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alstry (35.42)

This will be HUGE!!!!!!!!!!!!!!!!!!!!

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November 18, 2008 – Comments (14)

Nov. 18 (Bloomberg) -- GE Capital, the lending arm of General Electric Co., will cut $2 billion in costs next year as it pares jobs, forms regional units and marks assets such as overseas home mortgages for possible sale amid a global financial crisis.

The changes include a newly created chief operating officer post and take effect Jan. 1, the Fairfield, Connecticut-based company said today on its Web site. GE Capital will shed an unspecified number of its 75,000 jobs as the unit consolidates back offices and curbs lending in areas such as residential mortgages, Vice Chairman Michael Neal said in an interview.

“In a world where we think liquidity is an issue and is likely to remain an issue for a while, we’re de-emphasizing in general product lines that attract a lot of debt for the amount of earnings,” said Neal, who oversees GE Capital.

If you don't understand the implications of the above.....you soon will.

14 Comments – Post Your Own

#1) On November 18, 2008 at 10:45 PM, Option1307 (29.75) wrote:

Glad to see your optimism is back on track Alstry... What a week we've had, Citi cuts 65,000 jobs and now this from GE. We're all screwed!

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#2) On November 18, 2008 at 10:49 PM, Knobee (< 20) wrote:

I had to explain to my kids just how big the cuts at CITI were..

Carter Finley Stadium, Raleigh, NC -- With recent additions seats 57,500.  Now, they can imagine how bad a layoff this size is.

It hurts to put these things in "visible" terms.

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#3) On November 18, 2008 at 11:05 PM, jegr5347 (< 20) wrote:

Days of financial engineered earnings are over. Need to go back to selling light bulbs and washers.

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#4) On November 19, 2008 at 2:03 AM, DarkToast (43.99) wrote:

If they had stuck with lightbulbs and washers all along, think of how much more attractive their stock would be. Heck, even throw in the division that makes submarine engines.

GE Capital struck me as a strange chimera beast when I first heard about it years ago. It seemed to me then similar to Harley Davidson selling health insurance.

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#5) On November 19, 2008 at 3:57 AM, jester112358 (28.83) wrote:

Or as bad as Harley Davidson financing their own motorcycles sales-a major reason they are in so much trouble.  The old don't lend money to people who can't pay it back with future earnings syndrome applies to power plants and jet engines too as GE capital may be learning the hard way.

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#6) On November 19, 2008 at 4:48 AM, DemonDoug (73.55) wrote:

DarkToast: This is why I recommend Siemens (SI) to anyone who likes GM's infrastructure business.  In my company we use a lot of Siemens' products.

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#7) On November 19, 2008 at 7:18 AM, alstry (35.42) wrote:

It is not that I am optimistic or pessimistic....I simply convey the facts and draw reasonable conclusions from those facts.  Without a change in the facts, everything else is speculation.

The following has amazing implications:

“In a world where we think liquidity is an issue and is likely to remain an issue for a while, we’re de-emphasizing in general product lines that attract a lot of debt for the amount of earnings,” said Neal, who oversees GE Capital.

Think about how much of the current GE attracts a lot of debt for its earnings????  Then extrapolate that to the rest of our economy.

 

 

 

 

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#8) On November 19, 2008 at 8:32 AM, jesusfreakinco (28.92) wrote:

I guess Warren isn't so brilliant after all, eh?  He has lost his shirt on the GE and GS investments.  He was WAY too early - like years too early.  I guess this is part of his tax plan that he helped Obama draft - redistributing his own wealth.  How ironic...

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#9) On November 19, 2008 at 10:42 AM, XMFSinchiruna (27.47) wrote:

I'm right there with you Alstry... often presumed to be a pessimist as well though I am hardly one by nature. I see myself as a reporter, adding commentary all the while but essentially reporting facts that are, quite simply, the most troubling set of financial facts the world has ever seen. I agree with your assessment of the implications of a statement like that from the likes of GE... VERY telling.

jesusfreakinco:

You can bet Warren didn't volunteer his money for those investments... he was somehow manipulated into those positions because the administration needed to be able to point to a well respected figure who was unafraid to commit capital to this market. Like JPMorgan's actions a century earlier, they were no accident, and he will be handsomely rewarded for his trouble I'm sure.

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#10) On November 19, 2008 at 11:13 AM, LordZ wrote:

Buy ALSTRY

you will be missed...

 

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#11) On November 19, 2008 at 2:03 PM, dinodelaurentis (74.94) wrote:

if only i could "buy ALSTRY". LOL

i would hold him and feed him, pet him and love him...

and when he made me MAD, i would rub his fur the wrong way!

(does anybody remember bugs bunny cartoons?)

oh yeah, the post. more of the same and our futures continue to be revealed. brother, can you spare a dime?

how long will this last alstry? help a brother out and cipher this from available data...

i think it may last 7 to 10 years.

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#12) On November 19, 2008 at 8:19 PM, alstry (35.42) wrote:

It will last as long as governments and the bankers want it to last.....only time will tell.

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#13) On November 19, 2008 at 9:17 PM, Tastylunch (29.29) wrote:

Unfortunately I agree. Very troubling indeed.

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#14) On November 21, 2008 at 1:21 PM, jgseattle (32.43) wrote:

GE has $88B in debt.  About a month ago or so they wanted to issue a bunch, I know technical and accurate number, of commecial paper and could not place it on terms that were acceptable.  So what did they do?  They placed the commercial paper with the fed.  Not sure how they did this but that is what happened.

I find this very disturbing for two reasons -

1)  The fed must have overpaid since they were the only buyer.

2)  GE is about as stable a company as you are going to get, i hope, and by going to the fed bypassed the market eliminating the opportunity of investors to get a fair price for the risk they are taking.

If I am not mistaken GE has a large division that issues PMI, private mortgage insurance, for people how put down less than 20%.  I wonder when this is going to start being a major drag on earning?  Does anyone know their exposure to PMI risk?

 

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