Friday, March 28, 2008

Maxed Out - American Economy's Credit Woes

I wanted to see the documentary Maxed Out on the American Economy's Credit problems, too expensive houses, cars, way of living, and the effects it has on people. It was eye opening and worth watching. The good news is, you can apparently see it for free on Google Video here. I recommend checking it out.

Maxed Out as a documentary was very well done although I am not sure I agree 100% with the direction they took on it. They did not blame consumers or lifestyle creep as much as I think needs to be blamed. Instead, they seemed more prone to blame cost of living, the banks for offering credit and loans, and the government for not stopping the banks. For example, they point out that people have less money today than they did in the 1970s if you cost-adjust things for inflation. While that might be true, people are tending to live more lavishly than they should be as well.

As my friend Aaron said, "The system is set up for people to fail, but still, if [those people] could do basic math they should know that."

Speaking of lifestyle creep, its interesting that many of my friends tend to live in or purchase houses that are larger than those they grew up in. Are we more successful than our parents or more in debt? I think its a little bit of everything, interest rates back in the 1980s and 1990s were less, some of our parents maybe weren't as successful, now many more people do 100% financing and are more in debt, and finally I think that the new houses these days are built larger for less money but done so also with less quality.

All that said they do point out that the government debt is astonishing and needs to be taken care of, a point that a fiscal conservative such as myself wholeheartedly agrees about.

1 comment:

Chris said...

I actually just finished watching Maxed-Out last night; deffinately not enough blame on consumers. When I was in college it was almost every day (at least it felt like it) someone offered me a free sub/shirt/gift-card if I signed up for a credit card....thankfully I only kept one credit card throughout college.