Liquidation in GE..Can You Believe It?

Things are so bad at General Electric that on a day that the market is up 1.9%, GE is down 10% on huge volume. All type of rumors are out there:

1-GE Capital is in big big trouble and in need of a big bailout? The CDS Spreads have widened considerably the last few days on GE Capital...I wrote about this a few days ago.

2-Jeff Immelt is being thrown out?....wouldn't the stock rally on this? It should, but who would be brought in to run the shop? ...I wrote about this as well a few days ago.

3-Massive Sovereign Wealth Fund liquidations?...Pimco's Bill Gross on CNBC reported that he is hearing this. I doubt this is happening.

4-Liquidity / Leverage Issues? GE has an a astonishing leverage ratio depending on who you ask from anywhere from 30/50-1. Out of control. Of course the company refutes this.
They are huge in the commercial paper funding market. Huge in the overnight Repo Market, as well as big players in floating rate securities/asset backed loans. Can we envision a Bear Stearns like run in GE Capital? Anything is possible.

5-Rumors of a very imminent bond ratings downgrade? GE doesn't deserve Triple A rating. Its almost a given that this rating gets chopped down.

6-Delayed reaction to dividend cut?

All of these are valid and somewhat true statements. The market is betting that GE in its current form, just like Wells, BOFA,Citigroup, and AIG are not viable companies anymore. Maybe a break up of the company is in order? But what I think the problem ultimately is the leverage at GE Capital. How in the world these guys didn't deleverage when the whole planet is going in that direction is beyond me. But then again..Does anything surprise us anymore? Is this stock to big to fail like AIG? Or to scary to fail like JP Morgan? Somewhere in between? I say let them fail. How much more tax payer money is going to be paid out to subsidize poor and out of control management?

I was watching the "The Stock Tip" episode from Seinfeld a few weeks ago. Maybe Kramer was right when he said "Its all controlled with Junk Bonds"...just change "Junk' to "toxic".

Anyway Energy and Dry Bulk Shippers are very strong today, the banks are really horrible investments currently...The GE news is not helping that sector.

Just waiting around...as its NHL Draft Deadline Day.

Peace!