• November 2008
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Staring Into the Abyss

Consider this. Woolworths made 90% (widely reported figure) of its annual profit over Christmas. Four weeks prior to Christmas a saviour couldn’t be found for the company. Woolies, founded in 1909, had survived the Great Depression, two world wars and several recessions, but even with a price tag of just £1 for its 820 stores, there was no way back from the Crash of 2008.

This I’m afraid is only the beginning. After the (much reduced) Christmas rush, creditors and banks will be hovering over 323 of Britain’s best known retail names. Insolvency experts Begbies Traynor have compiled a list which indicates that this number have more than a 70% risk of failing before the end of January.

Of course this is not simply the result of a few months bad sales figures. Nor is it a result of media doom and gloom on the subject. The seeds of this crisis germinated about two years ago. No-one heeded the warning signs.

A 2.5% cut in VAT and tinkering with National Insurance in this situation is the equivalent of buying a new suit for a critically ill hospital patient or putting lipstick on a corpse.

6 Responses

  1. People will have to stay home and talk to their families if they haven’t already been evicted, can afford to heat their homes and can buy food. Joy.

  2. Much wringing of hands at the moment,but I dont buy it.
    This is the way the capitalist system works,the owners of the big retail companies have made fortunes over the last few years and profits have been salted away.
    They knew the recession was coming and now they have the chance to cut and run.
    what an excuse globalisation isnae working eh
    As usual the people left to carry the can are are the working class who tried to better themselves after being told by Tories for years that they had to get on the housing market,banks threw money at them and now their jobs are going and their houses whipped away by the very people who encouraged them.
    Families dont have the option of calling in receivers to free them from debt.
    I am one of the fortunate ones who is retired and dont have to worry about losing my job ,well not unless my wife sacks me

  3. Hear hear Campbell.

    Aye, Rab, a real shame indeed about Woolies. Especially at a local level . And this news has an impact for me. Wanna buy some new lamps???

    But, Woolies. institution and all that, has failed not because of the credit crunch, though it would be foolish not to suggest that it didn’t help, but because people just don’t shop there anymore.

    Not in numbers anyway. I think the phrase is ‘lame duck retailer’.

    £385m of debt is a staggering amount of money.

    Almost as big as Robbo’s offshore account.

  4. As Stu Who? said recently, where have the trillions gone? they’ve no’ been lost down the back of the couch! someone’s got them!

    Yup. Greedy bankers and speculators have to take their share of the blame.

    I think though Campbell you simplify the situation somewhat.

  5. You missed a zero and a point. The zero’s after the 5 and the point’s between the 8 and 5. Oh, and the m should read p. As for the trillons, that’s what i keep asking. The mantra is ‘Banks are having to borrow at high rates’. Er, who from?? If you look at the world economy like Rab’s place, double entry booking is a zero sum, so, to adapt Stu Who’s question, ‘where’s the credit balance?’

  6. Robbo, isn’t it the case that much of the “money” has in fact only been on paper?

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