I personally think most Americans don’t have a clue as to what’s going on. We’re in BIG trouble. This is worse than the Great Depression. The reason why is because of the government’s involvement. They keep making the situation much worse and the more money government throws at this recession, the longer and deeper the depression will be.
Lets do some rough math shall we. Citi is trading at $1.60/shr with market cap under $10 Billion. So Citi (C) ask our government to convert the preferred share at the price of $3.25/shr “up to $25 billion” and “36% stake in the troubled bank”..OK, Let’s see, the government is spending $25 billion to buy 36% of $10 billion company… no wonder US is bankrupt. Didn’t Paulson already make a 7.8% stake in Citi last fall??
Interesting comments in the article.
Tier 1 Capital
Tangible Common Equity
Converting $27.5 Billion from Debt to Equity
Market Cap yesterday’s close $10.2 Billion
Market Cap today’s open $8.6 Billion
Government (Taxpayers) getting 36% ownership
Taxpayer got screwed . . . again. And we must brace for the next round.
If the US Government really did care about the taxpayer’s interest, then they wouldn’t have swapped preferred stock for common shares. So what happens to the People’s 36% stake when Citi files for bankruptcy? Exactly, they’re screwed just like the common investor. This pathetic situation is going no where good.
Only one week ago, Obama said he was against nationalizing banks. I hope people are finally learning that you can’t place any faith in what comes out of the Federal Government. This is the end of modern capitalism as we knew it. I no longer have hope that Mr. Obama has any common sense, or that he will reign in his wild spending spree. The only thing that will slow him down will be the impending rampant inflation. We are now entering unchartered waters. Bernanke is repositioning the Fed blimp to dump dollars directly on Wall Street in hope to distract traders.
