Wednesday, March 4, 2009

ALERT: GE On a Stretcher

GE debt is trading like it is not going to make it.

It costs $7 million to insure $10 million in GE Capital debt for ten years. GE Capital credit default swaps require a $2 million up front payment, followed by $500,000 a year for ten years.

Got that? If you own a ten year GE debt instrument, over ten years it will cost you $7 million in insurance, through credit debt swaps, to guarantee you will get your $10 million back.

There's a chance GE is in the emergency room this weekend, with Geithner, Bernanke performing a Fed money infusion.

GE, of course, says no.

In a letter to investors, GE spokesman Trevor Schauenberg said any claims that the company needs to raise new capital in the near term is "pure speculation, is inaccurate and is not based on any input from our company."

"We have stressed our financial service portfolios and do not see the need to raise additional capital," Schauenberg said. "We plan to present results of these tests at our upcoming earnings webcast [n md-April] to further demonstrate the quality of our portfolio and ability to absorb potential losses in this difficult environment."

But, there is a credibility issue.

After claiming to have ample liquidity this past fall, GE announced Oct. 1 it would sell $12 billion in a secondary stock offering and $3 billion in preferred shares to Warren Buffett's Berkshire Hathaway Inc.

Then, after vowing for months it would not slash its dividend, the board cut it to 10 cents from 31 cents.

Nothing reflects the credibility problem more than the cost to insure GE debt.

It's going to be a wild two days for GE, before the markets close for the week.


  1. couldn't happen to a nastier, more deserving MERCHANT OF DEATH! Oh, I know, their commercial sez; "G.E., we bring good things to LIFE" (like weapons of death and munitions and things that kill people, predominantly, people who are not white, anglo-saxon, protestants)

    I'm elated these nasty bastards are on the ropes. Go down the shitter like a good turd, Genital Electrode!

  2. Was at the hardware store. Saw a GE floodlight for the same price as the "off" brand I was buying. Both made in China. Both have "Spanish" on the package. Would have paid significantly more for a product made in the US and printed in English, but why bother when when they are both the same?

  3. I had a customer in my store today whose husband is in management at GE.

    She said it's a big secret - but GE is terminal. They don't know what they are going to do. His pension is being renegotiated, and the company is on life support.

    Who knows? -- she certainly thinks so.

  4. So Thomas Edison's hot dog stand is going broke? Probably because of war mongering. I wonder how Nikola Tesla's Westinghouse is doing?

  5. GENERAL ELECTRIC --(donated 1.1 million to GW Bush for his 2000 election campaign)

    Television Holdings:
    * NBC: includes 13 stations, 28% of US households.
    * NBC Network News: The Today Show, Nightly News with Tom Brokaw, Meet the Press, Dateline NBC, NBC News at Sunrise.
    * CNBC business television; MSNBC 24-hour cable and Internet news service (co-owned by NBC and Microsoft); Court TV (co-owned with Time Warner), Bravo (50%), A&E (25%), History Channel (25%).
    The "MS" in MSNBC
    means microsoft
    The same Microsoft that donated 2.4 million to get GW bush elected.

    Other Holdings:
    * GE Consumer Electronics.
    * GE Power Systems: produces turbines for nuclear reactors and power plants.
    * GE Plastics: produces military hardware and nuclear power equipment.
    * GE Transportation Systems: runs diesel and electric trains

  6. Is it any wonder why GE is on the stretcher? I think there was some irresponsible spending there. If what the GE spokesman Trevor Schauenberg said that any news on their need to raise more capital is just speculation, then why did they decrease the dividends?

    Evelyn Guzman (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)