“Our services, with the credit crunch, are being overwhelmed by a whole new breed of debtor: middle class people” says Jamie Elliott of Transact, a financial advice charity.

Here’s the story in a nutshell. Lots of people (and not just those on low incomes) ran up lots of debts. Then the credit crunch happened. Now some of those people can’t pay their debts. And the credit crunch is to blame.

This story sort of makes sense… up to a point. But let’s not ignore the bit that happened before the credit crunch. The bit when lots of people signed forms that said ‘Give me a loan’.

The first step towards being unable to pay your debts is taking on those debts in the first place. Struggling debtors are victims of the earlier credit glut, of their own misjudgement, or of simple bad luck. The ‘crunch’ is merely the mechanism by which common sense has returned to the credit market.

It does astound me how quickly the credit crunch bogeyman has become a handy, off-the-peg blame shield. If a business has to issue a profit warning, then it happened “because of the credit crunch”.

Never mind that other factors may be at work — bad management… a flawed business model… failure to keep up with a changing market. Or plain bad luck.

But management know that sort of thing doesn’t go down well with shareholders. So, to get themselves out of a jam, they simply invoke The Double C.

Of course, there are genuine victims of the crunch. These include businesses who’ve set up potentially profitable deals, but who can’t get funding because lenders are twitchy.

Ultimately we’ll all be victims of the crunch. Because good deals won’t get done. Because productivity will be lost.

But that doesn’t mean the slowdown in the economy can simply be attributed to one handy scapegoat. It doesn’t work like that. Our troubles go much, much deeper than the credit crunch.

Britain’s economy has real structural problems. The tax burden has grown over the last ten years. Much of that money has been spent on increasing the size of the public sector.

Many new public sector jobs produce very little in the way of actual output — they involve men and women writing reports to ensure this or that public service meet this or that government target.

No doubt someone else is employed at our expense to ensure the people writing these reports hit their required targets.

Public money is being squandered on ornamental jobs. It’s no different from all those middle class debtors who ran up huge credit card bills buying shoes and clothes and plasma screen TVs. And then putting all the blame on American bankers when they can’t pay the bills.

It’s all part of the same cry-baby credit crunch culture.

We need the private sector to create real wealth to pay for the public sector. If the two get out of balance, the sums don’t add up. Not enough tax comes in to fund the public wage bill. This is a precarious way to run an economy.

Now the house of cards is teetering, and our leaders are invoking The Double C as an excuse.

In desperation, the Government is now scrabbling around trying to raise cash wherever it can. It cut the 10p rate, but that backfired. A similar U-turn is on the cards over proposals to tax corporate profits made outside the UK.

Face it, fellas. The game’s up.

But where there’s crisis, there is also opportunity. Below, Garry White and Manraaj Singh take a look at two different ways investors can actually benefit from the havoc wreaked by the crunch…

Say Hello to The Daily Reckoning

From today, Fleet Street Daily will be giving you more!

As well as everything you’ve come to expect from us — the latest UK economy and business news… the best ways to invest in commodities… Manraaj — we’ll now also bring you the daily thoughts of my American colleague Bill Bonner.

Since 1999, Bill has been entertaining readers each day with his Daily Reckoning essays. Taking in ancient history, financial hubris and the follies of money men and policy makers alike, The Daily Reckoning has proved immensely popular.

And now, we have it too!

So, without further ado, here is today’s Daily Reckoning.

Invest with the world’s greatest hedge fund manager One man who won’t be seeking debt advice any time soon is John Paulson. Because while many investors took a beating last year, hedge-fund boss Paulson made £3.7 billion.

Now Paulson has spied a great opportunity in the Gulf. And watching his every move is our very own Manraaj Singh of Profit Hunter!

“You’ve got a region that’s mega wealthy, and an investor who clearly knows his onions,” says Manraaj. “Now these two have come together… there’s only one word to describe the opportunity opening up as we speak: Pow!”

Find out what Manraaj believes is the best way to follow Paulson as he aims to clean up in Arabia.

Coaly Smoke, Batman!

Coal. Isn’t it dirty? Doesn’t it create a lot of nasty, carbony gas?

Perhaps. But those who forecast the demise of coal have been shown to be premature. In fact, as investors, we should take a serious look at the opportunity coal presents us right now. Because here is another great way to turn the credit crunch on its head — and make some money from it!

Right around the world, governments are facing the same problem. They need more electricity. And they need it now — they want to go nuclear, but that takes too long.

“It takes 12-15 years to build a nuclear reactor,” says Garry White, our man with the commodities plan. “The world can’t wait that long. Why do you think our government wants to keep Kingsnorth going? Because we still need coal-fired power stations”.

Governments the world over are turning to coal to fill the energy gap. As a result, coal prices have soared. But, as Garry explains in today’s Smart Commodities, there’s no reason to expect this bull run is over.

And Garry’s found an interesting way for you to invest in this boom. You see, there are a lot of great coal mining deals kicking around right now. But, unlike those middle class debtors mentioned above, these deals have become genuine victims of the credit crunch.

Miners can’t get funding for exploration, even though they could be sitting on an extremely profitable resource. That’s where the company Garry’s found comes in…

Garry’s investment offers these miners two things. The first is funding. The second is a wealth of mining expertise.

“This is a truly unique investment,” says an enthusiastic Garry. “It offers investors a great way to get early-stage mining exposure.”

Early-stage exposure is the way to make the biggest returns from mining. But that’s not all this investment offers…

“You also get a dividend stream — something virtually unheard of from explorers,” adds Garry.

Take it from me — Garry is very excited by this one. He’s just spent ten minutes telling me (and, it turned out, the entire office) about it. He was on his feet for most of that — a sure sign that our man has the bit between his teeth.

Find out how you can get exposure to one of the hottest commodities on earth with Garry’s unique investment.

Until tomorrow

Ben TraynorSource: Britain’s Crybaby Credit Crunch Culture

But a far simpler truth often gets lost in all the noise. We’re feeling poorer because we are poorer. And we’re poorer because the things we import — like food and oil — are getting much more expensive.

Oil sets a new record high practically every week these days. Last Friday it breached the $126 mark. It’s since fallen slightly, but Garry White explains below why those taking profits now are making a mistake.

High oil prices are damaging the British economy. They push up the price not just of petrol, but of heating, lighting, and any goods that have to be moved from one place to another. That’s pretty much everything you buy.

This inflationary effect is something that Bank of England Governor Mervyn King knows only too well.

Big Merv is stocking up on writing paper and feather quills. Why? Because Consumer Price Index (CPI) inflation for April was at 3.0%. A whisker higher and Merv will have to explain himself in an open letter to the Chancellor, just like he had to in March last year.

And there are signs that inflation will rise. Factory-gate inflation was 7.5% last month. This is yet to feed into the main, targeted figure.

The latest data are a blow to all those hoping for an interest rate cut in June. But it’s doubtful a cut would do much good anyway. It might temporarily mask Britain’s fundamental problem. But it won’t solve it. In fact, cutting rates will weaken the pound, making imports even more expensive.

That problem is that we must now pay more for our basic necessities. Oil is one of those. In real terms, we’re worse off. On the other side of the trade, oil-rich countries are better-off. Britain’s wealth is flowing abroad.

So what can you do about it? The answer is to divert some of that wealth back into your own pocket. There are several ways you can do this. We’ll be taking a look at some in the days and weeks ahead.

For today, I recommend you take a look at Garry’s Smart Commodities piece. With oil more valuable than at any time in history, Garry believes oil-exposure is a must for all investors.

High oil prices will continue to hit you in the pocket. But you can use oil profits to soften the blow.

NOT made in China

For years the west has spent a fortune on manufactured goods that are ‘Made in China’. But where do the Chinese turn when they themselves crave cheap manufactures?

Emerging markets expert Manraaj Singh believes he’s found the answer.

“Earlier in the decade was a great time to put your money in China,” he says. “We in the west couldn’t get enough of Chinese products.”

Thanks largely to this export market, China boomed. And China is still booming.

“China’s still a great place to put your money,” says Manraaj. “But I’ve found somewhere even better. A country where even Chinese manufacturers are setting up shop — because it’s just so cheap!”

Is this country about to take-off China-style? Manraaj reckons so — in fact, he says this investment is even better than China!

“Taking oil profits now is a huge mistake!”

“These oil traders must think China’s growth story is over!” says commodities guru Garry White.

The price of oil dipped by $2 yesterday, to around $123 a barrel. This was in part caused by China importing less oil last month than it had in April 2007.

But a quick look at the facts, says Garry, tells us why this is a temporary blip.

“A slight fall after a massive jump is not the same as a new trend,” he says. “Taking oil profits now is a huge mistake!”

Rising oil prices push up everything from heating bills to grocery prices. So what better way to hedge against this inflation than by investing in the stuff itself?

Find out which investment Garry believes is the very best way to play oil right now…

Until tomorrow,

Ben Traynor