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In Kevin Phillips' 'Bad Money,' exploring our sorry state of affairs

You've got to admire author Kevin Phillips. His erudite series of books on U.S. politics and failed economic policy for years has supplied critical bread crumbs for readers to follow.

Those who do will learn how we got trapped in today's financial debacle amid what is arguably America's larger downward spiral.

Phillips must feel at times like the modern-day Cassandra who's too far ahead of the country's mainstream in warning of a national lifestyle sure to end badly — or at least in the economic shadow of an increasingly dominant Asian world.

"It's gratifying but frustrating," Phillips said about writing books in a recent interview. Societies move slowly and grasp events glacially. "People never learn enough of what's gone on before."

There are many earlier important books by Phillips, a former Republican strategist. His 2002 book, Wealth and Democracy: A Political History of the American Rich, punched holes in the notion that America's wealthy disdain government intervention; rather, they embrace it as a malleable means to fatten their wallets. His 2004 book, American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush, criticizes the ties between the Bush family's business interests — from Enron to Halliburton — and the creation of misguided national policy.

The trail continues in Phillips' 2006 American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century. It explores the "disenlightenment" of America's political right amid the nation's ballooning dependence on Middle East oil and a soaring national debt.

At last, we arrive at Phillips' April 2008 book, the eerily prescient Bad Money: Reckless Finance, Failed Politics, and the Global Crisis in American Capitalism.

How frustrated the author must be to watch the unfurling of the Wall Street bailout and fumbled handling of the global economic crisis. Politely paraphrased, Phillips calls the bailout rescue team led by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke inept at best.

"They did not understand what happened in August 2007 when this became a crisis, and they have been behind the curve ever since," Phillips says.

In a recent blog posting headlined The Bungled Bailout (Or the Perils of Paulson) on the Huffington Post, Phillips paints Paulson as an ego-driven financial czar and the Fed chairman as a clueless sidekick he calls "Tonto Bernanke."

"Part of what Bad Money deals with I have not touched on before is the financial sector's massive use of private debt and leverage during the 1990s and then again in the first decade of the twenty-first century to expand its size, global reach and extraordinary profitability," states Phillips in his latest book's preface. "This is less a market-based Adam Smith brand of triumph than a mercantilist joint venture with U.S. government authority . . . and periodic Federal Reserve or U.S. Treasury bailouts of overextended financial institutions. This is certainly in keeping with the mercantilist flavor of policies gaining traction elsewhere in the world," he states.

Consider Phillips' roots. As a young man, he worked for Richard Nixon and wrote The Emerging Republican Majority, which anticipated how the GOP would regain power in Washington.

When asked how we got to today's sorry state of affairs, Phillips rips both political parties. He criticizes former Fed Chairman Alan Greenspan for failing to oversee runaway debt in the country and the creation of both the technology and housing bubbles. Phillips laughs at author Bob Woodward's Maestro — the title of his book on Greenspan. Perhaps, says Phillips, it should be renamed Fourth Flautist.

No less skewered is Robert Rubin, President Bill Clinton's Treasury Secretary. In a recent interview with Bill Moyers, Phillips attacked Rubin's lack of financial discipline. "Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he'd come back as a pail because this guy bailed out everything you can imagine."

Nor is Phillips optimistic a presidential election will change much. While the writer expects Sen. Barack Obama to win, he argues that the Democratic Party is too in bed with Wall Street's money to allow any significant restructuring.

One thing Phillips is upbeat about is the end of George W. Bush's era in the White House. As an author who never flinches at calling it as he sees it, he told Moyers: "I can't imagine anything worse than having another four years of George W. Bush. I think he's probably the biggest disaster at the worst period of time that we could ever have a disaster in modern history."

Robert Trigaux can be reached at trigaux@sptimes.com.

. meet the author

Kevin Phillips

He talks about Bad Money: Reckless Finance, Failed Politics, and the Global Crisis in American Capitalism at

1:15 p.m. in the Campus Activities Center.

In Kevin Phillips' 'Bad Money,' exploring our sorry state of affairs 10/22/08 [Last modified: Wednesday, October 22, 2008 4:31am]

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