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Posts Tagged ‘Citigroup

Some Bailouts Are Big Gifts. Some Bailouts Are Bad Loans.

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financialindustry1Maybe it’s the rise of the Internet that did it, but there are an awful lot of lemmings in the fourth estate these days. Once the zeitgeist gets hold of a word it’s everywhere fast. That’s especially true of catch-all terms that lose their meaning the moment anyone begins to dig even a tiny bit deeper into a story.

Take the term “Bailout”.

In economic terms it means ‘assistance to a financial or other institution in distress’. But assistance can mean anything from a loan that nobody else will give with very stringent terms to a total and utter gift.

There have been a ton of bailouts in the last few months. We don’t have to list them all, we’re just going to focus on two ‘institutions’, Citigroup and the Big Three Auto manufacturers.

Let’s look at what these two have in common. Both of them are vast with global reach and influence.  Both of them made awful business decisions in the short, medium and long term that led them to the brink of collapse.

Now let’s look at what people perceive they have in common, namely that both are “too big to fail”, another term of limited meaning. Citigroup is too big to fail because of the depth of its interconnected interests throughout the financial world. The Auto Industry is too big to fail because whole regions of the country depend on it for their economic welfare.

Finally let’s examine where they are different. Citigroup is a financial institution that buys and sells assets with client and depositor funds. It employs in the region 300,000 people worldwide. The Auto industry makes cars and trucks, is the backbone of US manufacturing and directly and indirectly employs around three million Americans.

It’s a tribute to how well the Finance, Insurance, Real Estate or FIRE sector has sold itself over the last twenty years of the Reagan Revolution that a bloated, shapeless and rudderless behemoth of a bank should be regarded so highly, while the jewel of America’s industrial crown should be treated as if it’s already on the scrapheap.

That contrast is perfectly reflected in the way that the United States Congress and the Administration has handled the ‘bailouts’ to Citigroup and the Auto Industry. Read the rest of this entry »

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Let’s Talk About “The System”

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hi, i'm the system

hi, i'm the system

Back in the eighties there was an awful lot of talk about the nefarious “system”, a deep and dark conspiracy of the powerful to keep down the powerless. Before resentment became a tool of the right, it was a clarion call of the unreconstructed left, a youthful, incoherent, but somehow meaningful rallying cry that drove many a drunken, sophomoric conversation. You don’t hear too much about “The System” these days. Nobody seemed to care anymore, when “The System” was delivering them flat screen TVs and great opportunities to flip condos.

But it seems to me that it’s time to revive talk about “The System” because it’s become very clear what it is.

Undiluted socialism for the rich and influential, and the legal and enforcement system to protect it. Read the rest of this entry »

When Will Hank Paulson Be Done Wrecking The Country?

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He’s got less than two months to do it, but it’s possible that by the time Obama gets into the hot seat, America may be in a very nasty depression. Take Hank’s words of wisdom for example on NPR.

November 13th.

Nobody is asking themselves anymore is there some major institution that might fail…

November 23rd

Ten days later and Citigroup’s stock is trading at well below the level where many institutional investors have to sell. Citigroup and the Government meet over the weekend to create a “bad bank” backed by the Government to park all Citigroup’s ‘toxic’ junk, so the bank can rebuild at taxpayer expense

Please, Hank, just go away.

Written by coolrebel

November 23, 2008 at 10:53 pm