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The United State government has agreed to increase its stake in embattled Citigroup from 8% to 36%. The NY Times explains, "Under the deal, Citibank said that it would offer to exchange common stock for up to $27.5 billion of its existing preferred securities and trust preferred securities at a conversion price of $3.25 a share, a 32 percent premium over Thursday’s closing price. The government will match this exchange up to a maximum of $25 billion of its preferred stock at the same price. In its statement, the Treasury Department said the dollar-for-dollar match was intended to strengthen Citigroup’s capital base." Still, Citi's shares plunged—Canaccord Adams managing director of U.S. equity trading David Rovelli told Bloomberg TV, "It’s just unbelievable. The government is making up the rules as they go. A continued breakup is probably in the cards." And former SEC chairman Arthur Levitt added, “This is another step toward creeping nationalization." Currently, the Dow is close to 7,000 points.
U.S. Gov't Takes 36% Stake in Citigroup
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Another case of sudden jihad:
http://www.nypost.com/p/news/local/student_kills_prof_nGgR2x0Omat9UDx4
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And former SEC chairman Arthur Levitt added, “This is another step toward creeping nationalization."
Um, DUH! What did these people think was going to happen when these companies asked to be bailed out? You can't ask the government to give you enough money to fund several small countries and expect no strings to be attached. This is why I was against the bailout in the first place - nationalization was sure to follow. Every last one of these companies should have been allowed to go under. That's capitalism, for better or for worse.
Now instead we're heading toward socialism. At least if they'd have gone under people would have learned a lesson - don't take out loans worth several dozen times your actual funds and invest them all in one place! Now what did they learn - don't worry about doing stupid shit and getting in trouble, the government will always be there to bail you out.
Capitalism is unsustainable. It's bound to fail.
"It’s just unbelievable. The government is making up the rules as they go."
Yeah, because bankers and financiers definitely follow the rules...
Note:
The Federal government.
Don't include the states, okay ?
The Federal Reserve is doing all this S@!$ !!!
I work for NYS and only the Fed is running the show, call ing the shots, and the stupid banks are allowing the Fed to call the shots.
The Fed fu$$ed up the system.
So true.
The Feds undid protections (at the behest of banks) meant to keep this from happening.
The Feds kept interest rates artificially low to replace one bubble with another.
The Feds profited from this, both individually in the form of campaign contributions from the hedge fund crowd and lobbying dollars from big banks and in taxing incomes inflated by the bubble.
Local governments fattened their tax rolls through artificially inflated property assessments and on sales taxes.
It's fair to blame capitalism, but blame the frog as well as the scorpion. http://allaboutfrogs.org/stories/scorpion.html
The government and corporate leadership should be put to task for this. The Ginsbergs were executed for less.
The problem that I have with this is that Citigroup deserves to fail. Everytime I've dealt with them, their service has been poor. They're incompetent. Why should taxpayers sustain a business as arrogant as Citigroup?
Have any of the executives at Citigroup lost their jobs because of their mismanagement?
"This is why I was against the bailout in the first place - nationalization was sure to follow."
Historical evidence, both domestic and international, is riddled with counter-examples. That doesn't mean that nationalization won't eventually happen.. but to make an argument that bailout=automatic nationalization requires more than a simple assertion.
The lesson you describe could still be learned without a potential collapse of the financial system. I don't have confidence that it will, but my hope is that a bit more oversight, a bit more regulation, and a bit more self-awareness from both lenders and borrowers will result in the lesson being learned, at least on a societal level. Even with the bailouts, a lot of people are still in a lot of trouble. There were 2.2 million foreclosures in 2007, and surely there were more in 2008 (I couldn't find any good data). Aside from that, you have all these job losses and 401k/investment losses which are directly and indirectly related to the mortgages.
This idea that the bailouts simply erase all of that and that people haven't learned anything just doesn't register with me.