If GE is spooked, what are the implications for less solid companies?

by Erin McCune on October 8, 2008

in Current Events, Finance, Investment Strategy, Treasury & Cash Management

Over at Information Arbitrage, Roger Ehrenberg has the following reflection on the predicament facing many blue chip companies in the midst of the financial crisis:

Does GE really perceive themselves to be AAA if they are motivated to raise money on the terms proposed by Mr. Buffett? Something is grossly wrong with this picture. Either GE is stupid (doubtful), they think having Mr. Buffett associated with GE will be helpful for market perception (sure, but how much is this really worth?), or they are scared out of their minds by the uncertainty of today and tomorrow's financial landscape (ding ding ding ding!). This is one of the most disturbing deals I've seen announced in a long time, because it shows just how scared one of the best and most diversified global corporations feels right now. And they are feeling pretty, pretty bad.

And that was last week… it's only worse now. And if the financially savvy companies like GE are scared and uncertain, the rest of corporate American is at far greater risk. Meanwhile, the Fed is taking increasingly ambitious, unprecedented steps (loaning directly to corporates) yet we're on increasingly shaky ground.

Ps. If you aren't already subscribing to Roger's blog Information Arbitrage, do so now. I value his level headed, Wall Street insider perspective on the current crisis (and he's got good things to say in non-crisis times, too.)

Leave a Reply

Previous post:

Next post:

Clicky Web Analytics