March 24, 2007

New movie and book on credit-addicted Americans - Maxed Out by James Scurlock



Some smart people are starting to write books and make movies about everything we've been talking about here at HP.

The American economy isn't fine folks. People aren't doing well. All that wealth you see is just a mirage. And out of control consumerism is not a good thing.

It was all bankrolled by debt, massive, out of control debt. And now the bill is coming due.

Here's a book (and movie) on this out of control debt and addiction to credit cards - I encourage all of you to go see it, or read the book.

Deep in Debt, Deeper in Denial

"Maxed Out," a documentary that opens nationwide next week, examines the dark side of America's love affair with debt.

"Maxed Out" is directed by filmmaker James Scurlock, a Wharton business school dropout and entrepreneur. Scurlock also wrote a book based on the film, which is due out next week from Scribner, a division of Simon & Schuster.

Scurlock says he started out hoping to do a lighthearted riff on consumer irresponsibility, but was shocked by what he found: College students and housewives committing suicide over their credit card debt, and the nation's biggest banks involved in predatory lending schemes.

"I wanted to know why people are living so close to the edge," says Scurlock. "A lot of people just haven't been able to keep pace with expenses like health care, education, and housing.

"It's not in anyone's interest to have a financial industry that behaves like a used-car dealership," says Scurlock. "I think it's conservative to expect that credit will be regulated in this country. People need to have to have strong financial industry that's trusted -- and to the extent that that erodes, that's very bad for the country and the economy."

Why, I asked Scurlock, don't people understand this? Why do so many consumers buy things on credit and then pay double for them over time? Why do they sacrifice what they want most in life for what they want this very second?

It's pretty simple, Scurlock says: "I think there's a lot of denial. Most people can't do the math. There is very little, if any, focus on the balance sheet side of the equation."

38 comments:

Brian said...

I think it was said well here at HP before.

With the arrival of mass communications, it's no longer 'keeping up with the Jones', it's keeping up with the world. It's keeping up with the glam we see on tv and in movies. It's keeping up with P-Diddy.

Mort said...

A lot of people just haven't been able to keep pace with expenses like health care, education, and housing...

Yeah, that's it, right. They've been running up the credit cards on useless crap they don't need, egged on the whole time by the government.

Anonymous said...

This time it looks like a depression coming

LauraVella said...

saw the previews, we're planning seeing it.

Maybe this movie will help steer the sheeple to understand that debit is bad, and having an huge over-inflated mortgage is worse.

Anonymous said...

I read this book a few weeks back, and it is a really good book. The author goes out and interviews people like pawnbrokers, bankers, realtors, debtors, rich & poor people. For a book on finance it is a really easy read. He saves his most venomous opinions for the banks that issue credit cards.

Mark in San Diego said...

I look forward to seeing this movie - hope he gets the Academy Award this year for best documentary. . .what a timely film/book. As I have been "screaming" for the past 20 years - debt is the problem. . .the housing bubble is just the most recent manifistation of the debt trap.

bub said...

Two words say it all.

Credit Money

Noodles said...

.

Anonymous said...

perhaps it is because everything cost so much and so little income to go with the high prices that credit is the only alternative. To furnish a house requires credit because a couch is 1000 dollars, perhaps a refridgerator is 1200, gas is ridulous, toll on bridges in california is 80 a month 5 days a week four weeks a month. Gas and Electric during the winter is 250 per month water and sewer is 125 every two months, cell phones are a rip off and car insurance car notes after all that what money is left over for anything? That is why the use of credit cards is rampant.
I remember years and years ago pundits came on TV and said get rid of the credit cards they are nothing but a pyramid scheme. After I really looked at it. I agree. I have 1 with no balance and pay cash for everything. I have more paying cash and what ever I buy is mine the day I buy it, than I ever had paying with credit. I don't have sleepless nights and I don't get phone calls from collection agencies. I did years ago and I have learned my lesson. Now I get credit thrown at me and I remember those days and I think to myself if you find you can't pay the loan those people are not going to give a s h i t and they will drive you crazy with those phone calls and I tell them NO and quit calling or I just toss the offers that come in the mail in the trash. If I ever consider it I think how many months do I save to buy it cash and that is what I do. Obviously alot of people live for the now and not the later and figure they can handle it. Work more hours get a second job. I don't have to work more hours or get a second job because of credit card bills and I thank GOD for that because it could be the other way. When you try to tell people to cut those credit cards loose they will tell you to stay out of their business and not everyone is like you so I don't say anything. If they want to live in a credit card hell, let them. I also advised my kids to stay away from credit cards because they will eventually get you into trouble. One did and now she knows to stay away. I think everyone has to try a credit card to just see if the world is really that easy, slap a card down and buy some clothes or a CD. When it works so easily they become addicted and that is the problem. With the amount of money these companies make with credit cards there will never be any reform unless you reform your- self.
Every year newcomers enter into the credit world and the companies know they have an endless supply of participants in the credit game. Maybe there should be classes on breaking free of the credit card addiction like AA because the desire is probably just as powerful as the want for a drink.

Anonymous said...

Thanx for the tip Keith....

There is another film to check out called "In Debt We Trust".

I plan on picking both of these up.

Capitalism (unchecked and unregulated....i.e. "free trade") is a cancer that concentrates wealth in the hands of an ever smaller "elite". The "experiment" is out of control.

We already passed the "tipping point" (where we could have done something about it) in that this same elite control our government and media.

There is no way out at this point except for a revolution and restructuring of every aspect of our financial/economic/governmental system.

And if we just refill all these positions with more morally and ethically corrupt people...we will not fix anything.

What is required are people with ethics and morals who are true "public servants" and who have a vision/goal for the public good.

Sadly, these leaders seem nowhere to be found.

Hope is hard to come by these days.....

Noodles said...

I'll try not to be a hypocrite and I'll admit to having been a stupid overspender when younger...but my father who above all is my role model showed me that:

1. You don't have to be rich to have your word be worth something
2. You don't have to be rich to have class

So I try to live up to his standards of living within my means and now have an almost obsession to pay my debts...but I've been on the other side and it's true how we blind ourselves to the bill that's coming especially if you have children and a nagging wife.

A man can always live with less but a woman a lot of the times has no patience...and sometimes to keep the peace you have to do what Mama says or your live will be like Al Bundy's.

I love America but Americans have no one to blame but themselves...we can blame everyone but in the end there is no one responsible for our actions but ourselves...Equity loans, cheap $$$ were temptations but greed, sloth and gluttony (yes I'm a Catholic boy)were human nature at it's worst.

So I'm prepping for mass layoffs, rising of crime, civil unrest and a slight breakdown of society...but it will be in the big cities mainly.

Someone asked me if the government knows what's coming since I work in the Prison system and the answer is YES!

We tried shipping convicts to other states (few takers even if Cali foots the bill)we attempted to start using privately owned prisons in Misisippi, Louisiana and Texas to hold our Illigals so they do state time before shipping them off to federal holding for deportation (courts knocked it down)so we're building more super-maxes (Bond city here we come!!)

What I'm saying with mass debt comes mass crime and at least from what I can tell the state of Cali is prepping for the storm so be advised.

Anonymous said...

Based on what I hear, my "spendaholic" friends believe that "having things" increases their quality of life and they never think that "being in debt" limits their freedom.

Until people start believing that "the ability to consume" isn't "real freedom," they'll stay in hock because they believe that's the road to freedom.

One of my friends told me the other day that he took out $30,000 in college loans, even though he never got a degree, because the interest rate was low and a good way to buy his "expensive truck" and "other stuff."

His girl friend took out $100,000, or so, in college loans, and I just didn't have the heart to ask: "how did she spend it?"

So, it became obvious to me that people are starting to think that you can partly pay off your house with low interest rate college loans?

my friend told me that he makes the minimum payment on his college loan and, when he dies, the government eats the outstanding balance.

never, in my entire life, would I do this and it's mind blowing to see why I'm being pushed out of the market-- because people are using college loans to pay outrageous prices for things and the Fed can "age target" cheap loans.

Who knows what else is going on?

BTW, I saw a screening of "Maxed Out" and I told Scurlock that he should have had savers in the movie to show people an alternative way to live. Even "Rich Dad" Kiyosaki states that a mortgage is "bad debt" since it has to be paid off each month. I thought that was a valid comment since he compared his film to "Super Size Me" and, in that film, Spurlock's wife is a vegetarian and provides a contraian view.

Anonymous said...

Suicide alone is a very tragic occurence. When people feel so lost in their lives because they've been taken in by easy credit and feel they have no other choice is just even more tragic.

I've heard of students killing themselves because they got all these easy credit card offers on campus & now cannot keep up w/ the minimums.

Our educational system has broken down when we do not prepare the next generation for managing credit, but instead bury them under a mountain of debt to keep them in servitude for their entire lives.

The US was the land of opportunity, now its the land of exploitation. The sun has set on the American Dynasty. The chance for a return to the greatness that was America exists, but it requires selfless service and not selfish service. There are too few today willing to make a sacrifice for the greater good and the few that are, are being exploited and destroied for it.

Anonymous said...

http://www.usatoday.com/money/economy/housing/2007-03-24-subprime_N.htm

Multiply by 2-3 million and the average loan balance and there you have it, a trillion plus of bad loans that will evaporate tens of billions of equity and erode bank earnings and projected tax revenues for a decade. All the people that say its just a 1-2 year 100 billion dollar problem are fools.

The S&L crisis was a 1/2 trillion dollar calamity that took a decade to work out. The scale of this credit debacle is at least 3x in terms of real scale so do not tell me that this will be over any time soon.

Rent a house from the debtors with stable mortgage products at a price that keeps them from defaulting, save your money and in a decade buy the place you want for a 1/3 of the price today w/ aq huge down payment and at a reasonable fixed rate.

Paul E. Math said...

I just watched the trailer for the movie - looks awesome. Documentaries are the new black.

You can't tell whether the movie spends much time on the housing bubble but the housing bubble is really part of the same problem: too much credit.

brianb said...

Why don't you let people post comments without you monitoring them? It slows down your blog b/c people can't really have a conversation.

Maybe you could appoint someone monitor and give them rights to delete spam and off-track messages.

I don't understand what's keeping prices up in LA, Las Vegas, etc. They should be down 10-20% everywhere by now. Then fall another 10-20% this year and next. Until LA is down 50% and lesser bubbles are down 25-30%.

Anonymous said...

Therock Obomba for president

MadMonkey said...

Oh great another liberal documentary where "the good people" (fireman, teachers, single mothers, former drug addicts) are taken advantage of by evil CORPORATIONS. The bankrupt subjects of the film will bear no responsibility for the situation they're in. Critics will rave about it - and it will be nominated for an Oscar along with "An Inconvenient Truth 2: Electic Boogaloo".

Yeah and this is the same douche who made "SuperSize Me" that giant piece of shit on film where he acted like he was dying from eating McDonalds - a lot of phony playing to the camera bullshit.

Peace out

Frank said...

I'm not sure exactly why people sell out their lives to credit, but America has become a status-obsessed society, and even those who are just a little bit insecure will fall victim to it. They feel the need to have the biggest house, hottest car, most expensive watch, etc etc of anyone on their block. I used to live in Scottsdale Arizona where people seem to have fake debt-financed status as their sole reason for living. Very sad that people do this to themselves.

trashwacker said...

There's just a lot of trash and scum in this country....

wawawa said...

“Most people can't do the math.”

I disagree. Reason for this mess is that Americans have become overindulged people who can not deprive themselves of anything.

I have a bumper sticker on my car that says “LIFE IS NOT A FASHION SHOW, TRY TO GROW UP”.

Paul E. Math said...

Just returned from seeing the movie dowon at the Kendall Square. It was a little too anecdotal, not enough numbers and data. But it still made me want to cut up all my credit cards and take a shower.

The madness has to stop. I think it's actually a symptom of a broken political system. Money buys influence and it's banks, credit card companies and special interests that have the money.

Yeah, people are stupid for running up credit card debt and they should have to pay that debt back. But interest rates of 40% are usury. It's wrong. There should be some reasonable total limit (including penalties, fees and interest) on the amount that a person can be charged above the principle they borrowed.

Shakster said...

Hope they mention the Realty/Broker WHORES.Don't blame them though,Just avoid them at all costs.Have a friend who's computer literate find a home for you.
BTW-The Victorville bubble must be imploding bad about now.Radio AM 960 has a Broker on Saturday mornings.He has asked anyone listening to e-mail him so he can guage how many listeners he has.Says he needs to know if it is worth it for him to keep buying the air time.
Your sales figgers should tell you that,Right?The show is a complete waste of time when nobody can get the free dough to buy any of the overpriced houses out there in VictoryVille.On the other hand,the show kicks ass for saturday morning Hallarity,and entertainment.Sorry i could get my e-mail to the guy,I figured he would have known that most listeners are in there cars.DUH?

jt said...

Know your audience Keith. These clowns are too maxed out to squeeze any more credit to buy this book.

Down in Oz said...

Great book. Sez in note book soon avail, but avail here in Oz. Not the best written book, but so what. The content and stories are very compelling. The real issue it makes clear is that while the creidt card companies and banks are doing all they can to shaft people at every turn, people also bear responsibility. Its not a problem caused solely by the banks, the government or the people--its a cultural/social problem. Sure the credit card people should not try to scam you with interests or moving around the due date, but hey, do you really need that $3.00 latte or a SUV or your kid must have all the latest Harry Potter and Game cube gee gaws? This book along with the tightening economic times should be a wake up call not just for more oversight of finance, but for some measure of self control on the part of "consumers". Do notice in America people are called consumers--I suggest to you that this term is not accidental.

Paul E. Math said...

The movie touches briefly on the run-up in home prices. It doesn't identify the run-up as a bubble that is destined to burst. The increase in home prices is just another aspect of the widening gulf between rich and poor.

One woman states proudly that her house was purchased for something like $300k and sold for something like $900k. She wonders aloud how new buyers can afford to enter the market and identifies the adverse affect this would have on some people. Then she says "but some people have made out really well so...". So that makes it alright?

It's the inherent unfairness of the housing bubble that bothers me the most. If the bubble continues undeflated then it is yet another great contributor to the widening gulf between the haves and have-nots. Not only is this grossly unjust but it is also a very bad thing for this country and for our society if we perpetuate these disparities.

Mozo Maz said...

E.math, that's what's always irritated me so much about the bubble. People couldn't admit they got lucky, that they just happened to be buyers in the right areas, before interest rates dropped to record lows. No, they were soooo "smart"!!!

Housing used to be a staid, gradual appreciation strategy. It didn't matter too much when you were born and entered your peak earning years. Most people got a reasonable chance to enter the market.

All the first time buyers in 2003-2006? Hey, sell them homes at 10x income. It's fair. It's the free market. You got priced out forever? Oh well, too bad, so sad!

Anonymous said...

Anonymous March 24, 2007 2:15 PM said:
"He saves his most venomous opinions for the banks that issue credit cards. "
-------------
Then we must also be equally critical of the rotten free riding parastic state of Delawhere!! That's the state with the loose corporate banking and credit card laws that allows them to exploit the ignorant sheeple. All the other states have very paternalistic laws that keep predatory bank lending in check, so Dela$h!th0le decides to serve up on a silver platter the legal protection/cover they need to exploit and dupe the masses of sheeple our society produces. Cut the cancer of Dela$h!th0le from our nation and we remove exploitation at its source. FYI, the deladumb delascum are all crying because all the call centers and credit card administration positions are being shipped to India so they are losing the big easy gravy train they've been enjoying since they passed all these bogus exploitive laws. E.g. the payday/title/tax return loan are all inovations of dela$h!th0le laws, just look where all the banks are incorporated and where you send your credit card payments!!

Anonymous said...

MadMonkey....very few enjoy being raped by corporations...glad you "like it".....your species (the rape cheerleader) is what has enabled the rape to continue...thank you SO much.

paul.e.math....good feedback/good points. thanx.

Natural Eyebrows said...

This story has been told before. Check this out:

http://tinyurl.com/5owbe


Paul E. Math is correct. Credit card lenders engage in usury. So do storefront "payday loan" operators and other consumer lenders. The problem is that there are hardly any usury laws any more, and the credit card companies have HQ'd themselves in states that have no interest rate ceiling, thus avoiding the usury ceilings in those few states that still have anything like a meaningful usury statue. This is all explained in the PBS documentary for which I have provided a link above.

We need a national usury law. Lenders lend to high risk borrowers because they think they can quantify the risk of default and price the loan accordingly. An interest rate ceiling would deter the riskiest practices. Of course this is only a part of the problem. Seven year car loans and exotic mortgages would still be a problem, if not fixed.

Domestic car companies are in the finance business because it's the only way they can continue to sell cars and keep their factories operating.

One more item re student loans. They are a VERY different category of debt because they are generally not dischargeable in bankruptcy. College tuition has been rising for the same reasson that home prices rose: free money. Colleges can raise tuition with impunity because a third party is financing the cost with no review of the likelihoood of repayment. When the student graduates and can't find a job that pays enough to service the student loan debt, the lender just calls in the gov't guaranty and the gov't or its proxy goes after the debtor. Many times a homedebtor can just walk away because of state mortgage anti-deficiency laws. At worst the mortgage debt is dischargeable in BK. Student loan debtors will have the worst of it, and that story has barely begun.

Ben Dover said...

In the Castle by Kafka, he says "I don't actually want to get into the true state of the affairs, the illusion may actually respond to reality."
Watched the movie Wall Street this week with Charlie Sheen. In it Gordon Geeko looks at a painting on the wall and tells Bud Fox that he spent 1.2 million dollars for that painting and now if he were to sell it today he could only get 800.00.
He says something like this..."When the illusion becomes real, the more and more real it becomes the more they want the illusion to be."
As we see this housing bubble go through all the different levels, the shock of the people is going to be maddening for some. We will not be in the same place that we were before all the mania.
Hold On.
Becky

Anonymous said...

Lafeyette? Victorville? Commonly-named-town?

Could you spare the energy to type the extra two letters indicating your state?

"Centerville - a real nice place to raise your kids up..." - Frank Zappa

Anonymous said...

So...exactly why should we not all join in the fun and max out as many credit cards as possible, if it's all going to crash anyway?

Cash darn well better had be king, after a lifetime of doing the right thing while, apparently hardly anyone else does. Humph!

Anonymous said...

I agree with anon 3;26pm. How do people make ends meet without credit cards? EVERYTHING from groceries to clothing has gone up about 40% in the last 5yrs alone (probably due to people cashing out equity and creating greater consumer demand). After you account for necessities like utilites, gas, insurance - health, auto, home, life (what a racket this insurance biz is!) there is often little to nothing left to spend. And let's not forget about birthday gifts, wedding/shower presents and all the BS holidays throughout the year that require extra spending. Sure there are those who abuse it for lots of extra's they don't really need since its so damn easy to get credit these days. But i can see how people with low wages and a family to support can get lured into the credit card trap.
Yeah, wasn't it nice when mom could stay home and raise her own kids? So sad that that's such a rarity now.

Anonymous said...

I don't think that credit cards are bad, if you know how to use them. I pay all my living expensive with credit cards, which offers me an extra 25 days to earn interest at the bank before paying the bill in full. Plus I get lots of rewards points that turn into free store gift cards.

The important thing here is knowing how to beat the system, folks. They are all out there to get us. Don't snooze.

The consumerism problem is not just an American thing anymore. The entire planet is living beyond their means. I agree with another poster who said that it's due to Internet, movies, and cable TV. For instance, young girls in South America are crazy for that American program, "The OC", which is about a bunch of spoiled rich kids in Orange County. Celebrities set a bad influence too, when they wear jeans that cost $500, pay $10k / night for a hotel room, and wear handbags that cost $8k.

Bitter Renter said...

You can lay the blame for our soulless, materialistic culture squarely at the feet of capitalism and its biggest cheerleaders, the conservatives.

It's no wonder people are willing to fly planes into our buildings as a warning to keep our way of life away from polluting their cultures.

Anonymous said...

Natural Eyebrows & Paul E. Math:

The Frontline PBS expose was excellent. Thank you very much. Basically Sub-prime has gone down the same path as the CC industry due to the vacuum of accountability at all levels. The difference? CC debt is rarely in the 6 figure range, but mortgage debt normally is, hence the dollar value of bad debt will be much larger. Mortgage debt is "secured" but the question is how much of the debt is "fluff" (over-valuation of the asset, fees, commissions, interest, penalties etc) to the point the bank will lose more relative to the unsecured debt of CCs. Also bankruptcy can still wash away housing related debts but CC debt now is virtually impossible to wash away.

I also note with interest (no pun intended) that South Dakota's usury reform was not intended to have this consequence, but was an attempt to address a real economic concern and the former governor expressed regret on what happened. Dela$h!th0le on the other hand possessed specific intent to foster this very dilemma by copying S.D.'s !!

Anonymous said...

I wonder if I can borrow 60K on my credit cards, pay off my student loans and then lose my job and declare bankruptcy.

I would think 7 years of no credit would be better than 30 years of paying it off.