GE's Immelt backs Obama
In an interview with his hometown paper, The Cincinnati Enquirer, he said that he believes that Obama's economic stimulus will work EVENTUALLY. When asked for specifics, he demurred.
"President Obama has pumped nearly $1 trillion into the economy . . . and my sense is that, over time, these things will work," Immelt is quoted as saying. "Our orders aren't bad given the state of the economy. . . . You see certain signs that things are stabilizing, but nonetheless this is a very difficult economy and we've got to be prepared for a range of possible events as we look forward."
Immelt, a member of Obama's Economic Recovery Advisory Board, is under increasing pressure from investors to back up his words with actions. Shares of the Fairfield, Conn.-based conglomerate are down 36 percent this year, even with the recent run-up in the stock market. Many investors are still worried about the company's financial arm.
But as BusinessWeek recently argued, Immelt's options regarding GE Capital are limited because of its exposure to risky lines of business such as commercial real estate and consumer loans in Eastern Europe. The CEO, though, probably could not sell the business even if he wanted to, since it would require GE to inject as much as $32 billion to back up GE Capital's obligations. Moreover, GE Capital's borrowing costs would rise because it would need to renegotiate credit lines with some 65 banks, according to the magazine.
In any event, Immelt's rosy outlook may not be shared by his fellow CEOs.
Most CEOs surveyed by the Business Roundtable said they see no prospect of a recovery in the next six months. I wonder if Immelt will be able to last that long.