The General Electric superfraud
- Thread starter nitro
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I'm not an expert on GE's financials but I do know that they "create" earnings through shifting money from their financial division to the manufacturing divisions through the commercial paper markets. If the Government hadn't stepped in and guaranteed the commercial paper markets last year GE may have collapsed. If there's ever a company that uses Accounting Trickery to "manufacture" earnings it's GE.
You can fool some of the people some of the time, but hopefully they will not be fooled too much longer so that my GE put makes me some money.
A shit load of US companies would have collapsed if the FED did not become the buyer of CP of last result.
We were real close to a full collapse of the US economy and a total lockup in commerce.
What saved our collective asses is the CP backstop. You could search for a post I did way in the past where I stated that they need to start backstopping CP.
I don't have a problem with saving companies, but i think if you get taken over or helped by the government then you should be broken up. Separate them into mini companies and bring them to the ipo market, at least people will learn they cant expect free aid or help for nothing. I mean come on Goldman Sachs, is a hedge fund with a government guarantee.
Completely agree. It's not just GE that relies heavily on the CP markets to conduct their operations. You could probably say the entire S&P needs it to function. It's very troubling however, that the use of the CP markets allows financial giants to manufacture earnings and especially troubling that a company such as GE can move numbers around by entering and exiting the CP markets to mark-up earnings in other divisions of their business. Take away the financial arm of GE away and you'll find a completely different type of company.
What would the Jack Welch era of GE look like without GE Capital? Kudos to him for creating it I suppose.
What would the Jack Welch era of GE look like without GE Capital? Kudos to him for creating it I suppose.