Calls for advice to the National Debtline have increased by more than 40% – from about 16,000 a month in November 2007 to 23,000 in November 2008.

Demand for a business debt advice doubled over the same period.

Paul Mullins, chief executive of the National Debtline, said the numbers helped by the service because they were in arrears on mortgage or secured loan repayments had risen by 30%.

Consumer minister Gareth Thomas said that the government was increasing funding for the service and urged struggling consumers to use the telephone helpline.

“It is imperative that when people are struggling with debt, they seek assistance as soon as possible,” he said.

Meanwhile doorstep lender Cattles is axing 1,000 jobs across the country.

The company, that calls door-to-door to lend to people on low income or who cannot get a loan from their bank, is slashing the amount of new business by 75% because banks won’t underwrite the loans.

One in five Cattles employees will lose their jobs. The company will close a call centre in Hull, where the company was founded in 1927, with the loss of 400 jobs. A further 600 will be cut across its UK branch network.

Most of Cattles’s business involves loans that are then repaid monthly by direct debit or doorstep lending, where agents turn up at borrowers’ home each week to collect interest payments.

Cattles has been badly hit by the credit crunch, having been reliant on borrowing from banks to raise cash to lend. The company hoped to operate as a bank to set up accounts for investors, but admitted that it is still in discussions with the Financial Services Authority over a retail banking licence application.

Shares in Cattles fell by nearly 6% to 27.75p. They have lost nearly 90% of their value in the last 12 months.

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Tags: Cattles, Debts, Financial Services Authority, Gareth Thomas, National Debtline, Paul Mullins

After the huge stock market break of 1929 and the subsequent poor management of the economy, Herbert Hoover did what many presidents and secretaries of commerce will do today…he engaged in massive public building works in an attempt to reflate the economy and provide desperately needed jobs to people who had lost their livelihoods as a result of the worsening economic climate which started with the 1929 crash.

The dam was a huge success and still provides a lot of hydro electric power today, almost 4 billion kilowatts per year. It provides electricity to California, Nevada and Arizona. Even today, it is still one of the crowning achievements of American engineering.

Today, Alastair Darling has indicated his version of the Hoover Dam. He will pull forward spending from future years to fast track the building of schools, hospitals and housing. This will provide jobs but will it really help the economy?

Many in the city think this is complete madness. The country, they point out, simply doesn’t have the capacity to carry the debt burden which will result from this spending. Instead of leaving the situation alone and leaving individuals up to their necks in debt facing a potential depression, the government is going to put a future generation into debt as well!

The government and society as a whole has over borrowed and overspent, mainly on consumption. This situation cannot be fixed with more borrowing which doesn’t expand the productive capacity of the country. Do schools, hospitals and houses increase the productive capacity? Only if we allow them to be used by foreign nationals who are willing to pay to use them. Otherwise, as our education and health systems are right now, this spending looks like a debt backed boom which will cost the country money, not make it money in the future. Tell your children to save their pennies in their piggy banks.

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Tags: Alastair Darling, Debts, Economy, Housing Market, Stock Markets, UK Banks

The key cause of hyper inflation is the debasement of the currency, usually through massive money printing programs. Some economists think that we will reach hyper inflation as a result of the huge bailout programs that are currently being undertaken by bankers and politicians. This is how it works. Think of a British pound as a share in UK PLC. Think of printing more bank notes and creating more fiat currency as the company taking on more debt…financed by the tax payers. Once the company we takes on more debt, it can pay less to shareholders since it has to pay interest on the debt. The time comes when we have to pay more and more interest on the debt until eventually the debt interest repayment level eats all the earnings from the company.

Once that happens, the company will be unable to raise more capital and it won’t be able to repay its debt. Once it misses a few debt payments, it’s off to the bankruptcy courts and insolvency follows. The key difference between the debt level of a company and a country is that a country doesn’t disappear from existence.

The debts will still have to be repaid and tax burdens will be increased to do this to a level that makes citizens virtual slaves through forced saving schemes to suck up excess liquidity from the population. In China, this resulted in the rise of communism. Social unrest is never far away once hyper inflation takes control.

It results in an inflation rate measured monthly and in excess of 50% per month. At this rate, it takes 36 months for the price of goods to go up 133 times. It creates massively higher prices and destroys savings and the purchasing power of those on fixed incomes. All pensions get wiped out thanks to LPI, limited price indexation, which is the measure used to increase many private pensions in this country. LPI normally states that pension increases are capped at 5% per annum.

If the governments give a blank cheque to the financial institutions, inflation will be the result. Whether or not it becomes hyper inflation remains to be seen. 

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Tags: British Pound, Debts, Financial News, Hyper Inflation