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No interest for one year! No annual fee! No minimum payments for six months! And, if you want to believe Robert Manning, there’s no way out of the debt that we find ourselves in, as individuals and as a country. Credit Card Nation combines debt of every kind–consumer, corporate, and governmental–and creates a vast landscape of profit-spewing lenders and struggling debtors present at every level of economics. Appalling statistics set readers off on a depressing journey: the years between 1980 and 1994 saw annual consumer charges skyrocket from 0 billion to 1 billion, with the average household carrying over ,000 in revolving debt. Accompanied by the erasure of nearly 0 billion in corporate debt and tremendous tax cuts for ever-merging conglomerates, the end of the 20th century seems to be just the beginning of an overwhelming cycle. While Manning’s book is extensively researched, it is also extremely readable. Individual stories of junk bondsmen, corporate raiders, and middle-class consumers are threaded throughout the pages of charts and statistics, with a few surprises. While most media would have us believe that students who rack up charge accounts are totally irresponsible, the reality is that some of these students are helping their families with cash-advance loans to make mortgage or insurance payments. Emphasis is also placed on the tremendous advertising budgets of credit card companies: Manning comments on “how quickly the cultural norms have changed in the Credit Card Nation,” we see a poster insisting “money can’t buy you love, but a credit card can get you started.” This is not a self-help book, and Manning has no 12-step program for debtors at any level. Credit Card Nation simply tells it as it is. –Jill Lightner
Credit Card Nation: The Consequences of America’s Addiction to Credit Overviews
A fascinating and timely chronicle of America’s tortured relationship to money–and the future crisis that looms as a result of our overwhelming reliance on credit.
Credit-card debt is choking American prosperity off at the neck. In Credit Card Nation, Robert D. Manning tells a fascinating story about the present and future consequences of credit dependence across all strata of U.S. society. Through extensive interviews with consumers, Manning talks to debtors, and to average Americans, affected by what Manning describes as our “credit card nation”: an American juggernaut of indebtedness that spans personal, corporate, and governmental debt.
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[if 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.]
Customer Review
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.
Much too Verbose – Snail –
I think I’m getting sick of reading books from Humanities folks, they are also far too verbose. This book is not an exception. This book could have been much shorter if the author stopped repeating himself and wrote in a less verbose style.
There are a few interesting tidbits of information in the book, but overall its not worth reading.
Robert D. Manning is one of the most influential “public” scholars in the US – O. Imamkhodjaeva – Medford, MA USA
Robert D. Manning is a rare combination of influential scholar and public policy “statesmen” whose work has not only inspired hundreds of scholars projects and thousands of media stories but also directly influence public understanding and regulation of financial institutions, the deregulated banking system, subprime lending, and the global dimensions of asset-backed securities.
Author of the widely acclaimed book, CREDIT CARD NATION, and editorial advisor of the powerful documentary, IN DEBT WE TRUST, which is based on his book, Dr. Manning’s scholarly and public policy work constitutes a pathbreaking intellectual enterprise: a dispassionate and ongoing investigation of the nature of America’s changing attitudes and behaviors toward consumer credit, the power of financial institutions, and role of the banking system in changing American society. Manning’s analysis of America’s growing dependence on consumer credit, the powerful financial institutions that have emerged under the deregulation era and shaped the fragile underpinnings of the “American Dream,” are presented in the context of broad social, economic, and cultural perspectives as US society grapples with its declining position in the global economy.
Dr. Manning has produced a truly creative approach to analyzing the post-industrial society where there is more profit to be made financing consumption than producing the items themselves. This is an unusual book in its effective weaving of macro-social and economic trends with carefully selected case-studies of companies and housholds. There is no attempt to present glossy oversimplifications, black-and-white statements, or sweeping generalizations. Rather, the book seeks to demonstrate how globalization and US industrial restructuring have dramatically changed the opportunities for the American middle-class based on their earned income (remember the primacy of the one-income earning family in the 1960s!) AND the pressures of the federal government to aid the suffering banking industry through favorable deregulatory policies which indirectly contributed to the soaring federal deficit. Manning emphasizes that there is no single institution or social trend that is responsible for this phenomenon as he artfully explains how all sectors of American society have become integrally dependent on borrowing–the “Triangle of Debt.”
This book is an impressive intellectual achievement: in a dispassionate manner it marshals overwhelming evidence and complex conceptual models that reveal the predatory policy banking institutions and marketing tools that have addicted most people to easy credit in America–both young and old. Furthermore, this book was the precursor to foresightful academic predictions of the subprime mortgage crisis and I understand that his next book systematically examines the consequences of the Credit Card Nation as the country’s Baby Boomers enter into an underfunded quagmire of retirement. Aside from the momentous intellectual contributions of the book, Dr Manning is one of the rare breed of scholars that practices what he preaches in the classroom through Congressional testimony, trenchant policy analyses, frequent media commentary, and his own carefully designed alternative to consumer bankruptcy.
One nation, under debt, with liberty and justice for some – JSBM – San Diego, CA
We’re in the middle of an ongoing social and economic crisis according to Robert D. Manning, author of “Credit Card Nation”. And with supporting evidence like his figures of every credit cardholder having 10 cards in their name and every family revolving over ,000 in debt (the number now is over ,000), it’s easy to see why he feels like it is a crisis. In this fascinating book, Manning describes the situation thoroughly, shows who’s at fault, and what we should expect as a result of the situation.
Manning separates the country into two categories of credit card users, the convenience sector, who pay their debt off monthly, and the revolver sector, who have accumulated all the personal debt this country maintains. He focuses on the revolvers and the dire straits they’re in due to the interest they pay on their debt. The author does mention some bright spots in the history of debt (e.g. ‘The Blair Witch Project’, which was financed on credit cards and ended up making millions), but the overall picture portrayed is bleak and Manning doesn’t describe how everyday people can take advantage of the credit card economy.
One major liability in this book (no pun intended) is that Manning repeatedly blames the credit card industry for putting so much effort into their marketing. It’s true that the industry uses some sneaky techniques to get people to become lifelong subscription holders to their finance charges, but some of the industry’s marketing can be used for consumer benefit.
Manning has a great angle on the social aspects of our spending society (from a Puritan savings mentality to a commercial spending mentality) and how it affects the separate classes (the system negatively affects the people who need it most while helping the people who need it least). His philosophy on the drawbacks of a culture that punishes production but rewards consumption should also be transferred to taxes as well as credit.
All in all, this is a thoroughly insightful book, which everyone should read.
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