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General Electric had 2 days of cash before they couldn't continue operations. We came really, really close to having the entire world stop working! People are

General Electric had 2 days of cash before they couldn't continue operations. We came really, really close to having the entire world stop working! People are debating this in other responses to you, but you're absolutely right. E.g.:[1] The Fed then purchased commercial paper issued by GE 12 times for a total of $16 billion. It bought paper from Harley-Davidson 33 times, for a total of $2.3 billion. It picked up debt issued by Verizon twice, totaling $1.5 billion. ... Verizon spokesman Robert A. Varettoni said that it was "an extraordinary time," adding that there was no credit available otherwise at the time. Forget the debate of whether GE is an industrial or a financial, etc. Verizon was the 2nd largest telco in the USA, and if they needed money from the Fed then yes WE CAME REALLY REALLY CLOSE to having (much of the) world stop working. If people are still not convinced, and they think that it was all financials, consider that McDonalds also needed money from the Fed.[2] [1] http://www.washingtonpost.com/wp-dyn/content/article/2010/12/01/AR2010120106870.html http://www.washingtonpost.com/wp-dyn/content/article/2010/12... [2] http://www.asphaltandrubber.com/news/harley-davidson-federal-reserve-cpff-loan/ http://www.asphaltandrubber.com/news/harley-davidson-federal...

Scoundreller 11y ago
I think the actual scenario was that there was no credit available at rates they were hoping to pay. The fact that these situations happened 12 and 33 times suggests that management had some structural disability in facing reality rather than needing a short-term boost until they could go shopping for what they needed. Just like shortages of profession X in geography Y, if you're not willing to pay the price...
- parasubvert 11y ago
  "I think the actual scenario was that there was no credit available at rates they were hoping to pay." Not on the traditional market from banks (i.e. commercial paper and repo) -- banks weren't lending money at any rate at the time as they really couldn't. Keep in mind that bank loans are basically "money printing", something that can't be done when your reserve ratio is already illiquid, as it was for most in mid-late 2008. Individuals and holding companies like Buffet/Berkshire with actual reserves OTOH were giving high interest rate loans out (i.e. to Goldman), but those were bespoke negotiations.

Scoundreller 11y ago

I think the actual scenario was that there was no credit available at rates they were hoping to pay. The fact that these situations happened 12 and 33 times suggests that management had some structural disability in facing reality rather than needing a short-term boost until they could go shopping for what they needed. Just like shortages of profession X in geography Y, if you're not willing to pay the price...

parasubvert 11y ago
"I think the actual scenario was that there was no credit available at rates they were hoping to pay." Not on the traditional market from banks (i.e. commercial paper and repo) -- banks weren't lending money at any rate at the time as they really couldn't. Keep in mind that bank loans are basically "money printing", something that can't be done when your reserve ratio is already illiquid, as it was for most in mid-late 2008. Individuals and holding companies like Buffet/Berkshire with actual reserves OTOH were giving high interest rate loans out (i.e. to Goldman), but those were bespoke negotiations.