Say it ain't so, Suze!

(MoneyWatch) In Helaine Olen's new book, "Pound Foolish," personal finance luminaries are taken down a few notches. It's a juicy read, but also something more: Olen provides an analysis that should make many people in the financial services industry deeply uncomfortable.

Olen, a former personal finance writer herself, delivers a scathing critique of the gurus who urge personal austerity on the one hand and stock tips on the other to make us the millionaires next door. It's a nice story they sell -- that by skipping the morning visit to Starbucks, finding a smart stock trade or investing in the right piece of real estate, people can catapult themselves into the 1 percent. Or at least arrange a comfortable retirement nest egg.

The trouble is, Olen says, these swamis often don't practice what they preach, their systems don't work as advertised, and they tend to benefit Wall Street more than the Average Joe. Consider for a moment that Orman, who commands $80,000 per speaking engagement and likes to fly in private jets, has had debt problems herself and has flip-flopped from urging people to avoid stocks to forming a partnership with a stock broker that pushed her typically unsophisticated readers into high-risk investments. 

"Orman might claim the mantle of anti-poverty crusader, but she puts the onus for our financial security on us and us alone," Olen writes.

There's also Dave Ramsey, a "preacher of the fiscally righteous life," as Olen calls him, who thunders against debt in any form as moral failure. Ramsey, who before he found religion and began railing against the evils of mortgages ran up such a huge tab himself that he sought the refuge of personal bankruptcy, sells people on the notion that if they just work hard enough they can (and should) avoid bankruptcy themselves. Never mind that bankruptcy sometimes can be the least odious solution to a family's financial woes.

Or take best-selling author David Bach's admonition against indulging in the luxuries of life big and small -- foregoing a daily latte is his vivid example of wasteful living. Instead, he urges saving that money and investing in the stock market. Olen points out that Bach, who has been touted by Oprah Winfrey, had a lucrative sponsor for his message: mutual fund company Van Kampen Investments.

CJ Burton/Corbis

Meanwhile, Orman and others who have echoed Bach's theory of frugality tend to wildly overestimate the potential gains that can be had from investing all that latte money. In her book "The Courage to be Rich," Orman took up the coffee cudgel, extrapolating from saving the $2.75 a day for a cup of Starbucks for 20 years "and investing at 10 percent" to calculate that a person could emerge with $57,504.

There's a problem with that, though. In comparison to her ordinary investors, even in the currently surging stock market, few hedge funds have been returning 10 percent.

Olen's basic message is this: The American mythology of flinty self-reliance is largely a corporate-funded scam. The reality is that we are living in a world in which it is increasingly hard for responsible people to make ends meet. Working people face income stagnation, while at the same time they must account for inflation in healthcare, education, housing, food and other necessities. Throw in a job loss, an illness -- any of the unexpected crises that can drain a bank account -- and people can find themselves in a situation that no amount of frugality and saving could have accounted for.

"We do not live in an economic environment that will permit mass personal financial progress, no matter how well meant the guidance or advice," her book says. "As a result, the success stories offered up by the gurus of personal finance were individual victories in a society sliding economically downward."

In a recent interview with CBS MoneyWatch, Olen noted that "50 percent of the population is living paycheck to paycheck. That's a lot of people who are deliberately messing up, or are so stupid they are messing up. It just doesn't make any sense. "

Olen said that at one of Ramsey's tent revival-like seminars, she pulled people in the audience aside and got their stories. "I would ask them where their debt was from and I would hear about a son who had had a car accident, about job losses, about a health care crises. These weren't people who had lived beyond their means and screwed up -- but they thought they had."

Other chapters in the book should also make Wall Street uncomfortable. These include the problems people face planning for retirement, from annuities that are complicated and unwise, to a reliance on the stock market and all its turbulence in retirement accounts. There is the idea propagated that women are particularly unschooled and ill-suited to financial decision-making ("Both sexes are abysmally financially ignorant," Olen said).

But the theme that runs throughout the book is one that is deeply political and rooted in a morality that is a sharp departure from the libertarian ethos drilled into Americans since the Reagan years.

"It's not that we shouldn't live within our means, " she said. "We should. But what I realized writing this book is that we get sold this idea that we can do it ourselves. This tough, tough talk -- 'You're on our own and you can do everything' -- is an attempt to say that we're not responsible for each other. We've forgotten about the quality of mercy."

As she takes down the faith healers of personal finance, Olen provides a small dose of her own advice. But it isn't the sort that promises a clear and easy alternative. She urges people to discuss their money and money problems openly, both individually and as a country. One possible byproduct of such a discourse: political changes that would leave the deck less stacked against the middle class.

"If honesty about our personal prospects helps us as individuals, imagine what such a thing could do for us collectively," Olen writes. "It could empower us to insist on changes that will benefit us all."

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