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March 31, 2009

Reston Heights gets Silver LEED certification

Filed under: term — Tags: , , — ManInBlack @ 2:37 pm

Reston Heights in Reston has earned the Silver Leadership in Energy and Environmental Design (LEED) certification — the first neighborhood development in Virginia to achieve the rating.

The first national system for neighborhood design from the U.S. Green Building Council takes into account principles of smart growth, new urbanism and green building. The certified development formerly housed surface parking lots and low density office space.

Chevy Chase-based JBG Cos. said aspects of its project that contributed to the rating include: all new buildings being LEED Silver certified, proximity to the Dulles Toll Road and two future Metro stations at Wiehle Avenue and Reston Parkway, green operations, cleaning, organic landscaping and maintenance programs for all new buildings and reducing water use by 30 percent.

Reston Square, the first phase of the mixed-use project, is done and consists of a fully-leased 140,000 square-foot Class A office building, a 191-room Westin Reston Heights, and the sold out 194-unit Mercer Condominium cash advances.

Subsequent phases of the project, designed by Cooper, Robertson and Partners, will include at least 1.5 million square feet of trophy office space, 350,000 square feet of retail, and 500 new residential units. The entire project is estimated to deliver by 2015, which will coincide with the expected completion of the Silver Line to Dulles.

In addition to Reston Heights, JBG currently has more than 20 LEED registered or certified projects throughout the area, totaling over nine million square feet.

Last year its Twinbrook Station in Rockville earned the Gold LEED certification — the first neighborhood development in the D.C. area and one of a handful on the East Coast to achieve the rating.

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March 27, 2009

No more Macy’s at Crestwood; store gone for good

Filed under: economics — Tags: , , — ManInBlack @ 2:14 pm

CRESTWOOD – The Macy’s store in Crestwood has gone dark.

Macy’s completed its liquidation sale and closed the store March 15, a spokeswoman for the Crestwood Court mall said today. The closure came just over two months after Macy’s announced plans to close the close the Crestwood store and 10 other underperforming stores around the country.

The closures are costing about 960 Macy’s workers their jobs. About 175 job cuts resulted from the store closing in Crestwood.

In addition, the city of Crestwood is taking a financial hit from the loss of sales tax revenue the Macy’s store provided payday loan no faxing.

Work is still under way to convert much of the former Crestwood Plaza into space for arts groups. A spokeswoman for the mall’s manager says arts groups should be using 65 store spaces by the middle of April. Whether the 150,000-square-foot Macy’s store might become part of the arts conversion is yet to be decided, the spokeswoman said.

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March 25, 2009

Carnival beats estimates, outlook sinks

Filed under: term — Tags: , , — ManInBlack @ 8:23 pm

Carnival Corp. & Plc. said Tuesday first-quarter profit rose 10% on lower fuel costs and higher bookings, handily beating analyst estimates and sending shares of the world’s largest cruise ship operator up 1.2%.

While the company cut its full-year outlook, citing deteriorating economic conditions in the United States and Britain, the new estimate was in line with analyst estimates.

The Miami-based company posted a net profit for the fiscal first quarter ended Feb. 28 of $260 million, or 33 cents per share, up from $236 million, or 30 cents per share, a year earlier.

This exceeded analysts’ forecasts of 19 cents per share, according to Reuters Estimates. Carnival (CCL) stock jumped to $23.58. Shares of its main rival, Royal Caribbean Cruises Ltd. (RCL) , were down 3% at $8.60.

Still Carnival’s net revenue fell to $2.9 billion, down from last year’s $3.2 billion, as lower fuel costs failed to offset a drawback in consumer demand.

Since the start of the year, booking volumes for the remaining three quarters are 10% ahead of the prior year, but at "significantly lower prices," the company said. Cumulative advance bookings for the remainder of the year are still behind last year’s levels paydayloans.com.

Carnival expects second-quarter earnings to be in the range of 30 to 32 cents per share, down from the 49 cents a year earlier, but still in line with Wall Street expectations.

The company said it now forecasts full-year 2009 earnings per share to be in the range of $2.10 to $2.30, down from its previous forecast of $2.25 to $2.75.

Carnival said it has 16 ships under construction to be delivered through 2012 for about $9 billion, the majority of which is expected to be funded by cash from operations.

In an effort to preserve cash, both Carnival and Royal Caribbean stopped paying dividends last November.

The company said it would need to obtain new financing this year, but it will look for "low-cost opportunities to enhance its liquidity."

"To enable us to overcome challenges in these difficult times, we have focused on maintaining tight cost controls and a strong liquidity position," Carnival Chief Executive Micky Arison said in a statement. 

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March 24, 2009

U.S. woos buyers of toxic assets

Filed under: money — Tags: , , — ManInBlack @ 1:33 am

The U.S. Treasury Department on Monday rolled out detailed plans for persuading private investors to help rid banks of up to $1 trillion in toxic assets that are seen as a roadblock to economic recovery.

Generous government financing will underpin the so-called Public-Private Investment Program, which Treasury will kick off with $75-$100 billion that comes from its existing $700-billion bailout fund approved by Congress last fall.

The plan is being launched in a volatile environment, with lawmakers angry over big bonus payments made to executives at bailout recipient American International Group.

Public and lawmaker fury over the bonuses, and efforts on Capitol Hill to claw them back, have made many investors skittish about partnering with the government, but Treasury specified that private partners in its latest effort to revive credit markets will not face tough executive pay restrictions.

U.S. stocks opened higher on the plan on Monday, a sharp contrast to the painful disappointment registered after Geithner offered only a scanty outline of the plan on February 10.

While Treasury, in company with private investors, will put up initial financing, the Federal Deposit Insurance Corp and the Federal Reserve will be tapped to offer further financing.

Under one component of the plan, Treasury will provide up to 80 percent of the initial capital, which would go alongside investment by private funds. The FDIC would then offer debt financing for up to six times the pooled amount.

A separate component will have the Federal Reserve widen the financing it now provides under its new Term Asset-Backed Securities Loan Facility, or TALF no faxing payday loan. That $200 billion program, will be bumped up to $1 trillion and will begin accepting older mortgage-related and other securities as loan collateral.

In addition, Treasury will approve up to five investment managers and match their money one-for-one and offer debt financing for 50 percent of the combined capital pool to buy securities banks want to unload.

Geithner believes the plan will help set prices for poorly performing debt left over from the U.S. housing bust, while involving the market to avoid the risk taxpayers will overpay.

The success of the plan is seen as a key test for Geithner, who already has faced a few calls for his resignation from lawmakers disgruntled over the AIG bonuses.

Two of the largest U.S. money managers, BlackRock and PIMCO, expressed interest in participating.

“This is perhaps the first win/win/win policy to be put on the table and it should be welcomed enthusiastically. We intend to participate and do our part to serve clients as well as promote economic recovery,” Bill Gross, PIMCO’s co-chief investment officer, told Reuters.

The Obama administration has stressed that the banking sector’s problems are so serious that the government cannot solve them alone, and Geithner on Monday underlined that market participation is vital.

“For these programs to work investors have to be prepared to take some risk,” he said. 

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March 22, 2009

AIG bonuses actually $218M, officials say

Filed under: economics — Tags: , , — ManInBlack @ 5:09 pm

NEW HAVEN–The attorney general of Connecticut said Saturday he is asking American International Group Inc. why documents appear to show the company paid $53 million more in bonuses to its financial products division than previously reported.

Documents turned over late Friday show AIG paid $218 million in bonuses last weekend, higher than the $165 million that was previously disclosed, said the office of Attorney General Richard Blumenthal, who had issued a subpoena.

Bonuses were "showered like confetti" on AIG employees, Blumenthal said.

AIG had previously disclosed that the company was contractually obligated to pay a total of about $165 million of previously awarded "retention pay" to employees in the financial products unit, based in Connecticut, by March 15. It said another $55 million in retention pay had already been distributed to about 400 AIG Financial Products employees.

That total of $220 million is about $2 million more than the figure disclosed Friday, and Blumenthal said he was seeking clarification from the company on whether the new papers differ from what was previously reported.

"Unless the number can be explained, it will undercut any lingering rationale the company may have for these unjustified payments," Blumenthal told The Associated Press on Saturday online payday loans.

AIG spokesman Mark Herr declined to comment.

The newly released documents show that the nation's largest insurer, which has received $182.5 billion in federal money to keep it from failing, paid bonuses of more than $1 million to 73 employees, with five of them getting bonuses more than $4 million, Blumenthal said.

The company did not release the names of the employees, citing worker safety.

"The initial number was so outrageous that it will further fuel the justified anger and revulsion that people feel," Blumenthal said. "It simply shows how these people should been shoved out the door, not showered with cash.''

News of the bonuses last week ignited a firestorm, and even some death threats. Congress began action on a bill that would tax 90 per cent of the bonuses, and the company's chief executive urged anyone who received more than $100,000 to return at least half.

Activists are expected to rally at AIG's Wilton office on Saturday to protest the bonuses. A busload are also touring some AIG executives' homes in Connecticut, organizers said.

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March 20, 2009

FedEx: We’re taking market share

Filed under: technology — Tags: , , — ManInBlack @ 11:57 pm

Package delivery giant and U.S. economic bellwether FedEx Corp. said Thursday it was taking market share despite a recession that drove its profit down 75%, and its shares jumped.

"If this is what FedEx can do in really tough times, imagine what they can do when things bounce back," said Sandeep Kar, a transportation analyst at consulting company Frost & Sullivan. "They are going to emerge as a lean and mean company that will experience rapid growth."

"This is a good stock to get into," he added.

FedEx shares rose more than 5% in early trading.

The Memphis-based company reported net income for its fiscal third quarter, ended Feb. 28, of $97 million, or 31 cents a share, down from $393 million, or $1.26 a share, a year earlier. Analysts had expected 46 cents a share, according to Reuters Estimates.

"Our financial performance was sharply lower during the quarter due to the global recession," Chief Executive Fred Smith said in a statement. "While we are gaining market share in all of our transportation segments, the downturn in our industry and the severity and expected duration of the recession require that we take additional actions."

Analysts said a drop in profit against a backdrop of a sliding economy was to be expected.

"FedEx’s results are not much of a surprise given the current environment," said Dan Ortwerth, a research analyst at Edward Jones. "But this is a wake-up call for us that things are not going to get better any time soon."

"It’s a fairly clear indication that the recent stock market rally better have a strong foundation than merely a positive near-term outlook," he added.

Like its main rival, Atlanta-based United Parcel Service Inc., FedEx is considered a bellwether of U.S. economic activity. When the economy does well, companies and consumers ship more goods; in a recession, package volumes drop cash advance.

"FedEx is an asset-intensive business and it’s hard for them to escape plunging volumes," said Keith Schoonmaker, an analyst at Morningstar. "FedEx can’t outrun those numbers, but they are doing everything right to manage through this downturn."

FedEx said third-quarter revenue fell 14% to $8.14 billion.

For the current quarter FedEx said it expects to earn between 45 cents to 70 cents a share, below the average of 72 cents expected by analysts.

The company said it was cutting capacity at its FedEx Express and FedEx Freight units, and reducing personnel and work hours.

FedEx said the measures would result in fourth-quarter charges of roughly $100 million and lead to a reduction in expenses of about $1 billion in its 2010 fiscal year.

In December, the company said it had suspended paying matching contributions to its 401(k) retirement plan for a minimum of one year as of Feb. 1 and would implement pay cuts for all salaried personnel. Smith took a 20% pay cut.

Both FedEx and UPS have seen package volumes hit by the downturn. Deutsche Post unit DHL shut down its U.S. domestic service in January with the loss of 9,500 jobs, citing the economic slump and its inability to take market share in a market dominated by FedEx and UPS.

Edward Jones analyst Ortwerth said while FedEx’s results reflected the recession, the fact the company is still taking market share is a positive sign.

"In a sense these are good times for FedEx," he said. "I’m not worried about them because they work well in downturns."

In trade on the New York Stock Exchange FedEx (FDX, Fortune 500) shares were up more than 5% at $45.23. UPS (UPS, Fortune 500) shares were down more than 1% at $46.01. 

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March 19, 2009

Raleigh, Austin are fastest-growing metros

Filed under: finance — Tags: , — ManInBlack @ 5:48 pm

Raleigh, N.C., and Austin, Texas, are the fastest-growing metropolitan areas in America, according to a U.S. Census Bureau report released Thursday morning.

Raleigh's population increased by 4.3 percent between July 1, 2007, and the same date in 2008, reaching a total of 1.1 million. Austin's population grew by 3.8 percent during the same span, climbing to 1.7 million. No other major metro grew as rapidly.

The Census Bureau released a new set of population estimates for the nation's 363 metropolitan areas on Thursday.

A total of 313 metros gained population between 2007 and 2008, while 50 suffered declines same day payday loans. Forty-seven of the 50 fastest-growing metros were located in the South or West.

The New York City region, which sprawls over portions of New York, New Jersey, Connecticut and Pennsylvania, remained the nation's largest metro as of mid-2008, with 19.0 million residents. It's followed by Los Angeles at 12.9 million and Chicago at 9.6 million. Fourteen metros have populations of 4 million or more.

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March 17, 2009

Luxembourg seeks Madoff deal

Filed under: legal — Tags: , , — ManInBlack @ 5:01 pm

Luxembourg said on Tuesday it would seek an out-of-court deal to end a protracted legal row about money UBS clients lost to Bernard Madoff that is damaging the country’s reputation as a financial center.

Rich clients lost money after having invested in Luxalpha, a Luxembourg-based fund set up at their request by Swiss bank giant UBS. The fund was holding around $1.4 billion of assets, sources familiar with the issue have told Reuters.

“I would encourage all parties involved to sit around a table and look for an extra-judiciary solution,” Luxembourg Treasury Minister Luc Frieden told the Reuters Funds Summit.

Frieden said the court proceedings were taking too long. He said he would contact UBS in the coming days.

“It is always negative if court cases take a long time,” Frieden said.

“It would be in the best interest of all parties if rather than having numerous court cases they would sit around a table.”

Minority shareholder activist group Deminor is helping clients to recover some of the money lost to investment in products offered by Madoff, a former Nasdaq chairman who has admitted to 11 criminal charges in Wall Street’s biggest fraud, which drew in as much as $65 billion over many years free credit score.

The legal action is another headache for UBS, which is struggling to restructure after being hit hard by the credit crisis and is also at the center of an high-profile U.S. tax fraud case.

UBS acted as the custodian of the Luxalpha fund and has repeatedly said that it did not recommend to clients any Madoff products and that clients knew what they were investing in.

Luxembourg financial regulator CSSF, which is looking into the case, said the custodian bank had to ensure at all times that the money invested in the products was actually there and has given Switzerland’s largest bank three months to make changes to UBS’ custodian bank in the wake of Madoff’s arrest.

UBS has rejected the calls to reform its Luxembourg operations and said it would defend itself vigorously as it did not believe that the CSSF was correct.

(Editing by Hans Peters)

(For other news from the Reuters Funds Summit, click here)

(For the Hedge Hub blog: blogs.reuters.com/hedgehub)

(For Global Investing: here)

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March 16, 2009

Bernanke May Buy Treasuries After Gilt Yields Fall

Filed under: online — Tags: , , — ManInBlack @ 8:46 pm

Ben S. Bernanke may have something to learn from his former Massachusetts Institute of Technology colleague Mervyn King.

By buying government securities to increase the supply of money, Bank of England Governor King is taking a step that Federal Reserve Chairman Bernanke has only talked about. Early results have been encouraging: Yields on 10-year U.K. government bonds fell to 2.94 percent March 13, at least a 20-year low, from 3.64 percent before King announced the policy March 5.

“The BOE is providing an actual experiment in answering some of the concerns that the Fed has about the effectiveness” of using the strategy to effectively print more money, says former Fed Governor Laurence Meyer, now vice chairman of St. Louis-based Macroeconomic Advisers LLC.

Bernanke and his colleagues on the Federal Open Market Committee start a two-day meeting tomorrow to discuss the deteriorating economic outlook and what they can do to turn it around. After their last meeting ended on Jan. 28, policy makers said they were “prepared to purchase longer-term Treasury securities” if it became clear the policy would be “particularly effective” in getting credit flowing again.

Since then, the stock market has fallen, with the Standard & Poor’s 500 index down 13 percent in a month and a half, even after last week’s 11 percent gain. Unemployment hit a 25-year high of 8.1 percent in February, and the number of Americans drawing jobless benefits reached a record 5.3 million.

Flooding the System

“The economy is in a free-fall,” says Tim Duy, an assistant professor at the University of Oregon in Eugene who writes on Fed policy. “They need to flood the financial system with money.”

Bernanke first raised the possibility of Treasury purchases in a speech on Dec. 1. The central bank subsequently put the idea on the back burner to focus on this month’s start of the Term Asset-Backed Securities Loan Facility, a $1 trillion credit program for consumers and small-business owners.

“At this point in time, the Fed has judged that buying long-term Treasuries is not the most efficient means of easing financial conditions,” Federal Reserve Bank of New York President William Dudley said after a March 6 speech in New York.

Treasuries have lost 2.85 percent this year, according to an index compiled by Merrill Lynch & Co., sending yields higher.

Dudley and other Fed policy makers argue that they get more punch for their purchases by concentrating on specific credit markets rather than buying Treasuries. The average interest charge on a 30-year fixed-rate mortgage has fallen to about 5 percent from more than 6 percent since the Fed announced plans to purchase $500 billion of mortgage-backed securities last November.

‘Credit Easing’

Bernanke, 55, has described the Fed’s approach as “credit easing” to distinguish it from the “quantitative easing” policy the Bank of Japan adopted from 2001 to 2006. The strategies differ in how they pump money into the economy. The BOJ’s focus was on increasing reserves in the banking system to encourage more lending. The Fed is trying to lower the cost of credit for specific types of borrowers, such as home buyers.

King — whose office adjoined Bernanke’s when the two were visiting professors at MIT in Cambridge, Massachusetts, during the 1980s — is pursuing both approaches.

Gilt Purchases

He is aiming to expand reserves in the financial system through purchases of U.K. government bonds, known as gilts — a strategy he describes as “conventional unconventional” monetary policy. He will also buy private-sector assets as Bernanke is doing — an approach the Bank of England chief calls “unconventional unconventional.”

The U.K. Treasury authorized the BOE to spend 150 billion pounds ($210 billion) for asset purchases, mostly of gilts. In the first stage, it will spend 75 billion pounds during the next three months no fax payday loan.

King, 60, who has faced criticism for moving too slowly as the economic crisis gathered steam, was able to put his plan into action quickly because it involves the government-debt market, where the BOE already operates regularly. The central bank held its first auction to buy gilts on March 11, just six days after it unveiled the program.

In contrast, it has taken the Fed four months to launch the TALF, as it tweaked the terms of the program to make it more attractive for private lenders to participate.

Favorable Response

The U.K. bond market responded favorably to the moves by King. Corporate bonds in pounds rose, driving down borrowing costs. The Markit iBoxx sterling nonfinancial corporate bond index has gained 4.7 percent since March 4. The benchmark index includes 260 bonds issued by companies including confectionary maker Cadbury Plc, Vodafone Plc and supermarket chain Tesco Plc.

“Given that it was a groundbreaking operation, it went pretty well,” says John Wraith, head of sterling interest-rate strategy at RBC Capital Markets in London.

The Fed and the BOE, like other central banks, are struggling to find fresh ways to rescue their economies as they run out of room to cut interest rates further. King cut the BOE’s benchmark rate to 0.5 percent March 5, and the Fed’s overnight lending-rate target has been between zero and 0.25 percent since Dec. 16. Both are record lows.

The Bank of Japan is focusing on measures to improve corporate finance, rather than on boosting the money supply. Governor Masaaki Shirakawa, 59, argues that quantitative easing had only a limited effect on improving the economy when the BOJ tried it earlier this decade, although it did help stabilize the financial system.

Shirakawa’s Intentions

“Shirakawa doesn’t seem to have any intention of reviving quantitative easing by using a reserve target,” says Izuru Kato, chief market economist at Totan Research Co. in Tokyo.

The BOJ, which reduced its benchmark interest rate to 0.1 percent in December, is buying commercial paper and corporate bonds and has resumed purchases of shares from financial institutions. Shirakawa, though, is resisting pressure from politicians to increase the BOJ’s purchases of government bonds to help finance a stimulus package.

The Swiss National Bank is taking a different tack. After cutting its main lending rate to 0.25 percent March 12, the central bank started selling Swiss francs in the foreign- exchange market. The flood of new francs drove the Swiss currency down 3.4 percent against the euro March 12 and 13.

Exchange Rates

When central banks fail to align their nontraditional policies, “that can be hugely destructive” for exchange rates, says Richard Portes, professor of economics at the London Business School. After King unveiled his plans March 5, the pound fell 3.4 percent against the euro through March 13.

European Central Bank President Jean-Claude Trichet has been reluctant to emulate the policies of some of his fellow central bankers. The ECB’s key rate, at 1.5 percent, is the highest among major central banks in the industrial world. Trichet, 66, said March 5 that while the ECB is examining “nonstandard measures,” it hasn’t made any decisions on their use.

Bernanke and the Fed led the way last year in taking unconventional steps to aid the economy by supporting the commercial-paper market and moving to buy mortgage-related debt, says David Jones, president of Denver-based DMJ Advisors.

“Now he’s got to decide whether it goes all the way and buys Treasuries,” says Jones, author of four books on the Fed. “At some point,” he predicts, the central bank will.

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March 14, 2009

GE loses top rating in downgrade

Filed under: online — Tags: , , — ManInBlack @ 10:37 pm

Conglomerate General Electric Co. lost its perfect credit rating Thursday when rating agency Standard & Poor’s downgraded the company.

S&P said it lowered the company’s rating to "AA+" from "AAA," because it expects the worsening economy to cause GE’s holdings to deteriorate in value. GE’s finance arm GE Capital Corp. (GECC) also received a one-notch downgrade to AA+.

"We believe that GECC is under increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe," said Standard & Poor’s credit analyst Robert Schulz. "This will result, in our opinion, in rising credit losses across key segments of finance portfolio."

The rating agency said that it still believes that GE is on solid footing, predicting that the multinational company will be able to generate about $2 billion in cash flow due to its huge reduction of its dividend to 10 cents from 31 cents late last month.

"We expect GE’s commitment to maintaining very high credit quality, the still-solid prospects for many of its business segments (despite economic weakness), and the company’s ample financial flexibility should continue to support the ratings at the current level and the stable outlook," added Schulz.

GE was one of only six American companies to hold AAA status. The five remaining are Berkshire Hathaway Inc. (BRK.A), Automatic Data Processing (ADP, Fortune 500), Exxon Mobil Corp. (XOM, Fortune 500), Johnson & Johnson (JNJ, Fortune 500) and Microsoft Corp (MSFT, Fortune 500).

An AAA credit rating allows a company to borrow at cheaper rates, but it also requires a significant amount of cash on hand, which GE was unable to maintain with its escalating debt.

GE said it will not change its business practices despite the downgrade, noting that it has taken steps to ensure that its balance sheet and liquidity position were bolstered.

"As we have previously said, we are prepared to fund the company as a double-A, but we will continue to run GE with the disciplines of a triple-A company, which means low leverage, high liquidity and strong risk disciplines," said Jeff Immelt, GE chief executive. "While no one likes a downgrade, this review and rating reaffirm the relative strength of the company."

Jon Larsen, portfolio manager of Albion Management Group, said GE’s downgrade was expected.

"It’s not that much of surprise, because of their debt situation and the amount of fear that’s out there," said Larsen, who runs a mutual fund with GE as its top holding bad credit payday advance. "In the current environment, with that amount of debt, it’s probably been due for a while."

Shares of GE (GE, Fortune 500) soared more than 11% in early trading. Bergenson said investors felt relief after worrying GE would be downgraded by several notches instead of just one.

Trouble with AAA rating

To maintain the rare AAA rating, experts say GE had to exert extra caution, costing the company billions of dollars in security measures.

"AAA has a sort-of saintly symbolism, — usually only governments have AAA ratings," said Sylvain Raynes, principal of R&R Consulting, a company that helps clients value its securities. "A company that wants to be AAA is giving up on things that are important to most companies, like leverage and experimenting with new systems that could be fly-by-night."

Ann Rutledge, also of R&R Consulting, called the downgrade "a defining moment for GE," expecting more downgrades from other agencies to come, followed by GE’s credit rating slipping even further in the future.

"No one is going to panic here," said Rutledge. "GE will have to pay a little more for capital, and the transcendental feeling of comfort and security is gone, but the impact is more qualitative and quantitative."

Still, when insurer American International Group (AIG, Fortune 500) lost its AAA rating in 2005, the company started on a downward spiral that forced it to raise more and more capital. Bond insurer Ambac Financial Group (ABK) lost its AAA rating in January of 2008, and its stock is currently trading at less than $1 a share.

"No one believed in AIG or Ambac, because they were houses of cards," said Raynes. "But GE is so far away from not paying its bills, it’s ridiculous. GE already began taking measures since it was put on credit-watch negative."

Larsen thinks that GE needs to focus on finding a way to spin off its ailing GE Capital wing before it attempts to reclaim its AAA rating.

"The unfortunate situation GE is in is they bet too big on the AAA rating," he said. "I’m hoping that they just deal with what they need to within the company and forget about the AAA for the short-term. But it wouldn’t surprise me if they break their back to get the AAA back." 

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