Make no mistake. America is in serious trouble. If you will, wander down to K-15 any day and watch as one train every 10 or 15 minutes chugs by loaded down with containers full of Chinese junk paid for by American debt, mostly treasury bills. Check out the Yellow Pages and count the mushrooming numbers of "car title" and "payday" loan outfits in this city.
Consider a Federal Reserve bailout of Bear Stearns, a multibillion-dollar financial services empire that had built a bubble for itself of badly performing securitized subprime mortgages and hedge funds. Ponder 800,000 Iraqi dead in that meaningless conflict, a number that translated into our own population would equal 14 million. Imagine in this atmosphere of failure and crisis a two-hour political debate moderated by ABC newsmen who reiterate disgusting questions about American flag lapel pins.
Kevin Phillips, in his new book, "Bad Money," looks several decades ahead for American finance, empire and politics, discovering nothing but disaster unless the people and their leaders make considerable and revolutionary changes to the financial, manufacturing, agricultural and political substructure. Phillips has been a keen political observer for more than three decades and is the author of 10 books, including the pivotal "American Theocracy," "Wealth and Democracy" and "American Dynasty."
In "Bad Money," he charts in considerable statistical detail the course of three social and economic storms converging to imperil our future.
American debt, both public and private, is at its highest level since the Great Depression. Domestic financial debt between 2001 and 2007 alone grew to $14.5 trillion while home mortgage debt soared to $10 trillion. At the same time a reckless "financial" sector that produces nothing tangible, but instead issues highly dubious "security instruments" of various arcane and opaque forms (collateralized debt obligations, etc.), has grown to 20 percent of the gross domestic product. Manufacturing currently produces 14 percent of GDP, half what it was 30 years ago. America doesn't manufacture anything these days, while Wall Street figures ways to make a killing on debt instruments.
In addition, American oil production peaked in 1971 and has been falling ever since. Not even idle talk about exploiting wildlife refuges and Western coasts can avert a future in which Americans import more and more of their oil, most of it from unstable or even hostile countries like Venezuela, Nigeria and Russia.
As the dollar falls, every barrel we import becomes that much more expensive. World production may peak soon, and as China and India, as well as the rest of Asia, really come "on line" with consumption of fossil fuels, demand will push the price even higher. At the same time, Americans gorge themselves on oil, paying for it on credit.
Lastly, Phillips examines the state of American foreign policy and dynastic politics. The costly Iraq blunder has resulted in a total loss of respect for American leadership in world affairs and the utter degeneration of our moral standing among foreign peoples. This calcified political system involves both Republicans and Democrats, both parties so indebted to special interests for money that change is impossible. Many politicians are sons or wives of elected officials, a dynastic-style of leadership more appropriate to Third World autocracies than a responsible democracy.
Phillips argues that, much like the 18th-century Dutch Republic and 19th-century Britain, the American empire is overburdened by excessive debt, global overreach, exhausted energy supplies, plutocratic politics and financial speculation. Phillips concludes, "No previous leading world economic power has enjoyed a full-fledged manufacturing renaissance after becoming unduly enamored of finance." His book is a clearly argued clarion call of alarm from an eloquent and fully informed observer.
Those concerned with the serious problems of our country should read this book. Or, just hang out along K-15.