Citigroup a ‘Black Hole’ that Requires Nationalization
A year ago, blogger Michael Shedlock pronounced Citigroup insolvent. No one paid much attention then, but Shedlock never wavered. Now the U.S. government is
Jul 31, 2020201.7K Shares3.2M Views
A year ago, blogger Michael Shedlock pronouncedCitigroup insolvent. No one paid much attention then, but Shedlock never wavered.
Now the U.S. government is in talks to significantly expand its ownership of Citi, the Wall Street Journal reports.And Shedlock, who writes the widely read Mish’s Global Economic Trend Analysis blog,thinks that move can’t come too soon.
From Shedlock:
“„Citigroup is a black hole, sucking in every dollar thrown at it and it still wants more. No amount seems enough to save it. Taxpayers have already guaranteed a whopping $300 billion dollars worth of Citigroup debt. Now, two months later, Citigroup is begging for still more capital, pretending that will save it.
And Treasury Secretary Timothy Geithner isn’t helping, Shedlock says:
“„How the hell can you preserve a system this way? The answer is you can’t. Nonetheless the Obama administration tries to end bank nationalization talk.
That isn’t working. Calls for nationalization keep growing, with everyone from Nobel Prize-winning economist Paul Krugman to former Federal Reserve Chairman Alan Greenspan joiningthe chorus. Shedlock points out that plenty of questions about nationalization remain, but there’s little doubt it’s the direction we’re headed in. There’s just no other choice. From Shedlock:
“„Geithner is attempting to bail out his banking buddies, no more, no less, and he does not give a damn what it costs taxpayers to do so. And while everyone and their brother has hopped on the Nationalization Train (please see The Nationalization Train Has Left The Station), I think there are at a bare minimum a half dozen questions that need to be addressed first (please see Nationalization Revisited).
“„Citigroup is struggling to remain independent even as it knows full well, that without still more government intervention, it is worthless. In fact, Citigroup is less than worthless because without more taxpayer cash infusions it cannot survive.
“„To hell with Citigroup. Bust it up and sell it. It’s the best possible outcome for everyone involved.
With banks facing stress teststhis week that will reveal more about their bottom lines, look for nationalization in some form to become an accepted strategy. They’ll call it something else to make it more acceptable, like preprivatization. As Shedlock pointed out last year, the entire banking system is insolvent, not just Citigroup. It really doesn’t matter what they call it anymore. Nationalizing the banks may be the only thing left to do.
Rhyley Carney
Reviewer
Latest Articles
Popular Articles