Govt ready to sell off its stake in Citi! It's socialism! It's...wait a minute...

Discussion in 'Politics, Religion, Social Issues' started by Thomas Veil, Mar 27, 2010.

  1. Thomas Veil macrumors 68020

    Thomas Veil

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    #1
    Res ipsa loquitur.

    Oh dear. This has simply been a terrible news week for the right, hasn't it? :D
     
  2. Ugg macrumors 68000

    Ugg

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    #2
    Shocking! What's the world coming to when the gummint makes money off loans to troubled banks! Raping and pillaging is sure to come next along with the very breakdown of our free enterprise system!
     
  3. Desertrat macrumors newbie

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    #3
    All the giant investment banks have been using your tax dollars to make beaucoup profits. They've had nearly-free money from the git-go, and the low Fed rate has enabled zero-risk profitability. Add to that the pumping of the market by the Plunge Protection Team, and the stock prices have been pushed upward from their well-deserved lows.

    The spin is that the idea for the deal came from the White House. I really doubt that; it's an effort on Citi's part to get out from under any governmental control inherent in the ownership of shares. The SEC is much easier to deal with.
     
  4. skunk macrumors G4

    skunk

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    #4
    Every silver lining has a cloud, eh 'Rat? :rolleyes:
     
  5. leekohler macrumors G5

    leekohler

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    #5
    What is happening is what was planned in the first place. The government never intended to stay in the banking business permanently. I was against bailouts, but even I knew this.
     
  6. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #6
    I never thought the government was in it to completely take over the banks, I just didn't like the idea of them shoring up the banks so they could put a pile of dirt over this mess and keep on going. This problem isn't solved by a long shot, we just buried it in a shallow grave.

    I can't remember if citi was the company we took a big hit with by trading preferred for common stock either..
     
  7. Peace macrumors Core

    Peace

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    #7
    Being the big money guy here Zombie it would seem an $8 billion return on investment would be a good thing.

    One can't dance around that fact.
     
  8. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #8
    I would have to see total expenditures which I believe were in the range of $45B plus interest. We get the shaft if I recall correctly when we converted $25 billion in preferred shares to common. I don't remember exact details, but I remember being pissed when i heard the deal.

    All of this is irrelevant however, the government should not have to be bailing out banks especially with the unsavory activity that was going on, the real bad part about this is that the housing market value was never realized.
     
  9. TechieJustin macrumors 6502

    TechieJustin

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    #9
    When Lehman went under, I remember watching clips on CNN of people walking out with laptops, printers and other various computer equipment.
    The problem was the IT equipment was leased, and not owned by Lehman.
     
  10. splitpea macrumors 6502a

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    #10
    Well, I hated the idea of corporate welfare in the form of bailouts (why is it that the right always endorses corporate welfare but condemns human welfare?), but it's a relief to see that at least it's turned a profit instead of a loss. One could hope that that profit would be returned to the taxpayer in the form of using the money in the budget such that it reduces the need to raise that amount of money via taxes.
     
  11. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

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    #11
    Ok?
     
  12. callmemike20 macrumors 6502a

    callmemike20

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    #12
    +1 :p

    The problem also is that many companies lease office space in buildings instead of owning it...
     
  13. NT1440 macrumors G4

    NT1440

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    #13
    I'm confused, how do these "problems" relate to the topic at hand? :confused:
     
  14. callmemike20 macrumors 6502a

    callmemike20

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    #14
    They don't. That's the point. It was a random post that I just sarcastically made fun of.
     
  15. NT1440 macrumors G4

    NT1440

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    #15
    Ah, carry on then gentlemen, I just thought I missed something. :)
     
  16. Desertrat macrumors newbie

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    #16
    From the Doug Casey folks:

    "The Treasury Department announced today that it plans to sell its 7.7 billion common shares of Citigroup (C) stock this year. In case you don’t recall, the Treasury acquired the stake last year after swapping $25 billion worth of preferred shares obtained during its $45 billion bailout of the troubled bank for common shares that were trading at $3.25 at the time."

    Hold that number: $45 billion.

    "If the sale of the Treasury’s entire stake took place today at the current stock price of $4.18 per share, it would generate a paper profit for the government of about $7.2 billion."

    That profit would be based on the share price difference, $0.93 per share in profit for each of the 7.7 billion shares.

    Trouble is, the trade was $25 billion worth of preferred shares; a swap. Okay, fine. But that $45 billion minus the $25 billion leaves us with $20 billion, right? So the actual net deal at this point in time would be $20 billion minus that $7.2 billion, or $12.8 billion of your tax dollars still invested in Citi. Still bailing, eh?

    Next:

    "...the government will still control warrants in the company and has the “right” to purchase more shares at a future date...the Treasury took $45 billion in taxpayer money for the bailout of Citigroup; you can bet the farm that no taxpayer will see any of that money back if the Treasury profits from the sale of the company’s stock."

    Good bet.
     
  17. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #17
    Thank you. I knew something fishy was going on here.
     
  18. CaptMurdock macrumors 6502a

    CaptMurdock

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    #18
    Link?
     
  19. Desertrat macrumors newbie

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    #19
    Scroll down to the second article, although the first is quite worthwhile.

    http://www.caseyresearch.com/displayCdd.php?id=383

    Sign up. It's a free deal. One of the many reasons I listen to the Casey folks is that he started squalling about the oncoming financial debacle in 2003, way ahead of such esteemed souls as Greenspan or Geithner.

    Peter Schiff is another who did the same. Schiff is the one who shorted Lehman for a gazillion dollars in profit.

    The contrarian investors have done well, so far in this century. The mainstream folks such as our government, MSNBC, CNBC and such creatures as Jim Cramer have totally blown it.

    I figure that folks who correctly analyze and then prognosticate correctly have far more credibility than those who mumble that they didin't see hard times coming.
     
  20. Sdashiki macrumors 68040

    Sdashiki

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    #20
    Vindication by your own self...how interesting.

    Oh, im sorry I didnt notice Zombie and Rat were different people... :rolleyes:
     
  21. sysiphus macrumors 6502a

    sysiphus

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    #21
    So much for the government cutting the strings from big business :/

    What exactly is your point? Oh, I'm sorry, I was looking for something useful or constructive in your post. My mistake.
     
  22. Sdashiki macrumors 68040

    Sdashiki

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    #22
    the constant stroking of eachother's opinions when it comes to right-wing crap gets old.
     
  23. Desertrat macrumors newbie

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    #23
    Sdashiki, how is pointing out real-world numbers "right wing crap"? How is acknowledging fact somehow "stroking"?

    You would have us believe that agreement among right wingers is bad, but agreement among left wingers is good? Is that not a double standard? Often better-known as hypocrisy?
     
  24. mcrain macrumors 68000

    mcrain

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    Illinois
    #24
    I'm going to prognosticate and point out something so that in a few years I can tell you that I told you so...

    Things are about to start getting better. How do I know? History.

    Take a look at the relationship of the blue text to the green numbers. We have blue today, we will have green soon.

    Mark my words.

    http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm
     
  25. flopticalcube macrumors G4

    flopticalcube

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    #25
    While I applaud the exiting of gov't ties to another Wall Street firm (that should never have happened in the first place), I can't help escaping the feeling that we will be revisiting this in the near future.
     

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