Bad Money by Kevin Phillips

Note: My review of the graphic novel Aya is now up at Words Without Borders.

Bad Money is the third book I’ve read recently about the current financial meltdown: after The Trillion Dollar Meltdown by Charles R. Morris and The New Paradigm for Financial Markets by George Soros, which will soon be reissued with new material and a snappier title: The Crash of 2008 and What It Means.

Maybe it’s time to give it a rest. Bad Money is packed with detail about our current financial plight, but it is so multifaceted and tightly written that no clear central argument emerges—at least not for me. Phillips takes an “a plague on both your houses” attitude toward recent Republican and Democratic administrations, blaming Clinton as well as Bush for excessive coziness with the kings of the financial sector, and the Federal Reserve for pumping up the Internet and housing bubbles with low interest rates. But he is more interested in global realpolitik, especially as it relates to the oil business and global warming. Here’s a paragraph on p. 151 where it all comes together. As he does elsewhere in Bad Money, he refers to his previous books, where perhaps some of these ideas are unpacked in a more leisurely way:

For such a short word, oil seems awfully long on consequences—the future of the U.S. energy supply, the value of the dollar and American purchasing power, global warming and the fate of the world’s climate. Unfortunately, all three predicaments seem to be converging in a relatively proximate time frame.... In several sections [of American Theocracy] I suggested five time lines and countdowns. The first involved oil and the possibility that “not only had American oil production peaked but global oil production outside of OPEC might be within five to ten years of doing so.” The second involved the concern of the U.S. oil giants over slackening discoveries, stagnant production, and the need for huge new reserves like those in Iraq. The third set of jitters involved precarious debt levels and the dollar—“a handful of Americans, aware of the interplay of oil and currency flows, worried about OPEC’s potential threat to the dollar,” and as for debt, “some who observe financial and credit markets see a speculative credit bubble, a housing bubble and $4 trillion of U.S. international indebtedness triggering a crisis within much the same time frame.” With respect to the global-warming countdown (the fourth), “particularly concerned climatologists talk about the 2010s.”

You need a scorecard to keep track of all the crises. Fortunately, Phillips thinks we no longer need to worry much about the fifth time line, concerning religious fundamentalists who see “biblical prophecy and Armageddon unfolding in the Middle East.”

What a relief. And while he predicts that a “six-pack” of Asian powers may soon dominate the globe, and points out parallels between present-day America and the decline of previous empires, Phillips does offer one encouraging note: “Spain, Holland, and Britain are far more prosperous today than they were at the heights of their global reach.” So if, in the end, the U.S. is no longer the world’s only superpower but simply a nation among other nations, that might not be so bad.