surrender more of taxpayers' money to Citigroup was temporarily avoided truly systemic collapse of the world banking system, but, as always, the real problems are not resolved and the inevitable collapse is only delayed.
Bloomberg reported that "Citigroup will cover the first $ 29 billion pre-tax losses of $ 306 billion troubled asset pool, in addition to reserves already set aside.Citigroup will accept 10% of the value above that amount with the government (ie tax taxpayer), which is responsible for 90%. treasuries absorbing 5 billion dollars in losses and the FDIC absorbing another $ 10 billion. If the portfolio plummets, the Fed will get credit for the rest. "Citigroup has already received $ 25 billion in the TARP.
Citigroup has 185 million credit card accounts around the world, even before the current phase of financial crisis, the increase in losses from year to year has jumped by 67% while the increase in accounts 90 days or more past due. Credit defaults are rising and it is inevitable that the main source of income will be reducing all the time. Nothing has happened to credit card debtors to repay what they owe, or to stop the exponential costs accumulate when you perform the payment due. are more matured, more difficult to pay the debt back. So, we can assume that Citigroup would be extremely vulnerable in that area and cause more losses.
above does not include the ever-present Pale Horseman of the products of the world. U.S. Commercial bank I account for 182.1 trillion U.S. dollars in notional derivatives. The frightening thing about this is that only 8.2 trillion U.S. dollars is regulated by the Exchange, and the remainder over the counter and not subject to any regulation. In mid-2008, Citibank NA held $ 37.1 trillion in derivatives bets with only 6.6% of regulated exchanges. This makes the derivatives exposures Citi 5 times the exposure to Lehmans had when he went to the wall. fallout from that still feels banks around the world. risk of these products is growing as the economy worsens and who will pick up the account when the inevitable debacle arrives? taxpayer, who should be getting something tangible for your hard-earned tax dollars as a real relief of their debt, the opportunity to keep their homes, investing in the creation of real jobs in manufacturing, rather than publicly funded largesse to Paulson's cronies on Wall Street. that have been exposed so far.
small agile Treasury policy continues to take precedence over common sense. This is despite the mixed culpas by Paulson himself admits that his cunning plan was not improving situation.Does anyone in Washington even think about the real economy more or they mistakenly assume that they can just throw a fiat money in financial institutions, hoping to will go away? U.S. ability to continue to throw money down the drain and still relies on the willingness of China, Japan and the oil kingdoms and they will be when the Treasury yield slipped below the level at which inflation will erode their gains. Gold is making a comeback in the reserves as a means of inflation proof. These latter countries also have to deal with their own economic disaster and need to have real money to solve the problem, not the promise of fundamentally bankrupt subject them to repay the money. increasing the distance between East and West Ogres bad for USThe splicing of countries in regional blocs, with their associated pragmatism, is a sign of things to come. How U.S. attack to the real economic problems will be determined by the wisdom and patience of some others. Whichever way you look at it, the U.S. must drastically lower living standards and expectations of relatively long and the existing production infrastructure reconstruction to the competition. Exposure to the U.S. taxpayer on the toxicity of Citigroup's "property" has only served to accelerate the downward trajectory.
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