You can’t turn on CNN without hearing the terms “credit crunch,” “sub-prime mortgage,” or “national debt.”

There is a documentary film that everybody and their grandmother MUST see right now.  It’s called “Maxed Out,” and it’s on Rogers-On-Demand this month.

You’ll find yourself thinking “This can’t be true” as you watch the film, but it’s all true, and it’s all quite sad…

Have you ever walked through Air Canada Centre or Skydome and seen a credit card company offering a FREE t-shirt just for filling out the form?

Now be honest….have you ever filled out the form and got the shirt?

Geeeeeeez….I was 17 years old when I first encountered this and I still knew it was a bad idea!

Maxed Out is a documentary released in 2007 that looks at the politics and pressures of credit card debt and its unequal effect on society. 

Thankfully, the movie is based in the United States of America, and as we know from watching CNN or reading any newspaper, that their credit-crisis is unique only to their country, when you look around the world today…

The opening to the movie Maxed Out is a terrific introduction to the problems associated with debt.

We meet a classy woman in her early-40’s who is driving her Mercedes through an expensive sub-division in Las Vegas.  She surmises that as long as you buy your luxury home in a planned community or “Master Plan” where by-laws prohibit the construction of, as she puts it, “mobile homes or nail salons,” then your investment is safe. 

As she walks into a very lavish, very expensive house, we realize that she is in fact a real estate agent.

She begins to tell us what people “want and need” these days.  They need two dishwashers in their extremely oversized kitchens, and they need laundry rooms in the basement and on the top floor, in addition to elevators, home theatres, and wine rooms.  People need bigger, larger, more, and better.

She then takes us to a construction site where we find out that her dream home is being built.

She explains “loan-to-value” as she gushes over what a terrific idea it is.  In order to qualify for her mortgage so she can afford to build her house in the first place, the bank appraises the house as if it were completed, effectively assigning value to a house that does not yet exist! 

Then the cherry on the top of this story: across the screen flashes “This is the same accounting technique used by Enron” just as she is calling it an “ingenious way to get people to continue construction on luxury homes.”

…..and roll opening credits!

As soon as I saw this opening scene to Maxed Out, I knew I was hooked.

The most disturbing part, is that the movie gets worse and worse…..for the people in it!

The premise of the movie, which comes out just as the United States is on its knees financially and about to go into a massive recession, is that banks, credit card companies, and mortgage institutions prey on the people that are least able to afford debt, and least likely to pay it back.

Ideally, the only form of debt discharge in the eyes of lending institutions, is death.

The documentary portrays many different individuals and families from all over America.

We learn of an 18-year-old boy who went off to university, and within months had accumulated over $12,000 worth of debt on a dozen credit cards.  He had never owned a credit card before in his life, but once he signed up for the first one, the other credit card companies bombarded him with more applications.

We learn of a poor family in Mississippi who has a low-interest, government subsidized mortgage.  Amazingly, when this family has difficulty paying back the government loan, Citifinancial replaces it with a 40-year loan that they can’t afford!

The documentary attempts to convince us that lending institutions are evil.  But after the conclusion of the film, how can we possibly disagree?

A professor at Harvard Law School is featured throughout the film, and tells us of the seminar on bankruptcy she presented to executives at Citigroup, at the behest of the vice-president.  Her message that “if you would screen the weakest customers, those least likely to pay, you would cut your bankruptcy losses by 50%” is met with this statement from a Citigroup executive: “Professor….if we cut those people off….well, that is where we make all of our profits.” 

The best clients for lenders and credit card companies are those people that can least afford it.  As one vice-president of MasterCard puts it, “We know two things about people that have declared bankruptcy: 1) they can’t declare bankruptcy again, 2) they have a taste for debt, and are willing to make minimum payments forever.

Some of the people we meet and stories we hear are incredulous, but try confirming these stories on the internet (like I did!) and you soon realize it’s all true.

For example, ever hear of Providian?  In 2000, the company was fined $400 Million for shredding customers’ cheques to charge them phony late fees and overage charges on their accounts.  Have you ever suspected that Rogers or Bell got your payment on time but charged you late fees anyhow?  What are YOU going to do about it?  That was a rhetorical question…

With all documentaries, we must remember that the filmmakers are trying to prove a point.  You know the old adage, “You can make numbers say anything you want?”  It’s like that with a film where you get to conduct the interviews, edit the footage, and produce the feature.

The closing ten minutes of the film sum up the demises of all the people we have met, while playing sad music by Coldplay in the background.  We learn that the university student who accumulated a dozen credit cards eventually hung himself, and that the mother of the nice couple from Nashville drove her car into the river to get out from her mounting bills.  We watch a sweet 59-year-old woman sell her belongings at a garage sale, while crying about her plight and her thoughts of suicide.

I’m not denying that this is quite sad.

And I’m not denying that everything in this documentary is true.

But we have to remember that this is a production, and a good documentary filmmaker will decide what thoughts and feelings he wants to conjure up in the viewers, and then create his work accordingly.

The other side of the argument is that “nobody put a gun to these people’s heads and made them take on more debt,” but I’d like to think that there is consumer protection in place, and government legislation to prohibit corporate America from preying on the weak.  Afterall, the miserable recession America is about to slide into can be traced back to the “credit-crunch” they find themselves in.

And what did George Bush do with his legislative powers?

He passed a bill that prevented middle-class Americans from declaring bankruptcy, and getting out of debt—getting a second chance.  By the way, his biggest campaign contributor is MBNA.

Maxed Out is a must-see for anybody, regardless of interests, occupations, or finances.  Not only will it (hopefully) prevent others from making the same mistakes, but it will give people the background and the reasoning for the financial horror that is about to happen in America over the next half-decade or more.

What did I learn from this film?

I learned most of what I already know: that America is on its knees financially, and in 2-3 years when the situation is at its bleakest, I’m going to buy a million-dollar ski chalet in Idaho for two-hundred grand.

I didn’t create the problem, and it’s not my job to fix it.

Thank God we live in Canada…