Citigroup is being nationalized by shareholders as we speak. Nationalization is when the shareholders get nothing, the bank it taken over by the Government, cleaned up, broken up, all executive management tossed out and then the bank is privatized once again.
Citigroup fell to $1.03 at 12:32 p.m. on the New York Stock Exchange after reaching 97 cents earlier today, marking an 85 percent decline this year and giving the New York-based company a market value of $5.5 billion. At its peak in late 2006, Citigroup stock was worth $55.70, for a market value of $277.2 billion.
Even more horrific, Citigroup lobbied for their own demise.
In addition, Citigroup pushed for the China trade agreement, influenced or even decided policy through multiple Presidential administrations and crafted additional agenda purely for their short term and short sighted interests. All the way back to the 1990's, when the public outcry reached 89% against the bad China trade agreement, we had this:
Corporate interests joined the White House in engaging in highly questionable tactics. According to news reports, corporate lobbyists and CEOs threatened to cut off campaign cash to lawmakers who opposed PNTR and lavished soft money on the two main parties (and millions on their conventions) to fuel active pro-PNTR leadership. Rep. Merrill Cook (R-Utah) reported being offered $200,000 to change his "no" PNTR vote to "yes." Corporations created fronts to funnel more cash to Congress. For instance, a corporate-funded PAC called the New Democratic Network handed out $250,000 to Democrats supporting the pro-corporate managed trade agenda. Companies such as Motorola, Boeing, AOL and Citigroup actively plied undecided or wavering members by organizing or promising special PNTR fund-raisers for pro-PNTR voters. Even the General Accounting Office concluded that the White House's coordination with corporate interests violated federal law forbidding the use of tax dollars for certain lobbying activities
Look what caving into these corporate lobbyists brings! National Economic Armageddon, even to that very corporation's own destruction.
If there is one major lesson to learn here is that corporate lobbyists are so obsessed with short term agendas they will cut of their nose to spite their face.
Politicians also have short term agendas.
As for this quasi-nationalization, ownership without control is a recipe for disaster.
RebelCapitalist.com - Financial Information for the Rest of Us.
post is sarcastic
What I'm implying is they threw all of this U.S. taxpayer money at Citigroup to avoid outright nationalization and they could have saved the taxpayer a ton of money and nationalized it, cleaned it up, head on.
The issue they are trying to avoid is systemic risk...
and if you see any projected analysis out there on scenarios of what would have happened if they just let these institutions fail, or simply nationalized certain banks, put them in a Resolution Trust Corporation and many of the alternatives....
That would be really enlightening...
because what I see is they are trying to salvage the shadow banking system, all of these derivatives, CDSes, CDOs, etc. from causing a domino type of economic collapse...
but I am wondering if they should have let the entire thing implode, just plain shut down the entire global financial system....let the fiction money disappear, the entire shadow banking system evaporate and then "reboot" the real financial system after some restructuring by governments.
One thing seems obvious, the current strategy is not working out too good and the justification for the current strategy are doomsday scenarios if they did not do things this way..
but it seems it will happen that way regardless of their efforts...
that's why we have all sorts of economists, experts from the far right to the far left all calling for bank nationalization akin to the Swedish action taken.
This stuff is getting to me.
I have lost my ability to detect sarcasm. I have wondered for a long time whether the threat of systematic collapse was intentionally overstated by financial conglomerates.
I believe if anything the lack of clarity and transparency on the part of Treasury and Fed. increases systemic risk. If there are segments of the financial sector that are relatively healthy should we know that.
I agree that maybe we let, at the very least, the unsalvageable go.
RebelCapitalist.com - Financial Information for the Rest of Us.
I believe the house of cards is very real
but ya know, if the entire global says "ok everybody, shut down now" and then as quickly as possible "shovels out the shit" in the system, i.e. CDSes, CDOs, etc. and then resets...
well beyond making speculators suffer, wouldn't everybody's pension funds and so forth that they are concerned about also reset at a new but equal lower level globally?
I mean gain and loss are relative terms so if they just had the entire globe be an "everybody loses" would we not notice the water levels are lower because everything now is?
I mean what a mess a $65 trillion dollar fictional economy, fictional money, global gambling casino extrodinaire and how does one plain shut the entire thing down with little real consequence?