The first of what is almost certain to be a long line of post-subprime, chest-beating, the U.S. economy is ruined, the U.S. dollar is going to zero, and, by the way, America sucks, books is now out. It’s author Kevin Phillips’ latest, the recklessly over-titled Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.
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.
So, does Phillips have a point? Sure. The U.S. is a screwy place at the best of times, and it’s particularly screwy right now — and wishing/pretending (ahem) it isn’t won’t change anything. Because we have had an addled and distracted administration, gone through two wrenching economic bubbles in a decade, gotten stuck in a nonsensical and expensive (both financially and politically) war, wandered off in the energy wilds, proposed xenophobic and anti-trade presidential candidates, and generally demonstrated that the American model, both political and economic, is in need of a serious spring-cleaning.
But, and I’m not trying to split suckiness hairs here, the above is not the same thing as ‘America sucks’ (which is, to my way of thinking, Phillips redux). This is, after all, still a capital-rich, entrepreneurial and open economy, one buttressed by low unemployment, a highly-educated workforce, top-drawer research, liquid and innovative (yes!) capital markets, and some of the best-known companies and brands in the world. So, to put it in Carl Spackler terms, we’ve got that going for us. The serious issues the U.S. currently faces could still be turned back by the country’s resilience and innovation, even while financial lust and a hide-bound religiosity (of the political, economic and spiritual sorts) threatens to drag the country into the swamp of swaps and syndication.
There are many more points I could make here, but I’ll stop — and I will read the book when it comes. What do others think? Does America suck as much as Phillips clearly thinks it does? Will you buy the book? By not buying Phillips’ book are you in denial, or do you think he’s merely another econo-political cheese-eating surrender monkey hack?
All views welcome.
[Update] Another review of the book from this week’s L.A. Times.