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« Bank Bailout News: CNBC Video: Maria Discusses The Banking Crisis With Nouriel Roubini and Howard Lutnick. Broadcast Feb. 27 | Main | Citigroup Bailout Details: Treasury Secretary Geithner Offers The Shaft To The Sheeple »
Friday
Feb272009

How Soon Until We Have To Bailout General Electric: CNBC Video: David Faber On The Dividend Cut At GE Plus Weekend News on AIG. Broadcast Feb. 27

The global collapse is not playing well for General Electric And CEO Jeff Immelt.  GE has been exposed.  When the music stopped last Spring, the investment community became acutely aware that GE is nothing more than a bank waiting to fail.  Vendor-financing wrapped in some pretty manufacturing ribbons.

Option Armageddon has the most recent calculations on bank leverage statistics industry wide.  GE is the run-away winner of this ugly pageant.  What else do you call 140:1 leverage.  So it's not surprising today that GE announced a massive 70% cut in their divident payout on common shares from .31 cents down to a dime per quarter.  This is just the start.  A GE's charge-offs grow as we will eventually see the dividend eliminated.  In fact, it's an outrage that they are paying a dividend given their worsening capital structure.  Dividends are expensive as GE will save $9 billion annually with today's cut, which means they will still spend approximately $4 billion to make the reduced payout for the rest of '09. 

As night follows day, GE will need a taxpayer bailout before this time next year.  Stop with your grandstanding Immelt and muster the courage to tell your shareholders the truth.  Even David Faber, one of your employees, has the sack to acknowledge the inevitable.  Faber dissects the pain in this 3 minute video from Maria's post-market show.  AIG and a possible weekend Treasury save are discussed in the final 45 seconds.

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