, the Dutch and the British failed; there is no common thread running through all of these stories, except perhaps the universal truth that all human creations fall apart sooner or later.

Phillips has no appreciation of America's ability at self-correction. Yes, the housing bubble, following on the internet bubble and prior bubbles, was a disaster of epic proportions, for which Alan Greenspan and George W. Bush have much to answer. But the system has already liquidated every single sub-prime lender and most of the bulls on Wall Street. We are past that piece of insanity, and it seems quite unlikely that we will be going down that road again any time soon. Could the Roman, Spanish, Dutch or British Empires change course this quickly? One little difference between us and them.

And, if Bush was elected, because the know-nothing bozos in the South, who are dumb enough to still take the Bible seriously control our elections, how was it that Barack Obama won in 2008? Obama, in many ways, is the polar opposite of George W. Bush. Our system elected him after Bush. Does that sound like a doomed, dying empire, unable to change course or to correct mistaken policies?

And, of course, Phillips takes it for granted that the whole world hates us for the abysmal failure of Bush's criminal policy of invading Iraq to grab its oil. Phillips, of course, is far too sophisticated to be taken in by that liar Bush's empty pretense that the war in Iraq might have something to do with democracy and ridding the world of tyrants. As I write this, Iraq is concluding its provincial elections, in which every major group in Iraq participated and which were carried out peacefully. And in which the religious extremists parties appear to have lost, big time. Something tells me that George W. Bush's bad public opinion ratings in Norway in 2004 will not matter much, to future historians, if Bush has in fact succeeded at creating a lasting democracy in the center of the Arab Middle East. And it is kind of hard to see America as a doomed, hopelessly declining power, when we achieve feats such as these.

Beneath Phillips' intelligence and erudition, this book stinks. If you want an explanation of the current crisis, there are many better ones out there. But Phillips' real concern is not the current crisis. His real perspective is the latest in a line of gloom and doom prophets reaching back to Paul Ehrlich, and the various authors who told us that Japan was going to take over the world. Jews are familiar with the odd phenomena of the "self-loathing Jew." Phillips is an example of that odd sub-species, the highly educated and extremely successful American who prides himself on his ability to see how shallow, ugly and tacky America is and who takes tremendous pleasure in predicting American decline. Sorry, Mr. Phillips, but betting against America has always been a bad bet. We have come through worse things than this, and something tells we will come through this one, too.

The United States currently enjoys the status of the premier economic and military power in the world. It has not always been this way, and it must eventually end. But I don't think most of us realize that, as author Kevin Phillips argues, decline may be just around the corner. The housing and credit crisis, converging with the specter of peak oil, are two of the central problems for the U.S. economy that together combine for a bleak prognosis.

The housing and credit crisis finds its origin in the shift in the economy over the past few decades from one dominated by manufacturing to one dominated by finance. Moving away from post-Great Depression suspicion of finance and debt, the administration of Ronald Reagan ushered in an era of "minimally fettered capitalism." This was a radically new view of economics that viewed debt as rational, the markets as efficient and self-correcting, and therefore economic deregulation as desirable. Phillips uses the phrase "the socialization of credit risk" to illustrate a policy adopted by the U.S. government beginning in the 1980s, whereby in a series of a dozen financial sector bailouts, it clearly showed that this was the sector of the economy where it was placing its strategic chips. Of course these government bailouts encouraged further financial recklessness and speculative innovation. One wonders, had these bailouts not occured, if perhaps a chastened and discredited financial sector might never have begun its 1990s ascent into the stratosphere.

With the ascendancy of finance has come the huge growth in the scope of credit and debt in the United States. Between 1987 and 2007, credit market debt roughly quadrupled from nearly $11 trillion to $48 trillion, which, in terms of relationship to the GDP is an inflated percentage not seen since the 1930s.

American infatuation with debt led to the extension of mortgages to all sorts of unqualified buyers with the creaton of unbelievably foolish innovations such as sub-prime mortgages. Between 2001 and 2006, as housing prices skyrocketed, an unprecedented number of Americans used their homes as ATMs. They refinanced their homes when interest rates went down to 1%, but instead of putting the money into anything housing related, they just spent it. This strategy to create spending was actually designed by Alan Greenspan of the Federal Reserve, and others, who noted that the housing bubble could replace the assets lost in the collapse of the tech bubble, which had cost about $7 trillion. But now nobody knows to what extent the crash of the housing bubble will have repercussions because it plays into so many facets of the economy.

All of this is going to be exacerbated by the growing reality of peak oil, which deals with the eventual exhaustion of global petroleum resources. There is the strong possibility that in anywhere from 10-25 years world production of oil will have peaked such that each subsequent year will see a declining amount produced. This will certainly force the price way up. Some say the peak has already been reached in 2005 or 2006. The price of oil is also being pushed up by the growing demand from the huge growth of the middle class in Asia and Latin America. In addition to growing price stresses, the United States is facing increased insecurity of oil availability. The major U.S. oil companies such as ExxonMobil and Chevron do not have the access to overseas oil fields that they once had and have been overshadowed by the new big ten, all of which are state-owned national oil companies. Diplomacy and new economic alliances will play a bigger part in future American access to oil. Saudi Arabia, for one, since the American invasion of Iraq, has begun to decrease sales to the United States and increase sales to China.

In 1974 the U.S. agreed to an oil price increase by OPEC with the understanding that OPEC would require that oil be bought and sold internationally in U.S. dollars. Further, the OPEC nations would recycle their petrodollars, the money they received in payment, by investing it in treasury debt or other related American bonds. This, for a time, made oil support the dollar. But the ballooning of oil prices during the five years after the invasion of Iraq from $25 per barrell to the $100 range was both the cause and the effect of a steady slippage in the value of the U.S. dollar. It was a cause as the burden of having to import two-thirds of the oil it consumed became more and more costly. It was an effect as the OPEC nations raised prices in response to declining profits measured in a weakening American dollar. There is now increased interest in OPEC nations of pricing oil in another currency or combination of currency, the effects of which, Phillips argues, could be painful.

In summary, the United States is not in the position it was when it emerged from World War II. In 1950 it was the world's leading creditor, the world's leading oil exporter, and the world's leading exporter of manufactured goods. Today it is the world's leading debtor, the world's leading importer of oil, and the world's leading importer of manufactured goods. Maybe there is some understatement when Phillips says, "to institutionalize the dominance of minimally regulated finance at this stage of U.S. history is a bad idea." He draws a precedent from the fates of Hapsburg Spain, maritime Holland, and imperial Britain, observing that "financialization has a long record of being an unhealthy late stage in the trajectory of previous leading world economic powers." And yet it is a subject that nobody will talk about, at least nobody in positions of influence in American politics. As world wealth continues to realign to Asia, Phillips is convinced that the inevitable decline in American influence and economic power will be that much more painful to face for a country that thinks it is somehow special and free to pursue a "history-ends-with-us millennial capitalism."