the problem is us

I've been weirdly fascinated by the ongoing financial crisis the world has gotten itself into, and have been listening to a podcast trying to explain it since, like, September or something. And then, this week, This American Life took their third whack at trying to explain the whole thing. If you're interested, all three shows are really good, especially #1 and #3. Links to listen online, if you're into that type of thing:

Show #1: The Giant Pool of Money
Show #2: Another Frightening Show About the Economy
Show #3: Bad Bank

Yes, I know, I've shilled for TAL in the past. Probably I'll do it again in the future. Get used to it, it's a good show, and I'm a hopeless fanboy.

Anyhow, in the most recent show, the most striking part came at about 38 minutes in. They were talking with a professor at Columbia, David Beim, about consumer debt in the U.S., and how it has skyrocketed in the past 10 years or so. The last time it was this high was, you guessed it 1929, just before the onset of the Great Depression. The quote:

What is happening to us is something that goes way beyond toxic assets in banks. It's something that has little to do with the mechanics of mortgage securitization, or ethics on Wall Street, or anything else. It says, the problem is us. The problem is not the banks, greedy though they may be, overpaid though they may be. The problem is us. We have overborrowed. We've been living very high on the hog. Our living standard has been rising dramatically in the last 25 years. And we have been borrowing much of the money needed to make that prosperity happen.

And of course, while he's saying this, they're playing the spooky music they always play to ramp up the drama. But still, pretty sobering. For a look at the graph of debt levels that he's talking about, look here.