You don’t have to listen too closely to hear the sound of factory gates slamming for the last time, and shutters rolling down over retail outlets. Consumer electrical chain Comet is just one amongst the many household names facing up to the consequences of the accelerating global contraction.
Closing down sales are in progress across the country and thousands upon thousands of jobs are disappearing. Close to 2,000 of its former employees will be on the streets by the end of November.
Workers for iconic brands in every sector are under attack. Alongside Comet comes Hovis. Premier foods, owner of Hovis which it acquired in 2007 with the purchase of Rank Hovis McDougall is struggling with £1 billion of debt. The debt burden was much bigger until it was forced to sell Branston Pickle to the Japanese Mizkan group and Hartley’s jam to the marvellously-named US-based Hain Celestial.
This summer’s extreme weather around the world devastated crops, driving wheat prices towards the stars, and pushing the cost of Premier’s bread beyond the reach of the Co-op which then cancelled its contract.
These two are just the tip of the rapidly melting iceberg.
One third of all
UK companies are running at a loss.
There’s a lot of talk about the estimated 150,000 “zombie” companies,
operating in the twilight zone, making just enough revenue to pay the interest
on their debts but unable to make any inroads into the amount they owe.
Collectively they employ more than one million people. There are tens of thousands of “zombie households”, where people are repaying just the interest on their mortgages with no hope of ever owning their home outright. Many are using pay-day loans to buy food.
That companies and households can continue to do this for the moment is dependent on a mixture of historically low interest rates and various forms of “forbearance” by lenders: the postponement of decisions to write them off as bad debtors.
The delay is understandable, not as the generosity of human kindness, but because the lenders’ own existence is dependent on maintaining the fiction that the economy will turn up, growth and profits will return and everything in the garden will be rosy.
It won’t. Just look at
Greece. Two tranches of the agreed
bailout funds for which the Greek people are paying so dearly – youth
unemployment has now risen to 58% - have yet to be handed over. As the global
slump deepens Greece’s
debt keeps mounting and European governments which have agreed to provide loans
to fund the bailout can’t agree on writing off their contributions.
Why? Because if they do, they in turn have to admit that they have become zombie countries.
As the global economy deteriorates the capitalist hawks are coming out into the open, calling for “creative destruction” to be allowed free rein, putting the so-called zombies out of business.
Some are echoing the words of
US treasury secretary Andrew Mellon
in the 1930s’ depression: “Liquidate labour, liquidate stocks, liquidate
farmers, liquidate real estate… it will purge the rottenness out of the system.
High costs of living and high living will come down. People will work harder,
live a more moral life. Values will be adjusted, and enterprising people will
pick up from less competent people.”
In a sign of what is to come, credit rating agency Moody’s cut
top triple A status on Monday because of the country’s “gradual, sustained loss
of competitiveness and the longstanding rigidities of its labour, goods and
The brutal truth is that the entire global system of transnational corporations and financial institutions is more dead than alive. And with governments across the world in their service, their main aim is to ensure that their crisis is being visited upon the 99%.