Ex-GE CEO Jack Welch predicts 'real tough times' for U.S.

Former General Electric Co. CEO Jack Welch warned today that the U.S. economy was in for "one hell of a deep downturn" because of the credit crisis.

From Reuters:

"I now believe we are in for one hell of a deep downturn," Welch told the World Business Forum in New York on Wednesday, adding that the first quarter of 2009 will likely be "brutal." Until recently, Welch said, he had believed the U.S. economy could avoid recession, but he has changed his mind. "I am now caving," he said. "Get ready for real tough times. They're coming. There is no credit available."

Welch, 72, said mortgage lenders, legislators, investment bankers and others are all to blame for the crisis, which stemmed from easy credit and investors' appetite for yield. "The problem was money didn't cost anything," Welch said. "People took swings."

Yes, including people at GE -- which owned subprime mortgage lender WMC Mortgage from 2004 to 2007.

That was on current CEO Jeffrey Immelt’s watch. But it was Welch, who led GE from 1981 to 2001, who built up GE Capital, the company’s huge financial services business. Last year that unit accounted for half of GE’s total operating earnings.

If it was a debt bubble that got us to this sorry state, you can bet that GE Capital played a big role in helping to finance it.

Just sayin', Jack . . .

Photo: Former GE CEO Jack Welch. Marty Lederhandler / Associated Press

Comments

[SLIM PICKENS]

JACK WELCH is RIGHT- the RITZ is about to hit the fan!! WE ALL WILL BE FORCED to go back to having a garden, simple living, forget buying a new car every other year (I REFUSE TO BUY A NEW CAR - EVEN LUXURY CARS HAVE PLASTIC BUMPERS NOW! VINTAGE CARS MADE OF STEEL ARE ALL I WILL DRIVE!) DO NOT BUY A CAR OR ANYTHING, EXCEPT A HOUSE, UNLESS YOU CAN PAY CASH. THE GENERAL PUBLIC IS STILL BACK IN THE "GREED '80s & EVERYONE needs to tighten the belt and quit thinking they are BEN AFFLECK & J LO or some HIGH ROLLER who actually has the means to splurge. -slim pickens

[vip]

everyone needs to get to know their neighbors, our wolds are about to get a lot smaller...

be happy with small things.

[homeowner not in forclosure]

yes, i agree. time to get back to basic's. we have to start thinking for our selves.
if you are still relying on gas as fuel and not looking for an alternative. you need to turn you computer into your personal library and start doing some research!
along w/how to grow that garden & raise that chicken!

[Gregg]

President Bush is a forgotten man. Soon to be just dust in the wind.

After 9/11, Bush could have become a great leader. But the very day that hell spewed from the skies, Bush did not know whether or not to return from Florida to Washington.

He espoused the philosophy of "compassionate conservatism" but then abandoned it, leaving a few desultory faith-based initiatives and a larger gap between rich and poor. Not a thing has been done to help people with no health insurance, but he vetoed a plan to expand children's access to health care. He vows to cut out 151 popular programs to save $18 billion but has spent $609 billion on Iraq and Afghanistan.

Hurricane Katrina and the bridge collapse in Minneapolis were stark testimony to the nation's crumbling infrastructure. But Bush had no plan to prepare the country to face fixing its roads, bridges and levees or care for its victims.

He demanded that Social Security be privatized - could you imagine in light of our current crisis?? - but when the country vigorously protested, he gave up trying to keep entitlements from eventual meltdown.

Now this, the 2008 meltdown of the financial sector. And if Bush has his way, he will leave the country with a $11.3-Trillion debt.

There is good reason the president's disapproval rating has been as low as it has for longer than that of any other president in half a century. There is good reason why the GOP candidates almost never mention his name.

His legacy will be insisting, without factual basis, that democracy would spring "sui generis" to life in the Middle East and that Iran, Iraq and North Korea were an axis of evil.

President Bush is a forgotten man. Soon to be just dust in the wind.

[George Levy]

I was there when Jack Welch said those things at the World Business Forum in New York City and I remember feeling a chill run down my spine. At the time, I ran into some other people saying that Jack was exaggerating the gravity of the situation. At the time there was a lot of talk about the government bailout and most people thought that it would solve the issue (just throw money at it...) Some others said that it was the uncertainty of the elections but... Here we are post-election, post-bailout, almost two months later and his predictions are ringing true. I think Jack hit it on the head when he said this... I just hope this "downturn" has an upward curve sometime soon.....

[Ted]

I used to be a loan underwriter for a major finance company. As the real estate bubble got bigger and bigger, our loan guidelines got looser and looser. I don't remember George Bush working at that company.

[Colmcille]

A year and a half ago I read the on-line Arthur Wyatt's (accountant, retired) speech , "Accounting Professionalism: What Is It That They Don't Get?". Standards have gone by the wayside, ethics are passe, integrity is hard to find. Seems like Wall Street CEOs might have a suitable home in Guantanamo.

[Richard]

When this guy was the BOSS at General Electric, the company polluted the Hudson River to the tune of a 1 billion dollar EPA clean-up. He walks away smelling like a Rose. I think he is a reprobate and thnigs should happen to him that don't make him very happy!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! It's amazing the kinds of people we in the US tout as someone special. That billion dollars that the US taxpayer had to spend to bail him out is disgusting. It's too bad the journalist of today don't know their @ss from a hole in the ground. They should get away from Paris and Britney and do some real journalistic writing.

[analogstuff]

Jack Welch is one of the Great leaders which GE is missing right now.
He is simply superb and his predictions are true from my knowledge.
Why dont GE get some advice from Welch in this current recession times.