Analysis | The Collapse of GE’s House of Debt Was 130 Years Coming

Even the conglomerate structure that current Chief Executive Larry Culp’s split will finally dismantle was in some ways a response to credit conditions. When debt is scarce, lenders are unwilling to provide cash to foster new and innovative businesses — but they’ll happily fund a blue-chip giant, a factor that once gave industrial conglomerates a crucial advantage over smaller businesses. By borrowing using its enormous balance sheet, GE could funnel cash at below-market rates into riskier ventures, helping to innovate faster and perfect the many inventions that emerged from its Research Laboratory: lightbulbs, power stations, X-ray machines, electric cookers, radios, televisions, lasers, jet engines and nuclear power.

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