Behind the Curtain at G.E.

So this is what it has come to. General Electric appears to be in trouble.

I bought it at $22.50, soon after Warren Buffett bought preferred shares. GE is now at 7 bucks a share. The bears are pummeling it, warning of defaults, of it losing its AAA rating, that GE Capital is going to hit the wall.

Earlier in the week Jeffrey Immelt, the chief executive, released his annual letter to shareholders, pointing out that the company had $18 billion in profit last year. Investors shrugged.

Last year doesn't count.

“It has too much debt and not enough tangible common equity,” holds a bear, Charles Ortel. Tangible common equity — equity minus good will and other intangibles — is the once obscure, now critical barometer of a bank’s capital.

last night I saw a commercial for GMAC Bank. Bank? It's a finance company, yet it has become a bank. GE Capital appears to have similarly morphed into a bank.

“The last time G.E. cut its dividend was during the Great Depression,” Jerry Useem, who used to cover G.E. for Fortune magazine, pointed out. He was quiet for a minute. Then he added, “If G.E. is in trouble, God help us all.”