Image via Wikipedia Citi Bailout – US Govt Screws US Again
Once again, the US Government has screwed us all with another undeserved bailout of a financial behemoth. Citigroup, whose exposure to subprime mortgages and their derivatives caused a more than 87% drop in ‘value’ this year, has been bailed out with not just a cash infusion, but substantial guarantees against future losses.
Longtime readers will recall that I’ve published pieces on Citi already twice this year. First, I reported on their choice of using known spam outfits to deliver official emails from the company, opening up their customers to more spam, as well as having their emails blocked by most spam filters.
Then in September I reported on their exposures to several types of risk, most notably in the subprime and derivatives markets, which made them particularly susceptible to failure. At that time, their share’s prices had declined only around 60% through the year. The conclusion of that piece was that Citi was indeed a risk to any and all who held their paper.
The Trick Is To Try To Swallow It
Of course, both of those were published BEFORE the Treasury Department rammed the $700 billion bailout down our throats. Had I known then that the Goldman Sachs alumni who are in control of our economy would be so eager to leverage the Fed up to 50%, higher even than any of the ‘Not Quite Big Enough To Save’ firms that have since disappeared (think Lehman Brothers, et al), then my conclusion would have been a bit different.
As long as our Goldman government is allowed to just create cash, adding to the already back-breaking burden of future taxes, companies like Citi will continue to survive and even to flourish.
From the AP report (emphasis mine):
The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week on worries about its financial health.
“With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy,” the three agencies said in a statement issued late Sunday night. “We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks.”
The Citigroup rescue came after a weekend of marathon discussions led by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Timothy Geithner, president of the Federal Reserve Bank of New York, who is being tapped by President-elect Barack Obama as his Treasury chief also participated.
The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one – of $25 billion – in Citigroup in which the government received an ownership stake.
As part of the plan, Treasury and the FDIC will guarantee against the “possibility of unusually large losses” on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.
Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government’s portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.
Note the names in BOLD up there. Each of them have close connections to Goldman Sachs. Some of you might be surprised to see Obama’s name listed. After all, isn’t he ‘change we can believe in’? You may be surprised to learn that he recieved nearly a million dollars from Goldman Sachs in support of his campaign for president. They were, in fact, the second largest contributor to his campaign.
But don’t feel bad. The whole world believed the earth was the center of the universe for thousands of years.
The Slaves Rise Up… And Say Hoo-ray!
So, in other words, we ( yes, you and me) will have not only given Citi $45 billion in cash, we (right again, you and me!) are on the hook for up to $275 billion of almost certain losses due to their bad paper. Add it up: it means they’ve got up to $310 billion out of US, thanks to our Goldman Sachs controlled government.
America. Earth. Have you guys been paying attention? Is it starting to become obvious to you yet? Don’t you see what is happening right in front of your nose? You and your children and their children and theirs will not pay enough taxes to generate this kind of cash.
We are being sold into slavery, and as a species, we seem to be applauding.
I am Jon, with not even one hand clapping.