After finishing this book, there's a part of me wishing I read it sooner, as it was first published in 2000 and the paperback version (which I read) came a year later. In fact, it would have been very interesting to read it a year ago as the banking meltdown was in full effect. This book is a little difficult at first since there are a lot of facts and figures being thrown right out at you, but eventually I settled in and found it a tremendous book.
The title leads one to believe this talks about the country's credit card problem. While it does, the early chapters set the stage talking about the larger issue of debt, including that which the U.S. government has taken on as well as that of U.S. corporations. That leads us to the consumer credit card story, and it's not as clear-cut as media reports would have us believe. To be sure, there is a personal responsibility component to the stories he shares of people who have run up hefty credit card debts over the years. But as Elizabeth Warren has been saying as well, to think the entire story on this is just a bunch of irresponsible people going binge shopping is to miss the boat and, by extension, a key aspect of the reality we're all dealing with thanks to the banks needing to be bailed out by the U.S. taxpayers. There's a lot more going on than just college kids getting free t-shirts and then binging to buy things they otherwise can't afford.
Manning illustrates how income inequality has been growing since the 1980s and not by accident, aided by mergers, leveraged buyouts and public companies being slaves to Wall Street by chasing dollars. What have these mergers and LBOs done? They've further lined the pockets of CEOs while the end products aren't necessarily better for the consumer, average worker pay has basically stagnated, employment disruptions are more common and the cost of living has been on a never-ending increase. And as such, credit cards have "come to the rescue" for many essentials in life, from groceries to necessary health care and, as illustrated later, for small businesses who inexplicably can't get credit in the form of loans even after having some success.
In these stories, it becomes clear that the credit card industry operates on a couple of major dichotomies. For one, there is the constant increase college kids get in credit limits after they do nothing but max out their cards - no good payment history required. They of course want the students to spend more and more money so they can make more on interest payments. Then there is the notion of "deadbeats", of which I am proudly one - those who pay their bills fully every month. While the credit card industry talks a good game about personal responsibility, especially as they lobbied for stricter bankruptcy laws like the one passed in 2005 (because their easy money practices came back to bite them in the butt too often), they hate people who actually show it by paying off their credit card balances in full every month.
Indeed, it's hard not to come away from this book thinking that the credit card industry isn't evil by nature, and that's before they got bailed out. A later chapter is one that was not pleasant to read and further reinforces this notion. Manning talks about how big conglomerates like Citi have furthered the socioeconomic class divide, all but exiting low-income and inner city areas, leaving people there to have to turn to second-tier financial services, where the cost of credit is much higher. There, services like payday loans rule, and those are notorious for having effective APRs in the three digits. What's not known is that many of these operations are actually financed by the same big banks that pulled out of those areas. Essentially, with the poor paying higher credit costs, they are subsidizing the rich, furthering the divide - until, of course, we're all asked to help bail out the banks as a result of this.
Reading this book made a lot of things clearer to me. Included was how the Citi conglomerate first came to be, via repealing the Glass-Steagall Act. Sure enough, less than ten years after it, we saw a meltdown that took the entire economy down - not very different from what happened leading to Glass-Steagall being passed in the first place. All in all, this book is well worth reading even now.
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