Reporter: Peter Overton
Producers: Hugh Nailon and Kirsty Thomson
It's been a hell of a week. The global economy's in meltdown, the financial markets are in chaos and it's not over yet, not by a long shot.
Basically greed, dodgy loans and bad debt are to blame.
So you'd think we'd all be a bit cautious with our credit cards.
Some of us maybe, but not the kids they call Generation Y.
They're young, reckless and they've racked up an astonishing $60 billion dollars of debt.
New cars, new clothes, new toys, no problem.
Just whack it on the card. These kids have never known tough economic times, so they think they're invincible but now they're in for the shock of their lives.
Young people in trouble with debt can receive FREE counselling through the Australian Financial Counselling and Credit Reform Association.
Young people seeking a 'Debt Agreement' can visit
PETER OVERTON: The world economy is in free-fall, on the brink of recession. But 20-year-old Amanda Nabulsi couldn't care less. How much would you spend a week on your credit card?
AMANDA NABULSI: Oh... $1,500?
PETER OVERTON: And you don't even blink at that?
AMANDA NABULSI: Not at all.
PETER OVERTON: It's a lot of money.
AMANDA NABULSI: It's alright. It's happiness.
PETER OVERTON: Amanda's typical of Generation Y - those aged between 18 and 28. She still lives at home, has no bills to pay. She earns $35,000 a year and happily blows every cent.
AMANDA NABULSI: Don't look at the price, really. If you love it you love it, that's it. Get it. Don't have hesitations about it. Don't have second thoughts.
PETER OVERTON: Put it on the card?
AMANDA NABULSI: Yeah, and pay it off later. It's like a take-home lay-by.
PETER OVERTON: Today she's unleashing a brand new credit card. Limit $5,000. Her age group is now known as 'Generation Debt' owing a staggering $60 billion. Are there any coins or notes in your wallet?
AMANDA NABULSI: Five cents.
PETER OVERTON: And underpinning their attitude is a naive confidence everything will be ok. What do you think older generations think about your attitude to spending?
AMANDA NABULSI: We spend to much money, that's what they think. Like I get told off by old ladies, "You are spending too much money." It's my concern not anyone else's concern where I am heading has to do with me it's got nothing to do with anyone else. It's my bill, it's my debt I'll deal with it and if I can't afford it then I will just... go bankrupt.
PROFESSOR STEVE KEEN: This is a generation which is only going to know debt and no assets. It's an extremely dangerous combination for an economy facing a global recession.
PETER OVERTON: The world financial crisis is being caused by debt, why does Gen Y keeps spending?
PROFESSOR STEVE KEEN: Because it's just like having a car accident - you only stop driving irresponsibly after you've hit the wall.
ZOE ZIRKLER: This is my life, Pete. This is $70,000 worth of debt.
PETER OVERTON: 21-year-old Zoe Zirkler has hit the wall. Big time!
ZOE ZIRKLER: $11,000 personal loan, $9,000 TV, $10,000 car, there's a $2,000 credit card, there's a $1,000 credit card.
PETER OVERTON: Just three years out of school, Zoe's on the brink of bankruptcy.
ZOE ZIRKLER: This folder is my life, this is who I am, what I do, this is me - $70,000 worth of debt.
PETER OVERTON: On a supermarket salary of about $35,000 Zoe bought a car, a playstation, a state-of-the-art laptop, two huge televisions and much more. All on credit. When you look at all this paperwork, $70,000 worth of debt. What do you think.
ZOE ZIRKLER: Why? Why was I so stupid? Why wasn't I just happy with what I had?
PETER OVERTON: It is that bad for you?
ZOE ZIRKLER: Yep.
BEN PARIS: They're destroying their future. They're not going to be able to afford to have kids. They're not going to be able to afford to have a home. You know, more than likely they're gonna be on a pension and they should be set up for life and we've squandered it on what? A big-screen TV and a flashy car? It's soul destroying.
PETER OVERTON: Ben Paris runs a debt-management service. This is their last stop? People with debt are calling here.
BEN PARIS: It's either this or bankruptcy.
PETER OVERTON: He goes in to bat for people like Zoe - trying to negotiate a deal with creditors. Business is booming. Does it worry you getting 8,000 calls a year for people your age in massive debt?
BEN PARIS: My age and younger. They are the ones that really worry me. I'm 26 and we are getting calls from 18-year-olds who are just eligible for a credit card debt and they've got a $5,000 phone bill a $5,000 credit card bill $10,000 car loan and they're 18.
PETER OVERTON: What's fuelling this crisis is ridiculously easy credit being offered to a generation who are used to getting what they want. Amanda has only 22 cents in the bank but she's preparing to buy a $60,000 car on credit. It's breathtakingly reckless but if it all goes pear-shaped, Amanda believes she is not to blame. Are you saying you're a victim in all of this?
AMANDA NABULSI: We are! We're targets. We are targets of the bank because they know we're gullible. They know that anything they say we'll just follow. They're the leader and we're just the little people walking behind them, "give me the money."
PETER OVERTON: You're loving it. You could have sent them the card back.
AMANDA NABULSI: But I needed it. I need it for emergencies.
PETER OVERTON: I think your definition of emergencies is different to my definition of emergencies. What role does easy credit play?
PROFESSOR STEVE KEEN: An enormous role because even if you only knew the good times and you're willing to be irresponsible, it takes an irresponsible lender on the other side to give you that credit and I really don't blame the kids for this.
PETER OVERTON: Economist Steve Keen says the bad debt Generation Y is accumulating mirrors the bad debt that's led to the global financial meltdown. Haven't the banks learned their lesson from the subprime debacle?
PROFESSOR STEVE KEEN: They haven't learnt it because they're still looking for the best possible margin and the competitive pressures in the market mean that if they don't provide an irresponsible bit of credit card lending to some Gen 'Y'er, somebody else will do it and they want to get hold of the fees and get hold of the high margins they get on those loans. Only when the whole thing goes belly up will they suddenly turn the tap off.
EMMA LOVELL: Alright Pete, this one's my shout.
PETER OVERTON: ut until that crunch comes Gen Y will just keep on spending. So this is an indulgence,
EMMA LOVELL: It is a little bit of an indulgence, but why not splurge sometimes.
PETER OVERTON: I'll have a beer.
EMMA LOVELL: I'll have a passionfruit mojito.
PETER OVERTON: Emma Lovell is a full-time student. She'll finish Uni with a business degree and $40,000 in the red. For students like her, debt is a way of life. How much are you guys in debt?
STUDENT: By the end of my degree I'll have around $49,000 worth of debt.
STUDENT: About $26,000.
STUDENT: Yeah, I'm almost finished and I've got about $20,000 racked up.
PETER OVERTON: How on earth do you guys afford to drink?
EMMA LOVELL: Happy hour prices.
PETER OVERTON: About half of Emma's debt is HECS fees - the unavoidable cost of a University education. And the rest, she's borrowed to pay for a car and that other Gen Y essential - world travel.
EMMA LOVELL: I'll be going to South Africa, then to Tanzania and Nairobi, up to London, Scotland, quick visit to Germany, fly over to Dallas for a stop.
PETER OVERTON: How are you paying for it?
EMMA LOVELL: With this little beauty - my loan which was for my car but I have refinanced it I've added on another $10,000.
PETER OVERTON: So this $12,500 is absolutely money well-borrowed?
EMMA LOVELL: Definitely. I know I am going to be in debt later in life so may as well learn to manage it now. Use it on great things like this I don't think it's a waste at all.
PETER OVERTON: Zoe, what's it like walking into a big shopping centre?
ZOE ZIRKLER: It's hard, it's really hard.
PETER OVERTON: Zoe's money was wasted in shopping centres like this, on stuff she didn't need and couldn't afford. Remember her debt is more than $70,000. Is that exactly what you were doing just coming in and laying down the card?
ZOE ZIRKLER: Yeah, just laying down credit and they ask, "How are you going to pay?" Credit, just credit. It's all just 'sign away'.
PETER OVERTON: A sucker for interest-free deals by the time she realised her debt was out of control so was her life.
ZOE ZIRKLER: I thought about going to be stripper for a couple of months just for the money. But when it came down to it I couldn't do that to my mum I couldn't do that to my family I couldn't do that to myself.
PETER OVERTON: What stopped you walking out the door?
ZOE ZIRKLER: My beliefs, my mum knowing how it would hurt my mum to know I went and did that.
PETER OVERTON: Oh, you poor possum. Like so many of her generation, Zoe is back living at home. A vastly different life to when her mum was her age. BARBARA JONES: When I was young for us to get credit, we actually had to get parents to go guarantor for us. I know I'd get the horsewhip if I didn't pay back my debts from my dad.
PETER OVERTON: There's no horsewhip in this household, just a caring mum still providing for her adult daughter. Do you know what Gen Y... how much debt they're in, BARBARA JONES: Overall, in total? No.
PETER OVERTON: How does $60 billion sound?
ZOE ZIRKLER: And how look at how much of a chunk I have of it. BARBARA JONES: Yeah, but you'll get through it, dear.
PETER OVERTON: Emma Lovell also still lives at home. But despite owing tens of thousands of dollars she's supremely confident of her future.
EMMA LOVELL: I want my life to go in a certain direction and I can't do that if I, you know, sit here saving. It's not possible to sit here and just save and save and save. That's not the way we do things.
PETER OVERTON: Why is your generation so ballsy about debt and confident you can pay it off.
EMMA LOVELL: I know I'll be successful because I will make myself successful. because I know I have this debt. So it can be a driving factor. It's scary, though, it really is, but unfortunately we need it, We need the money.
PETER OVERTON: What's really scary is the amount of interest Generation Y will ultimately pay to service its debt. Emma, we have projected forward to when you are 40. This is what you're going to look like
EMMA LOVELL: I hope not.
PETER OVERTON: But more importantly, if Emma continues to borrow at her current rate, by the time she's 40 she will have paid $77,500 in interest.
EMMA LOVELL: When you put it in a lump sum like that's it's horrendous and scary but that's what I've got to do to have a future hopefully better than that one.
PETER OVERTON: The story is the same for Amanda. This is you at 40.
AMANDA NABULSI: Oh! That's disgusting. Where's the botox?
PETER OVERTON: Put it on the card. But the real crunch is your financial situation when you're 40. With your credit card debt, a big car loan and if you don't pay it on time you will have paid $82,000 in interest.
AMANDA NABULSI: $82,000 is the price that I pay for being happy for being able to indulge myself in all the luxury items I've bought over the last 40 years. That's what it is.
PETER OVERTON: It's worth it?
AMANDA NABULSI: It is. It's worth it.
PETER OVERTON: Where does Gen Y's $60 billion in debt in Australia now fit into the global financial meltdown that's happening now?
PROFESSOR STEVE KEEN: That's the poisonous icing on top of a very poisonous cake. The cake was going to sink anyway and the icing is going to drive it down even further. They've got all the debt and no assets. At some stage soon they're going to have no income. And that's a deadly combination.
PETER OVERTON: It's a lesson Zoe Zirkler had to learn the hard way but finally, she's quitting credit. It has really got you shaken, hasn't it.
ZOE ZIRKLER: Yes, it does.
PETER OVERTON: Because of what they've done. She's working full time and you can't help but admire her decision to pay back what she owes. But for most of Generation Y, they will continue to buy now and pay later. So, this is your home?
AMANDA NABULSI: I was born here I will die here. It's great. It's great.