ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Thursday, November 13, 2008


citi approaches nationalization

institutional risk analyst has already predicted the outright nationalization of C, JPM and perhaps BAC in 2009, but the recent slide in citi stock -- as low as $8.27 today -- has felix salmon on board as well.

Citi might well turn out to be Hank Paulson's largest and biggest headache. There's no one he can sell it to -- it's far too big already. Which means that Paulson's only real option, if things deteriorate much further from here, is nationalization. Bits of it could be sold, at a price -- the retail bank to Santander, perhaps; other bits to JP Morgan or Goldman Sachs -- but the losses to the taxpayer would be enormous, and the disruption associated with breaking Citi up and then trying to integrate the pieces in the middle of a major financial crisis would likely be devastating to the economy.

In rough seas, it helps to be big and heavy -- up to the point at which it helps to be smaller and lighter. Citi is the biggest and heaviest ship in a storm of unprecedented magnitude, she's creaking badly, and there's nothing the captain can do about it: you can't fix a vessel like that in the middle of a hurricane. All you can do is hold on tight, and pray.

UPDATE: citi will cut 60,000 employees in a 25% reduction of workforce.

UPDATEL this from john hempton of bronte capital.

Labels: ,

every road seems to wind up at nationalization.

------ ------- ------
funny how nobody's ever interested in nationalizing things when profits are up...

------ ------- ------

Post a Comment

Hide comments

This page is powered by Blogger. Isn't yours?