GE tax affairs put Immelt in political spotlight

http://www.ft.com/cms/s/0/4f1ab962-5ca5-11e0-ab7c-00144feab49a.html#axzz1IKeWT2wy

Immelt scolded CNBC staff for being anti-Obama

I guess that explains Steve Liesman's pandering to US government fiscal and monetary policies. By the way, General Electric owned NBC, parent of CNBC.



http://www.youtube.com/watch?v=dq428cqNZbM&feature=player_embedded

GE and the US government are broke

General Electric and the US government are bankrupt, according to Porter Stansberry.

We've been telling our friends for months that sooner or later the U.S. Treasury secretary would come out and publicly say something ridiculous in defense of the U.S. dollar – much like a banana republic's finance minister on the eve of devaluation. Today, we got our first actual taste... On Sunday, Geithner said the U.S. "will never" lose its triple-A credit rating. Never is a very long time. And if you believe the representative of a bankrupt government, there's a bridge in Brooklyn you should look into buying...

Watching Geithner lie through his teeth reminded us of July 2008, when Fed Chairman Ben Bernanke assured us Fannie Mae and Freddie Mac were "adequately capitalized" and "in no danger of failing." One month earlier, I'd written an issue of my newsletter (Porter Stansberry's Investment Advisory) titled "Freddie Mac and Fannie Mae Are Going to Zero." I was watching Bernanke's testimony on TV in a hotel room on the 30th floor of the Four Seasons Hotel in Las Vegas. I could literally see more than $100 million worth of bankrupt real estate from my window – more than enough to bankrupt both Fannie and Freddie. As an investor, I had a simple choice to make: I could believe a government bureaucrat, who is in charge of running a paper money system backed by nothing by confidence... or I could believe audited financial statements and my own two eyes. I chose the latter.

More recently, I've been warning investors both our government and our biggest conglomerate (GE) are broke. On Friday, Moody's seemed to agree with me, warning the current deficits are unsustainable. Geithner and Bernanke will undoubtedly beg to differ. However, anyone who has ever paid interest on any debt before is welcome to simply look at the numbers and ask themselves a few basic questions... How can so few taxpayers be expected to repay more than $20 trillion worth of debt? How can a democracy where most people don't actually pay taxes ever be expected to run a balanced budget? Why would anyone expect America to repay its debts when millions of our consumers and a large number of our biggest companies are going bankrupt?

Big problems like these are easy for investors to ignore. And many investors will ignore these problems – for a long, long time. I can't tell you when, exactly, the scary numbers behind GE and our federal government will cause investors to take action. But I can tell you when that time comes you won't want to be holding dollars or GE bonds. And I can tell you with 100% certainty both GE and the federal government are going bankrupt within the next five years.

GE's balance sheet

Look at General Electric's debt--$518 billion. That should scare any bean counter. They've lost their AAA credit rating, yet the government gives them cheap loans, keeping their borrowing cost at 3.3%. Even at that low borrowing rate, they have trouble covering their expenses. For reference, GM's debt was $82 billion at one point. I'm not even sure how GE Capital accounts for their bad loans and toxic assets, since the government allowed for mark-to-fantasy accounting instead of GAAP mark-to-market accounting standards.

http://www.reuters.com/finance/stocks/incomeStatement?stmtType=BAL&perType=INT&symbol=GE.N

No wonder they are selling assets like NBC Universal. Gotta keep the lights on.

NBC for sale?

General Electric, parent of NBC Universal (with properties MSNBC, CNBC, etc.), is apparently looking to sell its network media asset. A potential suitor is Comcast, with GE CEO Jeffrey Immelt negotiating with Vivendi on a fair valuation and exit strategy.

Perhaps GE Financial Network--er...CNBC will now have a more neutral, balanced view on markets.

http://www.benzinga.com/markets/company-news/46197/sale-of-nbc-universal-to-comcast-close-after-ge-and-vivendi-talks-ge-cmcs

The larger question is how GE will remain solvent as it is forced to unload valuable assets. NBC is not the problem--the toxic mortgage loan portfolios on its book are.

Jack Welch

The former General Electric CEO in a Bloomberg TV interview: "We are going to have increased taxes--and everyone will be taxed." He included companies, individuals, families.

Have a good July 4th weekend everyone.

Jack Welch

Jack Welch, former CEO of General Electric, knows a thing or two about business. This morning, he commented on the stimulus bill proposed before the Senate for passage:
1) the bill should include components to CREATE jobs, not SAVE jobs.
2) the bill should address resuscitate the banking industry which is on cardiac arrest
3) the proposed bill is addressing the wrong priorities. He made an interesting comparison of the cardiac patient needing blood to flow through his body; yet, the bill proposes purchasing the patient a pair of shoes and a suit.

I think that is an apt metaphor. I believe the current bill does not include enough investment in infrastructure, and too much pent up pork--which will clog the arteries of the patient.