Bad Money: Financialization and Failed Leadership

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America has become dependent on trading and speculation and this in itself is a problem to the country. The author refers to this problem as “financialization”.He mentions that there is a friendly relationship between the Bush family and the producers of oil. The Republican Party has formed close ties with the Christian evangelism. He looks at these factors coupled by the weakness of the dollar and other emerging concerns in the financial sector. That these factors have created a mix which has toxicity that can be referred to as “Bad money”. He mentions that finance has ascended in the national efforts instead of other equally important sectors. This is attributed to the mere fact a few people in the government decided that finance is the sector that would drive the strategic plan of the country and not the manufacturing or even the lucrative technology sector. He argues that credit has not been adequately used to fund commercial activity but it has been misplaced on some financial outcomes.

The author is right to say that neglecting other sectors of the economy such as manufacturing will not help the country’s economy as desired by the people. All sectors of the economy but it is unfortunate that the Bush administration has focused so much on the finance sector at the expense of other sectors.


Philips was in 1968 a senior strategist for Richard Nixon. He precisely put into forecast the entry of Reagan Ronald into the white house as a result of a conservative realignment in the country. He also proved to be a principal architect of the Republicans “Southern strategy” he fore sore a change in effect from the Sunbelt to the right new direction. These are the two important phases he came up with alone.

The author also said that he would call the red state blue and predict precisely the geography of this state.

Philips in this shot focuses on the prevailing presidential campaigns which he claims do not address the current distress Americans are going through in terms of causes and the implications. That during the Bush administration, there has been a lot of economic expansion that this had demonstrated in the history of the country an exclusion of the middle class. That previous economic downfalls had left the poor languishing behind but the current state of affairs was only of importance and benefit to the rich class in the American society. Indicators such as the median income had indicated that indeed this was the longest ever fall since the median income was still less than what was recorded in the year 1999. That the Clinton boom cannot be said to have had significant impact on the huge middle class. According to studies by Pew Research Center which is non-partisan, the status of income in the upper class almost doubled as from 1983 while the economic status of the middle class only grew by a mere 29%.

In my view I think the author is justified to say that the leadership has failed to address the urgent needs of Americans. This is evidenced by the ever widening gap between the rich and poor.

The oil crisis

Philips also brings out a discussion on oil peaks whereby he digs deep into the government statistics and begins to mention that the government in its consumer price index, the rate of inflation has been underestimated. While getting back to his role as a political analyst he is emphatic of the fact that it is indeed evangelicalism that has propelled the government into finance. That the finance sector is losing its share in the gross domestic product. On the other hand there a serious crisis looming in the energy sector such that there has been notable shift in financing finance to financing other forms of energy such as ethanol, wind turbines and solar energy. This is quite encouraging.

Though there is an oil crisis saying that government figures are incorrect requires substantial evidence and not just mere speculations. It is important to mention that alternative sources of energy would be fundamental in getting over the energy crisis.


He laments that housing has become unaffordable, inadequate supplies, financial institutions not working, dynastic politics and imperialism has weakened the American society around the world. With this in mind there is fear over greed on the Wall Street and Main Street. The author undertakes to confront the contenders of the political main office in the two main parties to address both local and global problems that affect the country. The author notes that it is indeed financialization that fore sore the downfall or decline in world powers in Spain, the Great Britain and the Dutch republic. He therefore observes that instead of the government embracing harvesting, manufacturing and technology it was riding on the risk of finance. With this kind of situation there is fear emerging that America was headed for the same course as Great Britain. The finance sector makes 21 % of the gross domestic product in the United States. This has been clearly stated in the book. That there is no proper regulation to the finance sector by the government and this has consequently led to billions in terms of promoting and packaging of both private and public debt.

America in debt

A huge debt has been bundled in the current situation and the worst is that it is difficult to estimate the market value of such a debt. He also mentions that liquidity factories in terms of both private and hedge funds have led to the creation of pyramids yet it is clear that they have no parallelism in their entire history. It has been estimated that in 20 years that the debt of the country has risen to $43 trillion and the Bush administration has done very little in terms of reducing this statistic. There is prediction that there will be dire consequences of the financial sector security issues and the real estate situation if something is not done precisely. That it is evident that it is indeed the finance sector and the real estate the led to a 40% economic growth and employment that characterized the Bush administration. The current state of housing has serious implications for the country as far as recession matters are concerned.

The book further paints a picture of the American economic system in such a manner that it is only managed by the policy makers and the businessmen. These two groups of people sit and decide what they feel Americans should have and then they put in place policies to make sure that their wishes are done as planned. The truth and reality on the ground is that the economic and financial elites contain a lot of errors as the masters of the universe can have. In the book, there is a lot of speculation though the author is keen to defend his position by stating that he has no hand to personal first hand information and that he has no intention of becoming an investigator of conspiracy. It is mentioned that there is a feeling amongst some people that the president’s financial markets team has been transformed into a protectionist group. That this group focuses on protecting the interests of the big businessmen and firms from losses while at the same time suppress what has been referred to as creative destruction. If there is a protection team then it is a complete waste of public funds since creative destruction exists in our midst and specifically at 383 Madison Avenue.

There is a lot of reliance on the part of the author on speculation. His assertions are not based on concrete facts as the cases should be. One is tempted that he is just a mere peddler of rumors that is yet to be substantiated.

Society in borrowing mess

The corrupting influence of the Americas finance exists in the society. This has indeed been witnessed by the cutting off of interest rates early in the decade by the Federal Reserve cut. This has consequently had an impact on housing and further the worst of it is that Americans have been drowned into reckless borrowing.

In the final remarks of the book Philip looks at things from a historical point of view. It is noted that there has been growth in financial services sector to represent 205 of the gross domestic product. He compares this growth to the 13 %of the manufacturing sector. This is a clear indicator that America is going towards the direction taken by Rome. As this happens to America, China is going to rise as an economic power. That if the facts are anything to go by, then Asia as a unit is supposed to be in control of the global economy by 2030. Philips is right to point out that reckless borrowing is not a reliable direction in which the American society should follow. This is because in history shall judge the people harshly with such short term solutions to the problems facing the society.

America is now a loser in the global arena.

It is brought out clearly that America is loosing on the global economy. This happens because globally there are success stories while America continues to drown into the forces of failure. Although this is happening the book mentions that the last five to seven years have witnessed growth in America with more than 1 million people being lifted from poverty. The fact that the food prices, oil prices and interest rates are under the control of the global market implies that the suffering of American consumers is a consequence of America’s capitalism in the midst of a global crisis.

In my view America as an economic power is at big risk of being overtaken by countries like China and Japan if something is not done to save it from the current crisis in the country. This is all depended on the leadership and policy makers who even though have erred in the past they can still work out on solutions to bring back the country to where it is supposed to be.

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BusinessEssay. "Bad Money: Financialization and Failed Leadership." December 28, 2022.