Peter Jackson column

Jan 19 2006 By Peter Jackson, The Journal

Maybe it was sheer coincidence, or maybe a mood of post-Christmas gloom at the shameless consumption - on the part of myself in particular and the UK in general - but I was spot on.

For I showed more than my usual prescience last week when I welcomed the introduction of new certificates in personal finance for schoolchildren.

You will recall, I pointed to evidence showing people in the UK to be ignorant where personal finance is concerned, and to an unprecedented level of national debt.

And would you believe it? Less than a week later, it is reported that the National Debtline, set up by the Government to advise those in financial trouble, is being overwhelmed by record numbers of callers afraid of going bankrupt in the wake of Yuletide.

It has received more than 12,000 inquiries since January 3 and looks like having its busiest month since it was set up in 1987.

Figures show consumer debt levels rising by 10% year-on-year, while the number of debt defaulters and bankrupts soar. One prediction is that 20,000 will declare themselves insolvent in the first quarter of 2006, the highest figure since personal debt records began 45 years ago.

However, if you are worried by this, perhaps you should take heart from Alan Greenspan, the retiring chairman of the US Federal Reserve and a man who has bestrode the world's economy like a colossus for the past 18 years.

For last month, he declared our Chancellor Gordon Brown to be "without peer amongst the world's economic policymakers".

This may have been in return for Gordon's earlier description of Alan as "the rock of stability upon which today's global economy is built".

It is perhaps worrying that this same rock of stability, who presided over the dot.com boom and bust of the late 1990s, has also allowed the biggest expansion of credit in US history.

Between 1997 and 2001 in the US there was 4.8 new dollars worth of credit and debt for every extra dollar's worth of GDP.

When Mr Greenspan steps down at the end of this month his successor, Ben Bernanke, will doubtless be grateful for any tips on how to defuse this situation before it blows up in his face - as no doubt will Gordon.