GE - The Next GM?
When people remark that this is a normal recession or we will see a robust recovery later this year or early next year, all you need to do is look at companies like GE or GM or Citigroup. These iconic companies are being destroyed. Not the stocks. The companies. And, it is happening at a much faster pace than 1929. So, do you really need to know every detail of this environment to realize the happy talk about a fast recovery is utter bullshit? Let's be frank. Well, you be Frank and I'll be me. This year we have now passed into unprecedented territory. This is the worst decline in history without a rally of at least 50%. Worse than 1929, 1974 or any other collapse before or after. One could cite that as a higher probability for a rally but it's more accurately an ominous sign of how sick the global economy truly is.
Below is a twenty year chart of GE. The company looks as though it could possibly be the next Citigroup or Bank of America. What's GE's problem? The same as many other industrial companies. The same as GM. Something we have talked about often on here - the financialization of America's corporate management structure. People that really have no idea how to build anything or manage a corporation for sustainability are running these companies and society into the dirt. The entire American economy seemingly is focused on little more than finance in one form or another. Not because we were good at it. But because our position in the world encouraged and allowed it. You now see how good at it we really are. We were good at fooling ourselves. That's what we were good at. And, now these same people are going to manage us out of an environment they have created? Economic turnaround dead ahead? Dead maybe. Dead ahead? Hardly.
Jack Welch made a king's ransom running GE. Then he wrote books, consulted and hit the public speaking circuit making millions more. In retirement he was given a massive pension, access to the company jet and, as I recall an office in Manhattan and chauffeur. I'm going from memory so I might be wrong on a few of the details. But, the spirit of the post is more important than specifics.
I'm not picking on Jack Welch. I am using this example to make a broader point as we have in other similar posts. The world's problems were not his doing. And, he may have been a very good CEO in many regards. But, how many people drank his Kool-Aid and the spirits of other "experts"? Was it really Kool-Aid or was it sour milk? The chart below is an accurate representation of Welch's diversification into finance at GE. Maybe the most accurate. Now GE has become an entity that is likely to struggle for its very existence before this cycle is over. Financialization - a case study. It should be a required course for every business school in America.
Are our fearless leaders and politicians learning anything from this escapade? Not from anything I see. They seem to be a little slow on the uptake. But, I am highly confident the American people have learned a lot. They have learned never to trust again. And, that is exactly what they needed to learn to chart the course for our future. And, for the leaders we will choose to guide us into the future. It surely won't be those who believe in philosophies of today's politicians and business leaders.
Below is a twenty year chart of GE. The company looks as though it could possibly be the next Citigroup or Bank of America. What's GE's problem? The same as many other industrial companies. The same as GM. Something we have talked about often on here - the financialization of America's corporate management structure. People that really have no idea how to build anything or manage a corporation for sustainability are running these companies and society into the dirt. The entire American economy seemingly is focused on little more than finance in one form or another. Not because we were good at it. But because our position in the world encouraged and allowed it. You now see how good at it we really are. We were good at fooling ourselves. That's what we were good at. And, now these same people are going to manage us out of an environment they have created? Economic turnaround dead ahead? Dead maybe. Dead ahead? Hardly.
Jack Welch made a king's ransom running GE. Then he wrote books, consulted and hit the public speaking circuit making millions more. In retirement he was given a massive pension, access to the company jet and, as I recall an office in Manhattan and chauffeur. I'm going from memory so I might be wrong on a few of the details. But, the spirit of the post is more important than specifics.
I'm not picking on Jack Welch. I am using this example to make a broader point as we have in other similar posts. The world's problems were not his doing. And, he may have been a very good CEO in many regards. But, how many people drank his Kool-Aid and the spirits of other "experts"? Was it really Kool-Aid or was it sour milk? The chart below is an accurate representation of Welch's diversification into finance at GE. Maybe the most accurate. Now GE has become an entity that is likely to struggle for its very existence before this cycle is over. Financialization - a case study. It should be a required course for every business school in America.
Are our fearless leaders and politicians learning anything from this escapade? Not from anything I see. They seem to be a little slow on the uptake. But, I am highly confident the American people have learned a lot. They have learned never to trust again. And, that is exactly what they needed to learn to chart the course for our future. And, for the leaders we will choose to guide us into the future. It surely won't be those who believe in philosophies of today's politicians and business leaders.
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