Paper Summary:

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

Outline:
The U.S. Dependence on OPEC Oil
The Influence of Big Business and Special Interest Groups on Legislative Policy
Increasing Consumer Debt
Government Deregulation of Banking, Investment, and Insurance
The Complexity of Modern Financial Instruments and Trading Protocols
Consumer Debt and Home Mortgage Industry Fraud
Destabilization of the Home Mortgage Industry

From the Paper:

"During the 1980s, computerization revolutionized the process of stock trading because of the tremendous increase in the speed (and therefore, the volume) of stock transactions on Wall Street as well as in the foreign stock markets in Britain and Japan, among others. Toward the end of the decade, Wall Street investment firms began hiring PhDs in mathematics and physics to create incredibly complex algorithms capable of modeling elements of the stock and futures markets. In most cases, the creators of these algorithms knew next to nothing about the financial industry, and the executives who employed them knew (literally) nothing about the mechanisms their firms had begun to rely on for their trading strategy."

Sample of Sources Used:

• Phillips, Kevin. "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism" New York: Viking (2008).

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