Comments on: GE Capital datapoint of the day http://blogs.reuters.com/felix-salmon/2009/06/30/ge-capital-datapoint-of-the-day/ A slice of lime in the soda Wed, 19 Jun 2013 21:12:19 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Max http://blogs.reuters.com/felix-salmon/2009/06/30/ge-capital-datapoint-of-the-day/comment-page-1/#comment-3490 Max Wed, 01 Jul 2009 15:49:23 +0000 http://blogs.reuters.com/felix-salmon/2009/06/30/ge-capital-datapoint-of-the-day/#comment-3490 GE got a big chunk of its funding from money market funds. Think Lehman Brothers times 1000. Too big to fail, indeed. GE got a big chunk of its funding from money market funds. Think Lehman Brothers times 1000. Too big to fail, indeed.

]]> By: KenG http://blogs.reuters.com/felix-salmon/2009/06/30/ge-capital-datapoint-of-the-day/comment-page-1/#comment-3463 KenG Tue, 30 Jun 2009 21:56:52 +0000 http://blogs.reuters.com/felix-salmon/2009/06/30/ge-capital-datapoint-of-the-day/#comment-3463 GE could raise a lot of capital for GE Capital by spinning it off in an IPO. they wouldn't like to do that, because it would result in a huge loss, but better GE has a paper loss than the government has to print $300 billion to guarantee their loans. A lot of the debt problems of big banks and non-financial companies can be solved if the shareholders of those companies accept dilution. This is what has happened to Chrysler and GM, and should be extended outside the auto industry. The government only needs to facilitate the conversion, not add to the debt levels by backing up private debt. But that wouldn't be politically prudent, would it? and political prudence is what politicians care about, isn't it? GE could raise a lot of capital for GE Capital by spinning it off in an IPO. they wouldn’t like to do that, because it would result in a huge loss, but better GE has a paper loss than the government has to print $300 billion to guarantee their loans.

A lot of the debt problems of big banks and non-financial companies can be solved if the shareholders of those companies accept dilution. This is what has happened to Chrysler and GM, and should be extended outside the auto industry. The government only needs to facilitate the conversion, not add to the debt levels by backing up private debt.

But that wouldn’t be politically prudent, would it? and political prudence is what politicians care about, isn’t it?

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