Citibank Handout

by Larry Levin

As of Sunday evening, it seems like a done deal: the US taxpayer will be forced to partner-up with Citibank. Welcome to houseguest #2 that refuses to leave. AIG was the first houseguest that refused to leave the party, instead demanding tens upon tens of billions of dollars to go away. AIG, however, is still at the party - your wallet. Citigroup and AIG will soon come to be known as squatters.

The federal government was nearing an agreement Sunday night to rescue Citigroup Inc. by removing billions of dollars in toxic assets from its balance sheet. The agreement, which is still under discussion as I type this and could fall apart, would mark a new chapter in government efforts to nationalize U.S. banks. Although Citigroup has already received a direct taxpayer in injection via the TARP of $25 billion, it is not enough. Now King Paulson (Treasury Secretary) appears willing to absorb bad assets from specific institutions; politically connected and too big to fail institutions.

Let me be more specific - King Paulson is more willing to pass out your tax dollars in the form of capital injections, and more willing put your tax dollars at risk for Citibank's failed risk assessment of commercial real estate, credit card, corporate, and individual mortgage loans.

In addition to $2 trillion in assets it has on its balance sheet, Citigroup has another $1.23 trillion in entities that aren't reflected there - off-balance sheet assets. Enron sound familiar? Some of those assets are tied to mortgages, and investors have been worried that they could cause heavy losses if they are brought back on the company's books which caused its shares to drop 60% last week.

So who would be dumb enough to step in and guarantee to worst of the worst assets? Only a government. More specifically, only government officials that know its slack-jawed populace, who is so completely financially ignorant, would keep electing them no matter how much of the populace's tax dollars they piss away.

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. Andrew Jackson - 1836, before closure of the Second Bank of the U.S. (2nd Federal Reserve type bank) by revoking its charter.

In the end, the government is saying ANOTHER firm will not be allowed to fail. And capitalism without failure is like religion without Hell: it just doesn't work.


Previous Day's Trading Room Results:

Trade Date: 11/21/08

E-Mini S&P Trades*
(before fees and commissions):

1) Engf buy @ 8:45am at 763.25 = -1.50 (1 lot)

2) OTF sell @ 10:30am at 755.50 = -2.00 (1 lot)

3) FT buy @ 11:45am at 763.00 = -1.75 (1 lot)

4) FT sell @ 1:05pm at 750.00 = -1.75 (1 lot)

5) OTF sell @ 1:25pm at 758.00 = +1.50 (1 lot)

6) Algorithm positions (20)...combined daily total...+4.25

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



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