IF GE goes bankrupt this year, how will it effect the economy/markets

Discussion in 'Economics' started by KINGOFSHORTS, Mar 4, 2009.

  1. GE is like the Coke of industry in the US. Lets say the go under, equity wiped out company gone, 300K jobs gone etc..

    How do you think this will effect individual investors, I would venture they would think if GE could go anything is possible and pull out of 401Ks etc.. I could see the dow/S&P on such an event.

    So what do you think? We sure live in interesting times.
  2. Not going to happen. They would get gov't bailout. Common would be diluted under most likley scenario.
  3. IF common got diluted, It would still impact the market.

    I would imagine folks would pretty much pull out completely like in 1929 at that point. The old "Shit if it happens to GE whats next" and panic will set in.
  4. 1) GE would and should be split up into it's different operating divisions while the finance subsidiary would and should be buried in a nuclear waste dump in Nevada.
    2) Conglomerates are supposed to be split up during bear markets. They can then be re-assembled during the next expected bull market.
    3) A break up should be a "bullish" event. We'll see. :cool:
  5. lp60068


    From Reuters -
    March 4 (Reuters) - Concerns about the health of General Electric Co's (GE.N) huge finance arm have weighed on GE shares this week, driving down the stock to its lowest level since 1991.

    Analysts and investors have wrestled with the question of whether the finance arm -- which a few years ago represented one-half of GE's profits -- is adequately prepared for a surge in defaults by increasingly unemployed consumers and tottering mid-sized businesses. [ID:nN03487826]

    Below are a few facts about GE Capital:

    * Services include commercial loans, operating leases, fleet management, financial programs, home loans, insurance, credit cards, personal loans.

    * Segments include Aviation Financial Services, Commercial Finance, Energy Financial Services and GE Money.

    * GE Capital Finance reported $573 billion in assets at the end of the fourth quarter.

    * In January, the unit increased estimates of credit losses to $10 billion from $9 billion. It reported reserves of $5.3 billion.

    * Reported earnings of $8.6 billion in 2008, estimated 2009 earnings of about $5 billion.

    * GE has said it plans to reposition GE Capital as a well-funded, smaller finance company that would be positioned to grow in 2010 and beyond.

    * After a first-quarter $9.5 billion capital contribution, GE will have injected $15 billion of capital into the unit over the last 6 months.

    * Company said if GE Capital requires additional equity, it has a number of options without seeking external capital.

    * GE said Wednesday GE Capital's ratio of tangible common equity to assets is 5.3%, at the high end of the range of large commercial banks.

    * GE Chief Executive Jeffrey Immelt says company "taking a close look at nonstrategic assets" such as equipment services, most of GE's consumer mortgage books.


    GE is already looking to get smaller - "look at nonstrategic assets" and "reposition GE Capital as a well-funded, smaller finance company"

    I agree that if they go BK they will split it up. The parts will provide some nice opportunities.
  6. GE will refinance its debt to almost 0% interest, thanks of course, to the Federal Reserve.