Citigroup Nationalization: Talks Of 40% Gov Stake Causes Stock Rally (page 2)

Warlock

Maybe this is why gold has taken dive to the downside......................Citigroup Nationalization.

Maybe it will recover tomorrow. Not Citi, but gold.

Warlock

The same man that railed against the status of the GSEs, Fannie Mae and Freddie Mac as neither "fish nor fowl" when he was a candidate now converts the largest banks into the same thing. Public/private enterprises. That statists and socialists are reacting to this slight upwards move is confirmation bias. Its pennies. Citigroup is practically a penny stock. It's current market capitalization is a fraction of what it was 3 years ago. A small fraction. It does not take much capital to move it. Take a step back and look at the broader market. How is it reacting? The market votes every day it opens for business. Everytime the Messiah flaps his gums, it tanks. Still, bear markets cannot last forever.

1) Burden banks with lending mandates, overregulate (poorly), and flood the market with money.

2) Guarantee against failure, provide an unscrutinizing government backed secondary market that buys the dubiously secured debt sight out of mind--thus insulating against risk and creating a moral hazard. Sell a lot of it to foreigners. The oil states and China. What a great con.

3) Wait for the bust to come. The tide goes out and reveals all the filth at the sea bottom. Banks fail.

4) Nationalize the banks or at least extend government ownership. Blame it on free market capitalism when in fact what failed was state capitalism from the start (the banks became nothing more than appendages).

5)??? Leviathan owns you. He owns your banks where you keep your money. He owns your money, the sweat off your brow more than ever. The national credit is ruined, entities abroad will not want to invest here anymore after losing their shirts in a rapidly depreciating currency. Ruin.

BTS

BurnTheShips

CONCLUSION

America's biggest banks are going bust or have gone bust. Little banks are toppling each week. There is no end in sight.

The government, which is running a trillion-dollar deficit this fiscal year, is adding ever more debt to save the favored banks. It is buying the banks' insolvency in the name of future taxpayers.

The buyers of Treasury debt and the Federal Reserve System are funding all of this. They think future taxpayers will pay them back. I don't. I think there will be a tax revolt: mass inflation.

Meanwhile, every dollar that flows into the Treasury does not flow into the private sector. The nationalization of insolvency continues. The authority to make decisions regarding who will get the shrinking supply of private savings that the banks have not already absorbed to keep their doors open has been transferred to a new generation of capitalists, people who live in fear of government regulators, not depositors.

The year 2008 has seen the end of free market financial capitalism. Forget about efficiency. Forget about stable economic growth. Forget about everything except solvency as defined in fiat money.

Moral hazard is alive and well in the West. Free capital markets are not.

It was nice while it lasted. But it could not last. State capitalism always demands bailouts. It always gets what it asks for.

Senior managers got the gold mine. Taxpayers got the shaft.

beksbks

The same man that railed against the status of the GSEs, Fannie Mae and Freddie Mac as neither "fish nor fowl" when he was a candidate now converts the largest banks into the same thing. Public/private enterprises. That statists and socialists are reacting to this slight upwards move is confirmation bias. Take a step back and look at the broader market. Everytime the Messiah flaps his gums, it tanks

Let's see. "He" didn't start the TARP business, the last admin did.

Over regulate?? Is this a joke? Even the incredibly magnetic and attractive Allan Greenspan shrugged his shoulders and admitted that DEregulation hadn't worked like it was supposed to. It's a theory that has been tried and failed.

BurnTheShips

Let's see. "He" didn't start the TARP business, the last admin did.

He enthusiastically voted for the Bush Paulson plan, as did his major opponent. Not a dime's worth of difference between any of them.

Is this a joke?

No, it is not. A lack of regulation is not what destroyed the market, it was government guarantees and government interference. Regulation increased over the last term. Fed monetary policy on top of that. The SEC complained it no longer had resources to enforce. But if we look at the root cause why, it was the explosion of credit. More money, same number of bodies to track it. I have already posted extensively on it. Ron Paul brought this up in 1999. Search my recent post history.

BTS

beksbks

I've suddenly come over all sleepy like, goodnight.

BurnTheShips

Citigroup Nationalization: Talks Of 40% Gov Stake Causes Stock Rally

I picked up the local paper today and this actually gets it backwards. It is huffpo political spin. The stock rallied when Bernanke said the bank would not be nationalized. Here is the WSJ article:

"We don't need majority ownership to work with the banks," Mr. Bernanke said. "We have very strong supervisory oversight. We can work with them now to get them to do whatever's necessary." The goal is to restructure firms, remove toxic assets and return the institutions to profitability, eventually drawing private capital back in, he said.

The remarks eased investor fears, sent bank stocks surging and helped lift U.S. markets generally. The Dow Jones Industrial Average, which slid nearly 251 points Monday, climbed 236.16 points, or 3.3%, to end at 7350.94. The S&P 500 climbed 29.81 points, or 4%, to 773.14, boosted by a 12% surge in its financial sector.

http://online.wsj.com/article/SB123548742716959583.html?mod=googlenews_wsj

beksbks

Investors have been anticipating that the overall number of shares would increase and therefore reduce the value of each share. But investors also seemed to welcome the report because it lessened uncertainty about the company.

"People don't want to see the banks nationalized but they know something has to be done for Citi," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York. "A lot of people were scared of full-fledged nationalization."

"People are thinking at least maybe we know what they're doing now," he said.

Huff Po's article above.

Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that he doesn't believe any major banks are on the verge of failure and sought to quash speculation that banks would need to be nationalized, though he did leave open the possibility that some eventually will fall into government hands.

Testifying before the Senate Committee on Banking, Housing and Urban Affairs, the central bank chief acknowledged that some government capital could be placed into firms that need more cushion against losses. But public money flowing into banks would be structured to avoid triggering more federal ownership unless a worsening economy were to ...

Wall St Journal (I didn't realize you lived on Wall St. Burn)

Warlock

The market gained back its loses, but I think the Citi nationalization idea came back into it's memory and it ended down 80 points.

It could also be that the market was anticipating comments from the Obaminator.

Oh well, there's always tomorrow.

Warlock

Citigroup Nationalization: Talks Of 40% Gov Stake Causes Stock Rally

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