Review: Americans' appetite for debt did them in

— -- We've all heard about "conspicuous consumption," the now out-of-vogue affliction.

This economic malady has been usurped by "cannibal consumption" — the perilous intertwining of the housing and consumer credit markets, says Charles R. Geisst, author of Collateral Damaged: The Marketing of Consumer Debt to America (Bloomberg Press, 288 pages, $27.95). And unless the U.S. government straightens out those markets soon, Geisst maintains, the country is in for even more calamitous times.

A Manhattan College finance professor and former investment banker, Geisst traces America's credit history and finds it riddled with sleepy regulators, congressional do-badders and craven financial firms making euphemistic lures to consumers.

"A credit card offers $10,000 of credit, not debt. It has a friendlier ring," he writes.

Consumer debt is at an all-time high, exceeding $2.5 trillion, or $8,000 per person, making it as American as apple pie and apparently equally tasty. But The Great American Debt Machine, as Geisst calls it, is hardly new.

Sears established its consumer credit operation nearly 100 years ago, and automobiles have been sold "on time" since 1916. The American debt machine really began roaring in the '20s, when consumer debt doubled. But fewer than 20% of the population bought anything on credit then.

Charge cards hit the scene with Charg-It after World War II, followed by Diners Club and American Express. Diners Club and AmEx required payment in full, however, so their card holders couldn't get in over their heads. Plastic as we know it began about 50 years ago, with Bank of America's BankAmericard (now Visa) letting card holders finance purchases over time, paying interest on unpaid balances.

Geisst says a confluence of factors beginning in the 1980s played a major role creating the current financial chaos:

•Variable-rate credit cards and adjustable-rate mortgages shifted credit risks from lenders to borrowers.