General Electric

Turns out march 2013 was a good time to read a book about how GE was secretly a bank that failed.

• Jack was a womanizer I guess I shouldnt be suprised
• Recap of the disaster
  • In the 90s, GE used its AAA credit rating to grow a ginormous financial divison that accounted for 50% of its profits. Some parts were related (airplane, power leasing). Some parts were not. (leveraged buyouts, real estate, insurance). It did not have backup lines of credit but used short term loans that could (and did) dry up.
  • 2001 made people realize GE had huge liabilities because it insured both planes and the wtc. (I was familiar with this part)
  • 2007-8 GE capital did not divest from real estate (despite some internal advice to do so). It went down hard, maybe almost bankrupt. It’s short term financing went away and credit rating went down. It snuck into bailouts by the skin of its teeth by getting declared structurally important.
  • 2018, same time Jeff got ousted at CEO, it got a double whammy. A small LTC insurance business it failed to spinoff posted a 20 BILLION loss because its models sucked. The power business crapped itself (part failed merger, part terrible forcast, par bad management).
  • GE is now basically a jet engine business and a seperate power business .
• Though the book is ambivalent about whether Jeff or Jack set up GE to fail it leans more heavily to jeff. But not sure that’s right. Jeff did try and unwind GE capital but kinda of failed to miss the most important parts (real estate and the LTC). It’s not clear what Jack built was ever sustainable. Success has a thousand fathers and failure is an orphan. Jeff is that orphhan.