BAD MONEY: Reckless Finance,
Failed Politics, and the Glocal
Crisis of American Capitalism
By Kevin Phillips

Viking Adult, 2008

After reading the new book by Kevin Phillips, a painful realization dawns: Not one of the people running for president is addressing how interconnected and serious America’s economic, ecological, and security problems are. Worse, the bankers and hedge-fund speculators who created the credit crisis that sent real-estate prices rocketing, and now, tumbling, are financing the campaigns of Democrats—the only politicians likely ever to rein them in.

The new analysis by Phillips is called Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.

Read it and weep.

Kevin Phillips itemizes massive campaign contributions from the very hedge-fund managers, investment bankers and other Wall Street speculators who engineered a calamity in the name of free-market capitalism. Their influence, he writes, will continue to shape American foreign and energy policy.

The two presidential candidates these bankers know best and vie to fund are Barack Obama and Hillary Clinton.

By contrast, the Republican candidate sounds like an anti-Wall Street populist. He’s still taking in banker money—but John McCain promised not to bail out either speculators who make bad loans or the overstretched homeowners who default on them.

The problem, Phillips argues, is that there are no heroes on our political horizon—and that there is ugly and sad historical precedent for what happens when a great international economic and political power lets speculators and bankers make all the decisions.

But won’t “green economics” save us?

Phillips thinks that Democrats are too hopelessly conflicted to rein Wall Street in. Meanwhile, Republicans are so ideologically married to a fantasy of “market triumphalism,” in which any government action of any kind is wrong, that they are alienating even their most enduring corporate allies.

For the past eight years, we’ve had a president and a Congress who have allowed American bankers and oil companies to call the shots in our international finances and our national energy policy—with the result being that our dollar is losing value and our national energy policy doesn’t actually exist.

China and India and Russia and Iran all have national energy policies—and their government-owned energy companies are communicating with one another, and jointly planning and constructing pipelines and other facilities, and conducting their foreign policies as if the United States were a much less-important factor than ever.

So does that mean we should go green and go it alone?

Phillips labels such thinking “utopianomics.”

“Put on your green collars, Americans,” he writes with mocking scorn. Phillips says that Democrats are pitching a fantasy—“Have we got a Green Deal for you now!”—that ignores the reality of continued reliance on fossil fuels. The International Energy Agency report he cites says that 84 percent of the increased energy consumption between now and 2030 will come from fossil fuels. Another report says that nonconventional fuels (oil sands, ethanol, biomass, LNG, etc) will only supply 10 percent of demand by 2030.

Phillips does not, however, scorn folks like oilman T. Boone Pickens, who worry that petroleum production has peaked. For them, it is ominous indeed that the government-owned oil reserves in Russia became Russian-only territory when Prime Minister Putin decided to toss the American oil companies out.

For Phillips, the Right and the Left in this country are equally nuts—the Right for letting televangelists shape environmental and energy policy, the Left for pushing the notion that we can go our own green way.

What about the rest of us?

There are 300 million Americans. Among us are a few thousand bankers, and the 535 members of Congress, and a president and vice president whose campaigns and policies the bankers fund, advise, and steer.

It’s hard enough to understand how money-troubles, energy policy and foreign policy all connect. It’s harder still to understand how a politics shaped by candidates who are so conflicted will help sort it out.

And besides, we have other problems. A new book by a climate scholar warns that global warming’s real threat to America is the severe, prolonged drought that could make the Southeast and the Southwest uninhabitable before too long. Another suggests that Third World slums, in which at least a billion people today live, will continue to supply treatment-resistant infectious diseases to the rest of the world. Drought and disease are bigger even than the economic trouble described in Bad Money.

This new Kevin Phillips book will get a lot of attention from journalists and editors, as did his book American Dynasty, where he laid out how deeply enmeshed the Bush family has been in the finance and politics of Mideast oil for at least three generations. In the mid 1980s, his book The Politics of Rich and Poor helped embolden some political progressives who in turn helped pave the way for a resurgence of mildly progressive politics in the 1990s.

But Phillips is, above all, interested in history, not in campaign plans. He sees things in the long run. He is an intellectual descendant of Ibn Khaldun, the 14th-century north African historian who described a multi-generational cycle of how invaders sweep out old dynasties, then see their successors acculturate and then, having lost the warrior ethos, go soft, and become targets for new invaders.

Kevin Phillips has been arguing for a while that the same fate that befell old dynasties is headed our way. It’s hard to disagree.

—bruce fisher