Zubin Jelveh posts on a new study that reveals just how debt-dependent our culture has become:

Obtaining data from an unnamed credit bureau agency, Mian and Sufi track 100,000 homeowners living in all of the big cities across the country between 1997 through the end of 2008. They find that, on average, these households borrowed between $250 to $300 for every $1,000 in home price appreciation.

What did people do with the extra cash? Surprisingly, one thing they didn't do -- at least on the scale that's been portrayed in the media -- was trade up into new homes or investment properties.

More worrisome, these homeowners also didn't pay down credit card debts either, even as that type of debt doubled over the period. This happened even though credit cart debt carries a higher interest rate than the typical home equity loan, so in the long run consumers would have been better off doing this. In fact, Mian and Sufi find that the people most likely to tap their homes for cash were those who had the worst credit scores and the highest debt levels. And that's something which came back to haunt a number of these borrowers. Mian and Sufi find that about 20 percent of the defaults we're currently seeing are a result of people extracting too much equity out of their house during the boom years.

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