[QUOTE=__HRB__;163990]to avoid every cheesehead from taking things personally?

Note the sly omission of personal pronouns in this post. Also note the sly use of "cheesehead" as a generalization.[/QUOTE]

Do you mean "cheesehead" as a generalization WRT people from Wisconsin or people in general? I'm from Wisconsin and I take your statement personally by lumping me to the other cheeseheads who take things personally. :rolleyes:

I was talking to my financial advisor yesterday (BTW, his employer did not need or take bailout money) and his perspective is that if there is a run on a big bank that it might trigger a similar run on many other banks which could be disastrous. None of these banks have enough collateral to handle a run on them. Maybe the FDIC should lower its government backing to $10,000 and then let Citi and BoA fail...

Now if only I were smart enough to store my life savings in my mattress. It would be safer there than in the banks and its guaranteed rate of return would probably be better too.

[QUOTE=rogue;163998]None of these banks have enough collateral to handle a run on them. Maybe the FDIC should lower its government backing to $10,000 and then let Citi and BoA fail...[/QUOTE]

Then we might as well go the whole hog, lower the backing to 1.00$, announce that Citi and BoA have failed and then put it up again and hope that nobody notices.

Having a FDIC is like doubling the stakes playing roulette when you lose. Many small wins, followed by a huge bankrupting loss. So, maybe this is the big one, that gets rid of the FDIC (ok, that was wishful thinking).

Instead of having a FDIC at all, it should be left to the banks to show us how safe our money will be with them. The next time you see a booming local business, ask them which local bank is financing them. The same thing for a project that doesn't seem to go anywhere and is 'under construction' all the time. Or find someone that does that sort of thing and ask him where he has his money. It's even in his interest to tell you the truth.
Regulation can never be as smart as five people paying attention to the real world.

[QUOTE=rogue;163998]Now if only I were smart enough to store my life savings in my mattress. It would be safer there than in the banks and its guaranteed rate of return would probably be better too.[/QUOTE]

An even better thing to do, would be to start a company that makes matresses with built-in safes, or a company that maked safes with matresses around them. Any cash in your matress might only be cotton with ink on it.

As California continues to look for solutions to its financial troubles, an old proposal with new relevance:

[url]http://www.latimes.com/news/local/la-me-pottax24-2009feb24,0,7534269.story[/url]

"Taxing pot could become a political toking point"

[quote]Reporting from Sacramento -- Could [I]Cannabis sativa [/I]be a salvation for California's fiscal misfortunes? Can the state get a better budget grip by taxing what some folks toke?[/quote]

Vikram Pandit sings! | iTulip.com: End of the Road
 

Markets trying desperately to rally today on delusional [url=http://globaleconomicanalysis.blogspot.com/2009/02/bernankes-boiled-frog-plan-to.html]Uncle Ben will save all the bad banks[/url] hope, in the face of [url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aln3GQz8vKTk&refer=news]horrific losses by GM[/url] and ever-worsening data on [url=http://money.cnn.com/2009/02/26/real_estate/new_home_sales/index.htm?postversion=2009022611]new-home sales[/url], [url=http://money.cnn.com/2009/02/26/news/economy/jobless_claims/index.htm?postversion=2009022609]jobless claims[/url] and [url=http://www.ritholtz.com/blog/2009/02/durable-goods-data/]durable goods sales[/url]. Still not quite enough of a bear market rally to "short the snot of" as I expressed hope for a couple days ago, but if one was nimble in the past 24 hours there were several good opportunities to at least "short the sniffles" out of, if your inclinations are of the ursine variety.

[b]Bad-Bank Singalong:[/b]

[url=http://thereformedbroker.com/2009/02/26/vikram-pandit-i-will-survive/]Citigroup cover of Gloria Gaynor's "I Will Survive"[/url]:
[quote]At first I was afraid
I was petrified
Kept thinking they would never let
Our credit ratings slide
but then they cancelled all the flights
On the Citi corporate jets
And I regret
And I learned how to write off debt...[/quote]
[i]My Comment:[/i] I am working on an original market-related singalong of my own - watch for it at your local iTunes music store.


[url=http://www.theonion.com/content/node/93430]The Onion | Business: Nation Instinctively Forms Breadline[/url]
[quote]"What's happening to us?" California resident Rebecca Baker said after glimpsing a group of investment bankers leaning against a broken-down jalopy, their suit pants rolled up to the calf and their feet muddied and bare. "Why…why is that man carrying a bindle?"[/quote]
[i]My Comment:[/i] Ah, the good old Onion, ever a bastion of sanity in a world gone berserk. If only their article were truly far from the grim reality:

[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=as3PyDwmDEQY&refer=news]California's Newly Poor Overwhelm Agencies With Need for Food, Housing Aid[/url]: [i]In California’s Contra Costa County, 40,000 families are applying for just 350 affordable-housing vouchers. Church-operated pantries are running out of food. Crisis calls have more than doubled in the city of Antioch, where the Family Stress Center occupies the site of a former bank. [/i]


[b]Is There Really A Silver Lining to the Crisis?[/b]: iTulip.com asks whether the sharp upward spike in household savings artes as consumers slash spending is really a good thing for the long term.

By way oif background, iTulip (named after the famous Dutch [url=http://en.wikipedia.org/wiki/Tulip_mania]tulip-bulb mania[/url] of the 1630s) is a site devoted to the so-called [url=http://www.fireeconomy.com/]FIRE economy[/url] (Finance, Insurance, Real Estate), which in the U.S. now as prior to the Great Depression has mushroomed out of all proportion to the "real" economy, that is the Productive economy that actually makes stuff. I happened across the following recent article while searching for some references related to historic data on household savings rates, and the article makes the interesting point that the recent increase in U.S. household savings rate may in fact *not* be a "silver lining" of the current financial crisis, but rather a harbinger of some really nasty crap coming down the pike. Not for the faint of fiscal heart:

[url=http://itulip.com/forums/showthread.php?p=78579#post78579]iTulip.com | Road to Ruin: Final stretch[/url]
[quote]Incomes fall during economic contractions generally as debt repayment rises, creating a statistical increase in saving because debt repayment is reported as saving. But in a post-bubble world it is not the kind of saving that winds up in bank accounts to be spent later in consumption. What we are seeing today that looks like saving for future consumption is in fact the debt left over from the FIRE Economy sucking the life out of the US economy.

Similar policies, combined with the demographics of an aging population, led to a continuous decline in personal savings in Japan since 1992, two years after the end of the assets bubbles ended that started in 1985. Not coincidentally, the savings rate in Japan peaked at the same time. Why? During a period of asset price inflation, households stop saving and take on debt. After the asset price inflation ends the savings rate then increases for a year or so as debt is repaid.

Asset price inflations and deflations exert a perverse effect and saving. First the pool of savings to be spent on future consumption shrinks during the period of asset inflation because households are fooled into believing that asset price inflation is wealth creation, that inflating stock and home prices are doing the saving for them. Income is spent on current consumption. [u]After the bubble pops and the fake wealth is wiped out, briefly the savings rate rises as post bubble recession has not yet expressed itself as rising unemployment and incomes have not yet begun to decline. About a year later then the pool of savings starts to shrink again as unemployment rises, incomes decline, and a greater proportion of income is goes to paying off debts taken on during the boom.[/u]

Savings declines.
[b]
Collision Course
[/b]
The duplication by the current administration of Japan's misguided policy to use public and private funds to pay down debt taken on during a credit bubble era is self limiting in the US case in a way it was not for Japan; as long as the debt repayment versus restructuring is pursed, and the banking system is left in its current state of disrepair, the US economy will continue to rapidly decline. (See: [url=http://rs6.net/tn.jsp?t=aqlbiycab.0.0.m9jgptbab.0&ts=S0370&p=http%3A%2F%2Fwww.norges-bank.no%2Ftemplates%2Farticle____13822.aspx]How a government that is politically independent from its financial sector swiftly ends a banking crisis[/url].)

By our estimates, due to the combined impact of the crushing weight of debt burdens created by the FIRE Economy and maintained by the current Debt Deflation Continuation Plan and absent an immediate and effective, politically independent response to the banking crisis, leading to an intensification of the credit crisis as S&P predicts, real GDP will fall 4% in 2009 and 4% again in 2010. This despite the fiscal stimulus, estimated by Adam Posen of the Peterson Institute for International Economics at $1.5 trillion when TARP and other programs are taken into account. If federal government spending continues to increase outlays at the current rate of more than 10% of 2007 GDP per year, and federal government receipts continue decline at a 7.5% annual rate in 2009 and 2010 as in 2008, the fiscal deficit as a percent of real GDP will certainly exceed 10% in 2010, and the current account deficit on a balance of payments basis rise above 10% percent, even as imports fall as previously prodigious capital exporters in the Middle East and Asia suffer current account deficits of their own.

If and when its fiscal deficit reaches third world levels, will the US -- with its massive current account deficit financed by the public sector and daily dependence on capital inflows to maintain a balance of payments - finally suffer a balance of payments crisis, rapid currency depreciation, rapidly rising cost-push inflation, and rising interest rates? What we at iTulip.com refer to as a "Poom" portion of a Ka-Poom Theory?

It could happen this year. In fact, it may be happening now.

When the Russian government found itself unable to pay the interest on its foreign debt in August 1998, nor able to borrow more money in the international financial markets, nor increase taxes on its imploding economy, nor locate private capital inside Russia willing to lend it money, it suffered a balance of payments crisis. The result was capital flight, a ruble crash, and a spike of cost-push inflation.



In theory, this can't happen to the US, or so we are told. If the US experiences a balance of payments crisis capital has no place to flee to from the US.

The US enjoys the world's least badly managed government.

The US issues the world's reserve currency.

The US is the model of political stability.

The dollar has persisted for over a century without having ever been recalled, unlike any other currency in existence today.

But these arguments ignore two facts.

First, historically it is the very absence of previous experience with either a severe inflation or deflation that lulls policy makers into over-stepping the bounds of market tolerances. Japan, its currency and its people's savings once wiped out by hyperinflation pursues inflation phobic policies that leave the nation vulnerable to deflation while the US, once gripped by a deflation spiral in the 1930s, pursues reckless anti-deflation policies that expose the country to a horrific hyperinflationary outcome (See [url=http://rs6.net/tn.jsp?t=aqlbiycab.0.0.m9jgptbab.0&ts=S0370&p=http%3A%2F%2Fwww.itulip.com%2Fforums%2Fshowthread.php%3Fp%3D77759%23post77759]Hyperinflation case revisited - Part One: On the road to hyperinflation. Will we complete the trip?[/url]).

Second, the dollar is not the only option for capital flight from economies doing even more poorly than the US as the collapsing FIRE Economy spreads economic hardship around the world. Money has been fleeing into hard assets the in the manner of capital flight by insiders from a third world country before a balance of payments induced currency crash (See [url=http://rs6.net/tn.jsp?t=aqlbiycab.0.0.m9jgptbab.0&ts=S0370&p=http%3A%2F%2Fwww.itulip.com%2Fforums%2Fshowthread.php%3Fp%3D49722%23post49722]US exchange rate and capital controls or bust?[/url]).

Most observers do not see the recent rise in the price of gold (and silver as well) in this context because gold has been a cult for so long that even the gold cultists don't understand what has changed. They see the current price rise as a part of a bull market that started in 2001, but we side with Soros on this, and Volcker: we are witnessing a global systemic breakup, the end of the road we got onto in 1971. We passed the last exit in 2001, the last chance to adopt a strategy to shift to a production and savings based economy through a series of steps negotiated with trade partners. Instead we increased the debt further through a property bubble financed with fraudulent structure credit products. The road ends when the US cannot finance its debts. The end of the road is near.[/quote]

FDIC Problem Bank List Membership Skyrockets
 

[url=http://money.cnn.com/2009/02/26/news/companies/fdic_banks/index.htm]Problem bank list tops 250[/url]: [i]FDIC reports that number of troubled institutions soared during the fourth quarter to the highest level since 1994.[/i]
[quote]NEW YORK (CNNMoney.com) -- The government's closely watched listed of troubled banks grew during the fourth quarter to its highest level since 1994, regulators said Thursday.

The Federal Deposit Insurance Corp. reported that the number of firms on its so-called "problem bank" list grew to 252 during the last three months of 2008, compared with 171 banks making the list in the prior quarter.

"There is no question that this is one of the most difficult periods we have encountered during the FDIC`s 75 years of operation," agency Chairman Sheila Bair said Thursday. [/quote]
[i]My Comment:[/i] Let`s flash back to [url=http://www.mersenneforum.org/showthread.php?p=138253&highlight=sheila+bair#post138253]last summer[/url]:
[QUOTE=ewmayer;138253][url=http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/07/23/BUHA11TFGJ.DTL]FDIC: Don`t worry about bank failures[/url]
[quote]The housing bust will put more banks out of business, but all but a handful of institutions will weather the crisis, one of the nation`s top financial regulators said Tuesday.

"There will be more bank failures, but nothing compared with previous cycles, such as the savings-and-loans days," Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., said in an interview.

So far this year, five banks have failed and been taken over by the FDIC, a number that Bair said "should not be alarming."

"Banks went into this with very strong capital and are overwhelmingly safe and sound," said Bair, who was in San Francisco for an event marking the FDIC`s 75th anniversary.[/quote]
Sorry Sheila, but that is a flat-out lie. If that were true, you and Hank Paulson wouldn`t be flooding the financial airwaves with soothing "Banks are sound! Really!! Especially the ones that haven`t gone belly-up yet!!!" propaganda on a near-daily basis.[/quote]

[quote=ewmayer, in footnote;164012][I]Last fiddled with by ewmayer on 26 Feb 09 at 12:46 AM Reason: CF. post #197, as well - a.k.a. the "Michael Phelps Memorial Revenue Enhancement Act"[/I][/quote]Oh ... when I [strike]read[/strike] hastily skimmed #197 I mistook "[B]Attention Seniors![/B]" for a comment on the preceding link "[URL="http://www.sacbee.com/topstories/story/1646399.html"]California: Bill would legalize, tax marijuana[/URL]" and somehow decided that you were signaling that it was about medical use only.

[quote=ewmayer;164098][URL="http://itulip.com/forums/showthread.php?p=78579#post78579"]iTulip.com | Road to Ruin: Final stretch[/URL][quote](See: [URL="http://rs6.net/tn.jsp?t=aqlbiycab.0.0.m9jgptbab.0&ts=S0370&p=http%3A%2F%2Fwww.norges-bank.no%2Ftemplates%2Farticle____13822.aspx"]How a government that is politically independent from its financial sector swiftly ends a banking crisis[/URL].)[/quote][/quote]Stuff like that tempts me to blithely blurt my standard criticism about not having learned the lessons of history ... but this differs from Iraq vs. Vietnam in that these past financial lessons were, I think, not as prominently available to the non-financially-involved general public as the prolonged discussions of that SE Asia war. (Or maybe it's just that I haven't been reading enough WSJ or Barron's.) So I can't claim any obviousness to me.

How fair would it be to expect professional financial regulators to have been familiar with the Norwegian case, as at [URL="http://www.norges-bank.no/templates/article____13822.aspx?"]http://www.norges-bank.no/templates/article____13822.aspx[/URL] ?[URL="http://www.norges-bank.no/templates/article____13822.aspx?"]
[/URL]

Is it possible that bankers bastardized the CRA and took advantage of taxpayers and unworthy borrowers alike for unrealized profit?

IMO, The IRS tax codes are a good example of complicating regulation to infinity. The bankers simply beat the system along with Freddie and Fannie.

Where did the Mortgage-backed security originate?

/begin rant/ AES, There is no excuse for ignorance in this thread. Read the previous discussions and answer your own question. /end rant/.




Today Citi gets a $25 billion conversion of taxpayer dollars into a 36% stake in the company. Lets do some math on that. We already own an 8% stake so whatever they are paying, it is for 36-8 = 28%. This is NOT existing stock either, it is newly issued shares which is therefore highly dilutive to existing shareholders. The float is 5.4 billion shares so a raw estimate is that citi has to issue 16 billion new shares to convert the govt stake plus the required conversion of other preferred shares. Now lets see. 8 billion shares at a nominal $25 Billion means we are paying $3.25 per share. I know this is funny math, but do you get the impression we are being shafted? Look at this statement in the press release.

[QUOTE]"Treasury will receive the most favorable terms and price offered to any other preferred shareholder through this exchange," the department said in a statement.[/QUOTE]

So given the price per share we are paying, how do they come off saying it is the 'most favorable terms'? How about if I add this to the mix also from the release.

[QUOTE]Citi will offer to exchange up to $27.5 billion of its existing preferred stock held by private investors at a conversion price of $3.25 per share. That's a 32 percent premium over Thursday's closing price of $2.46.[/QUOTE]

Does anyone else spot that $3.25 conversion price? How about the extreme effect this will have on existing shares? Closing was $2.46 yesterday so I predict a closing price of $1.75 or less today. That is almost cheap enough to tempt me to buy a boatload - NOT! I'm not even going to talk about the dilutive effect $27.5 billion converted to common stock at $3.25 will have. You calculate the actual number of shares required.

DarJones

[quote=AES;164142]Is it possible that bankers bastardized the CRA and took advantage of taxpayers and unworthy borrowers alike for unrealized profit?[/quote]Not sure exactly what you mean by "bastardized" and "took advantage of", but the answer is NO for any interpretations that occur to me.

Go back to the previous thread and start reading at post #716. [URL]http://www.mersenneforum.org/showthread.php?t=9526&page=8[/URL]

(I'm a softie.) Here's a shortened version:

Consumers Union says,

"CRA is not the cause for the foreclosure crisis"

[URL="http://www.consumersunion.org/pub/homepagerighttop/006247.html"]http://www.consumersunion.org/pub/ho...op/006247.html[/URL]

[quote][B]Statement from National Civil Rights, Consumer, Community Development and Housing Groups Regarding Attacks on the Community Reinvestment Act (CRA)[/B]

Washington, DC – The following group of civil rights, consumer, community development, and housing groups today made the following statement:

Recent conversations pointing to the Community Reinvestment Act as the cause of the foreclosure crisis and credit market crisis are an attempt to deflect attention away from the real problem affecting our financial system. That problem is failed regulatory policy and oversight.

For more than a decade, community leaders, civil rights proponents and housing groups have raised concerns about unfair, deceptive and abusive lending practices that have undermined homeownership aspirations for millions of working families. Those pleas for better regulatory policy and oversight not only went ignored, in some cases they were contradicted by regulatory policy that made predatory lending more virulent and prevalent in low-income neighborhoods and communities of color.

. . .[/quote]and it ends (with my underlined italics for the first sentence -- cheesehead):[quote]... [I][U]If the Community Reinvestment Act – and other appropriate regulation -- had been applied to independent mortgage companies and other non-bank financial institutions, it is likely that our nation would not be confronted with a foreclosure crisis.[/U][/I] Critics of the law conveniently ignore that about 75 percent of sub-prime loans were not covered by CRA. They also ignore the fact that most reckless and damaging subprime lending occurred between 2003 and 2007, long after CRA’s passage in 1977.

CRA exams provide clear and strong incentives for banks to make safe and sound loans and penalize them for making loans that are unfair and abusive. CRA is an antidote, not a cause of the current crisis.

Signed by:

Accion USA / Chicago / New Jersey / New York
Center for American Progress
Center for Responsible Lending
CDFI Coalition
Consumer Action
Consumer Union
Consumer Federation of America
Dēmos: A Network for Ideas & Action
Enterprise Community Partners
Housing Assistance Council
Lawyers' Committee for Civil Rights Under Law
Leadership Conference on Civil Rights
Local Initiatives Support Corporation
NAACP
National Association of Consumer Advocates
National Alliance of Community Economic Development Associations
National Community Reinvestment Coalition (NCRC)
National Consumer Law Center (on behalf of its low income clients)
National Council of La Raza
National Council of Negro Women
National Housing Conference
National Housing Institute
National League of Cities
National Low Income Housing Coalition
National NeighborWorks Association
National Policy and Advocacy Council on Homelessness (NPACH)
National Rural Housing Coalition
National Urban League
Opportunity Finance Network
Rainbow PUSH Coalition
US Conference of Mayors

[B]Contact[/B]:
Pamela Banks
202-462-6262[/quote]In response to a common misconception that CRA makes banks lend to uncreditworthy people, I pointed out:

[quote=cheesehead]No, the CRA encourages banks not to "redline" by ruling out loans to entire neighborhoods. It provides for periodic examinations of banks to determine whether they comply.

It does _not_ require that any bank make a loan to a noncreditworthy person. What it _does_ is encourage banks to stop using a creditworthy person's location or neighborhood as reason to deny a loan.

From [URL]http://www.federalreserve.gov/DCCA/CRA/default.htm[/URL]:

[quote]Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.[/quote][/quote]

[QUOTE=Fusion_power;164177]Today Citi gets a $25 billion conversion of taxpayer dollars into a 36% stake in the company. Lets do some math on that. We already own an 8% stake so whatever they are paying, it is for 36-8 = 28%. This is NOT existing stock either, it is newly issued shares which is therefore highly dilutive to existing shareholders. The float is 5.4 billion shares so a raw estimate is that citi has to issue 16 billion new shares to convert the govt stake plus the required conversion of other preferred shares. Now lets see. 8 billion shares at a nominal $25 Billion means we are paying $3.25 per share. I know this is funny math, but do you get the impression we are being shafted?[/QUOTE]

See my link to Barry Ritholz` article about the government`s increased stake in Citi below, just underneath the GDP report link.

---------------------------

[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=arvmEfnEL1OI&refer=news]U.S. Economy Shrank 6.2% in Fourth Quarter, Worst Performance Since 1982[/url]: [i]The U.S. economy shrank in the fourth quarter at a faster pace than previously estimated as consumer spending plunged, companies cut inventories and exports sank.[/i]
[quote]Gross domestic product contracted at a 6.2 percent annual pace from October through December, [u]more than economists anticipated[/u] and the most since 1982, according to revised figures from the Commerce Department today in Washington. Consumer spending, which comprises about 70 percent of the economy, declined at the fastest pace in almost three decades. [/quote]
[i]My Comment:[/i] ...None of which should come as any big surprise - except to the "experts", apparently.


[url=http://www.ritholtz.com/blog/2009/02/worlds-worst-investment-to-get-worse/]Citigroup: World’s Worst Investment to Get Even Worse[/url]
[quote][i]Losers double down.
[/i]
That’s the classic trading rule which the USA is about to violate in an enormous way. According to trading maven Dennis Gartman, one should [b]“never, ever, ever, under any circumstance, add to a losing position.”[/b]

And yet that is what we are about to do.

To review: Former Treasury Secretary Hank Paulson made a terrible investment on behalf of the taxpayers by purchasing a 7.8% stake in Citigroup (C) for an initial $25 billion dollars. He further put the US on the hook by guaranteeing against 90% of future losses on $301 billion in assets. Subsequently, we (the taxpayers) injected another $20 billion dollars.

At the time, Citigroup had a market cap of about ~$50 billion dollars. Today, its worth ~$13 billion.

So for about 100% of the market value of Citi, plus insurance guarantees worth of as much as 500% of its value (~$275 billion), we got less than 1/10 of a company that in total was worth 1/5 of our investment.

Pretty good deal, eh?

That $45 billion dollar stake now has a market value of just over a billion.

And, its about to get even worse.

Rather than do what is the FDIC-mandated-by-law thing, we will instead convert the nearly worthless common into preferred shares. The taxpayers stake will rise to near 40% of Citigroup.

NYT:
[i]
“Under the terms of the deal, the Treasury Department has agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock. It will convert its stake to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so alongside the government, two people close to the deal said.”
[/i]
What does this do for us? Well, the higher investment stake creates an enormous incentive for John Q. Public to continue to pour money into Citi, regardless of valuation. The inept banking giant then has access to infinite amount of capital, courtesy of you, the 1040 filers.

Its just another example of why these insolvent banks should be nationalized, or for you squeemish free marketers, [b]FDIC mandated, pre-packaged Chapter 11, government funded reorganization.[/b]

If Obama continues to listen to the god-awful advice of Larry Summers and Tim Geithner, he will doom his presidency, and finsh marginally ahead of George W. Bush on the list of worst presidents.

This is not change we an believe in ...[/quote]
[i]My Comment:[/i] I would amend the advice about never adding to a losing position with "...unless you have really, really, really good reason to believe the long-term prospects of the company or sector are far better than current valuations reflect, and you can average down safely, i.e. without going `all in'." In the case of the U.S. government`s stake in Shittygroup, neither is true. Citi is so far beyond insolvent it`s not even funny ... absolutely no good reason (except the Geithner-protecting-his-bankster-buddies-backs argument of "mustn`t spook the financial markets") to throw more money at this financial black hole.

Fellow top-rated independent econo-blogger Mike Shedlock was a big supported of Obama during the recent presidential campaign (mainly once the field got whittled down to Obama v McCain - MS` original choice was Ron Paul), but like Barry Ritholz, is [url=http://globaleconomicanalysis.blogspot.com/2009/02/dear-mr-president-with-all-due-respect.html]none too pleased[/url] with the fiscal "initiatives" coming from the Obama administration so far.

One of the none-too-pleased shareholders on the Yahoo finance message board for Citi, observing that Citi shares (which had already dipped below $2 intraday in the past week) are approaching $1 in the wake of the government`s increased stake, observed wryly that " Obama was Correct - CHANGE is coming, 99 cents." (To which I would reply that without the government propping up [strike]ZombiemegabancorpUSA[/strike] Citi, he`d be lucky to get even one cent, because Citi would have filed for bankruptcy and been pink-sheeted long ago).