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Kevin Phillips went from designing the infamous Nixon "Southern Strategy" to becoming one of the foremost analysts and critics of capitalism run amuck. It is one of the most fascinating transformations of a political appartchik in recent decades. And his writing is well-researched, cogent and sweeping in its overview.

In his latest book, Phillips pulls the fire alarm on an American economy that both political parties have turned over to the finanical industry -- including hedge funds -- and sacrificed to globalized trade and debt.

In short, Kevin Phillips debunks the notion of American economic dominance and reveals that we're living a charade, being sold siren songs of super power prowess that's built on trillions of dollars in debt.

The truth is that the American economy is now mortgaged to foreign nations.

And the Wall Street financial industry has no patriotic interest in America. They just go where the money is.

BuzzFlash has interviewed Phillips on a couple of occasions and we admire him because he became a transformed man by following the facts where they led him.

From the Publisher, Penguin Books:

The bestselling author reveals how the U.S. financial sector has hijacked our economy and put America's global future at risk

In American Theocracy, Kevin Phillips warned us of the perilous interaction of debt, financial recklessness, and the increasing cost of scarce oil. The current housing and mortgage debacle is proof once more of Phillips's prescience, and only the first harbinger of a national crisis. 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. Bad Money is the perfect follow- up to Phillips's last book, whose dire warnings are now proving frighteningly accurate.

About the author:

Kevin Phillips has been a political and economic commentator for more than three decades. A former White House strategist, he has been a regular contributor to the Los Angeles Times and National Public Radio, and has written for Harper's Magazine and Time. He is the author of ten books, including The New York Times bestsellers American Theocracy and American Dynasty.

From Barnes & Noble:

There is no one quite like Kevin Phillips. As a political strategist, he earned fame and presidential recognition as the author of The Coming Republican Majority, but since then his astute political and economic commentary has cut across party lines, excoriating leaders on both sides for ineptitude and cowardice. Bad Money might be best seen as the even more focused sequel to his American Theocracy. Clearly, Phillips thinks that the situation has grown worse since that 2006 book: "The parallel to the historical Achilles heels of previous leading world economic powers -- global over-reach, worn-out politics, excessive debt, financialization and exhausted energy regions -- are chilling." No simple jeremiad, Bad Money is an alarum against the politics of evasion.

From the LA Times:

In part, this latest book is meant as a rhetorical shot across the bow of the current presidential campaign, which Phillips convincingly argues is failing to address the causes and implications of our current distress. There's plenty of that to go around: The economic expansion that has occurred during the Bush administration was the first in U.S. history to exclude the middle class. Previous booms had left the poor behind, but this one was the first to benefit only the rich. Median family income is still less than it was in 1999, which makes this the longest slump ever measured in that key indicator of middle class well-being. The Clinton boom was no great shakes for the great middle either: Since 1983, according to a recent survey by the nonpartisan Pew Research Center, "the median net worth of upper-income families more than doubled, while the median net worth of middle-income families grew by just 29%."

In this context, "Bad Money" reads as kind of an electoral cri de coeur: It's the economy, stupid.

Yet, for a variety of reasons, including the Clintons' close and quite obviously mutually beneficial relationship with Wall Street, Phillips doesn't hold out much hope that either party is willing to address the roots of the crisis. The GOP's faith in markets is absolute, and the religious right's blind embrace of capitalism has eliminated populist dissent from the party's internal debate. The Democrats, meanwhile, are irreparably compromised by contributions from the Wall Street bankers and hedge fund managers, who are at the center of the current global meltdown.

Phillips locates that malaise in two structural factors: Over the last three decades, financial services have expanded from 11% of America's gross domestic product to a record 21%, while manufacturing has declined from 25% to 13%. The author rejects the notion that this shift simply reflects a healthy adaptation to a "post-industrial" economy. Instead, he argues that the emergence of hedge funds and ever-more exotic bundles of financial derivatives amounts to a "financialization" of the American economy that has facilitated a ruinous expansion of private, as well as public, debt. Failed energy policies -- or rather, the avoidance of any policy -- have made the United States vulnerable to what may be the coming peak in oil production, thereby further weakening the dollar, which is essentially backed by the global petroleum economy.


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