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Waaagh_Gonads wrote:
A lot of electoral goodwill will be lost for Obama and the house demoocrats if even one of the makers go down because the democrats are the ones in charge now and even though Obama isn't in until January, he'll have to deal with the consequences.

Bush is a bogeyman in all respects. Any auto failure will be at his feet. That isn't to say it will actually be his fault, because really it isn't. But it will be laid at his feet, and no one will have difficulty swallowing such a characterization.

Stumbled across this, is it right ? I assume this would be a major problem if this firm went belly up right ?

Its right in that GE long ago gave up on being a manufacturing company in favor of dealing in finance. Its also right that there is major cause for concern pertaining to the company's fiscal solvency given the black box nature of GE Capital, and the drastic action it has taken over the last year.

I'm not sure that GE is going to go belly up anytime soon, but they will almost certainly be forced to run at a loss after the credit markets are regulated. Indeed, I'm fairly sure that in house financing will soon be frowned upon as a kind of vertical monopoly.

That said, if GE loses their AAA status, they are going to have some serious issues maintaining operative capital in the event of mass default inside GE Capital.

Big firms going bust attract a lot of headlines. The majority of the population are actually employed in relatively small firms (under 200 staff.)

However, such small firms often exist to serve big firms in some way, for example, catering and cleaning services. So the collapse of a big firm has a lot of knock-on effects.

It seems likely that the financial industry will not return to its pre-credit crunch peak for years or decades. It depended on easy access to credit, and that is not going to come back in a hurray.