>> a decade of prosperity, thelongest economic expansion on record.the 1990s to mid-2000s brought profits to wall street andaffluence to main street. was it the best of times, or wasit an illusion? as the nation now grapples withan ongoing economic recession,
Average American Credit Card Debt, what is the cost to individuals,family, society? university of iowa scholarsrecently convened to address questions like these."borrowing to the brink: consumer debt in america,"sponsored by u.i.'s obermann
center for advanced studies,brought together scholars from around the country to addressthe issues of consumer debt. the seminar was directed bycollege of law professor katie porter, whose researchexamines bankruptcy outcomes for everyday americans.>> bankruptcy law has a purpose of giving families a freshstart, and we have a lot of discussion in the academicresearch about a fresh start. but we have very littleunderstanding of what really happens to families afterbankruptcy.
how you recover, how fresh yourstart is, depends on what happens to your income, and whenincome keeps going down, even after bankruptcy's washed awayyour debt, it's really hard for these families to make ends meeton a going-forward basis. >> the subject of income is afocus for u.i. sociology professor kevin leicht, wholooks at the increasing use of credit as a substitute forincome growth. >> the major thing that'shappened with debt is that debt is used to subsidize a lifestylethat people's earnings can't pay
for.when people's incomes started to stagnate in the 1970s, andespecially the earnings of the middle class from jobs, all of asudden, you could lease cars rather than buy them, you couldbuy cars with no money down, and there were all sorts ofinterest-only and other adjustable-rate mortgages youcould get for houses. >> jerry anthony, professor ofurban & regional planning, examines housing costs as acritical factor in today's economy.>> the nation has had a
historical problem with highhousing costs. housing prices have outpacedincome growth, and therefore the percentage of income spent byhouseholds for housing has increased consistently over thelast three or four decades. the decade of the 1990s was afantastic opportunity for us to rectify this problem, because inthe 1990s, we saw phenomenal economic growth, and the fact ofthe matter is that between 1990 and 2000, housing cost burdensdid not go down, in spite of the economic prosperity that we had.>> in combination with stagnant
incomes, high housing costs havemade the american dream of home ownership an increasinglydifficult prospect. >> owning a house has been sucha central component of the american dream that people havebeen willing in the united states to do just aboutanything to own a house. and so people have purchasedhouses that they can't necessarily afford, but inaddition to that, people who have bought houses that they caneasily afford have seen their property values dropcatastrophically because of the
foreclosure crisis.there are a lot of people out there who are saying, "i'veplayed by the rules, and i've made my payments on time, andi'm losing money hand over fist and this is not fair.">> leicht addresses the cultural damage of consumer debt in"postindustrial peasants: the illusion of middle classprosperity." >> this world where consumerdebt props the u.s. economy up is not really sustainable.people who don't know where their next paycheck is comingfrom and don't know whether they
can pay their own debts focusexcessively on themselves, and so the cub scouts aren'tmentored, the baseball teams aren't coached, the bicyclerides aren't taken, the sunsets aren't watched.all of those things that make community life interesting sortof go by the wayside as you do everything in your power to payoff your debts and keep your kid in a decent school.>> while the plight of the middle class seems increasinglydire, the issues of consumer debt in america are beingbrought to light as academic
work focuses on bankruptcypopulations. >> we can use bankruptcy as awindow to see the kinds of problems that plague ordinary,everyday americans. sometimes the answer will beregulating credit, cutting back on things like mortgages thatare not underwritten for peoples' real income.and then the other lesson is taking a look at the income sideof it. we've had a very stagnant wagegrowth in america for a number of years, and a lot of familieshave used borrowing to sort of
make up for that loss in wagegrowth. so we keep seeing an improvedstandard of living in america, but a lot of that standard ofliving has been driven by borrowing.>> from the community-planning perspective, discussion ofconsumer debt in america can't be separated from the chronicissue of housing costs. >> unless we as a nation focuson how to reduce housing-cost burdens and make housing moreaffordable, we will have housing foreclosure crises like this andwe would have consumer-debt
crises like the ones we've seenin the recent past. >> while economic recovery hasyet to arrive, continued study of consumer debt can only helpus to better understand the private issue of financialdistress. coming up, inside the iowaspirit squads. next, on "iowa magazine."
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