I’m doing a comedy writing class at the moment, and one of the pieces we’ve studied is this bit of standup about austerity by Frankie Boyle.

“It was the fucking banks! They showed you them doing it on the fucking news!”

It’s a great bit, and I’m reminded of it every time there’s an article about a retailer or other household name facing doom. The articles blame falling sales, bad weather, rising rents. But: it’s the fucking debt!

Did Toys R Us go under because of Amazon?

It was the fucking debt!

Is Gibson in trouble because nobody wants to buy guitars any more?

It’s the fucking debt!

Is New Look suffering from low-margin competition?

It’s the fucking debt!

Debts are usually (but not always) the result of a buyout, which is then used to load massive debts onto the company. For example, Toys R Us went under because it had five billion dollars of debt, most of which was due to its six billion dollar buyout in 2005. As Bloomberg put it:

It’s been more than 12 years since a group of private equity firms loaded up Toys “R” Us Inc. with debt to take it private. The retailer’s balance sheet would never recover, and while that may not have been obvious then, the writing was always on the wall.

Gibson’s woes are because it bought other firms. It ran up debts of $560 million trying to become a lifestyle company instead of focusing on making really nice guitars.

New Look’s in trouble because it’s carrying £1.2 billion in debt.

The various problems affecting companies are real, but it’s the debt that’s killing them. If they didn’t have to service the massive repayments they would be better placed to deal with the slings and arrows of business.

This kind of corporate debt is like taking out a massive remortgage: if it’s a stretch in good times and something happens, such as a change in your circumstances or an interest rate rise, you’re fucked. Exactly the same thing is happening to big-name firms.

It’s not the weather, or Amazon, or the end of guitar music. It’s the fucking debt.