The latest book from political and economic pundit Phillips is a sobering reflection of how we got into this mess.

Phillips identifies the problem coming from three structural issues. The first is that financial services have expanded massively. In 1950, financial services were worth 10.9% of US GDP but by 2005 it had almost doubled to 20.4%, now dwarfing other sectors like manufacturing, health and wholesale/retail. The eighties, he says, saw the financial sector take over the US economy, a turbo-charged growth of financial debt and extending mortgage credit to subprime and other unqualified buyers, swelling the housing, mortgage and credit bubble to the point where it started to explode in 2007. The hugeness of that sector would dictate the circumstances that would engulf the real economy. The second force was household, financial and non-financial corporate debt that went ballistic and wound up totaling some $36 trillion.

"My summation is that American financial capitalism, at a pivotal period in the nation's history, cavalierly ventured a multiple gamble: first, financializing a hitherto more diversified US economy; second, using massive quantities of debt and leverage to do so; third, following up a stock market bubble with an even larger mortgage and housing credit bubble; fourth, roughly quadrupling US credit market debt between 1987 and 2007, a scale of excess that historically unwinds; and fifth, consummating these events with a mixed performance of dishonesty, incompetence and quantitative negligence."

And finally, there is the inability of all sides in politics to come up with a policy on energy and oil. All this at a time when the future of the US energy supply, the value of the dollar and American purchasing power and global warming are converging on the interplay of oil and US currency flows. The US is vulnerable to peak oil, and that will weaken the US dollar even further.

Phillips, a former senior strategist for Richard Nixon's 1968 campaign, does not see the Obama administration doing much to rein in the finance buccaneers given how they heavily it was funded by financial services firms including hedge funds.

"In Republican and Democratic national politics, the notion of a breath of fresh air has become almost a contradiction in terms. One could argue that in place of the vital centre praised by historian Arthur Schlesinger a century ago, the changes of the last several decades have pushed us towards a venal centre,'' Phillips writes.

Phillips makes four predictions: Asia will dominate the global economy by 2030, China is the best bet to be the dominant power in Asia, a city with a large Chinese population, and not necessarily in China, will become Asia's leading financial centre, competing with London and New York and the premier currency in Asia will have a leading reserve function by 2030. Incidentally, he includes Russia as part of Asia because of its three-quarters Asian land mass.

The financial services sector will need to be unwound, and indeed we are now seeing the great unwinding. Not before time. As Phillips reminds us, the British colonial secretary Joseph Chamberlain told the bankers in 1904: "Granted that you are the clearing house of the world but are you entirely beyond anxiety as to the permanence of your great position?...Banking is not the creator of our prosperity, but is the creation of it. It is not the cause of our wealth, but it is the consequence of our wealth."

And contained in there is the warning that the US empire will go the way of other leading world economic powers such as Hapsburg Spain, the maritime Dutch Republic (when New York was called New Amsterdam) and imperial Britain just before World War 1.