Essay - Economics - Book Summary Book Summary - Bad Money in...

Economics - Book Summary

BOOK SUMMARY ***** BAD MONEY

In Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, Kevin Phillips analyzes the current U.S. economic crisis and outlines the factors most responsible for its evolution over the last several decades. In chronological order, Phillips explains how the following issues ***** circumstances culminated in the recent collapse of the American economy: (1) the increasing influence ***** big business and special interest groups on legislative policy in Wash*****gton; (2) the increase U.S. dependence on OPEC to meet energy demands; (3) the increase in consumer debt; (4) government deregulation of bank*****g, investment, and insurance; (5) government deregulation of the commodities and futures market; (6) the complexity ***** modern financial instruments and trading protocols throughout the financial ***** sector; (7) the resulting destabilization of ***** home mortgage industry; and (8) rampant fraud on both sides of the consumer debt ***** home ***** industry. Less directly, Phillips also implicates the Right-Wing Conservative orientation of the presidential administration of George W. Bush.

The U.S. Dependence on OPEC Oil:

Prior to the early 1970s, ***** U.S. dollar was partly dependent on gold. Since then, ***** agreements with Saudi Arabia and the Persian Gulf oil countries have resulted (in effect) ***** the ***** ***** the U.S. dollar on OPEC *****. In addition to indefinitely delaying ***** development of the alternative energy sources that we already knew would eventually be necessary, this relationship has ***** rendered ***** health of the U.S. economy ***** the price of oil and to retaliatory manipulation by Middle Eastern countries.

***** *****fluence ***** Big Business and Special Interest Groups on Legislative Policy:

Beginning mainly with the presidential administration of Ronald Reagan in the 1980s, lobbyists representing big ***** and ***** interest ***** became *****ly able to affect ***** outcome of government legislative policy agendas. During the administration of Bill Clinton in the 1990s, *****all Street financial services ***** investment firms succeeded in the passage of the Gramm-Leach-Bliley Financial Services Modernization Act (GLBA) of 1995, which allowed the merger of commercial and ***** banks.

Increasing Consumer Debt:

***** previous generations ***** *****s largely restricted *****ir reliance on consumer ***** ***** major property investments (like their **********) and major purchases (***** cars), during the last decades of the *****0th century, Americans began relying on debt much more substantially and much less responsibly. A culture ***** *****-funded consumerism gradually evolved, characterized by the rampant use of credit at all levels ***** *****merican society to live beyond one's financial means ***** th***** simultaneously reduced per capita savings tremendously.

Government Deregulation of Banking, Investment, and Insurance:

Just as the GLBA changed several fundamental rules that allowed commercial banks and investment firm mergers after 1995, in 2000, the Commodity Futures Modernization Act (CFMA) of 2000 deregulated the ***** ***** ***** respect ***** previous restrictions on ***** ***** ***** of energy futures. The first major c*****sequence ***** ***** *****pect of deregulation manifested itself in the 2001 bankruptcy ***** Enron and the more recent collapse of Lehman