We realize it, but we also see those tight families with the top cable TV offering and multiple cell phone contracts. Many of them can't separate luxeries from necessities.
In an information age economy I am not sure that cell phones and cable TV are necessarily luxuries, in the same way that a $60M Park Avenue apartment or Chateau Lafite is a luxury.
Second and most importantly, you have missed the entire point. The point is that the fundamental cause of this entire problem is Alan Greenspan creating an economic system that replaced cash money with credit, raising the cost of goods so that you could not acquire them with "cash" only but had to accompany some cash money with a bit extra of a credit transaction. You cannot blame the half of the people who are underwater as a consequence, without blaming those who created and profited enormously from the mess in the first place.
I will let Travis tell you in the immortal words of Thos Jefferson and Ludwig von Mises what happens when you create a credit based monetary system. The short answer is, it creates enormous econimic distortions, disconnects economic power from sound economic transactions, and creates this exponentially growing time bomb that sooner or later blows up in everyone's face. Interest is the eighth wonder of the world in the words of Nathan Rothschild.
Last week we heard Bernanke throw in the towel. He doesn't know what to do to fix it because all he can do is print money and give it to the guys who were in on the cabal with Greenspan from the beginning.