The Economy, stupid

[Balta1701]

Thanks for the opinions folks.

 

Figured I'd play it safer and just cashed in $250 worth of gift cards. They'll get used at some point guaranteed, at that way I don't have to worry about it.

[southsider2k5]

If they actually fail, as in bankruptcy, yes. What I am saying is, I believe they will not actually go bankrupt.

 

Balta- I have about 100,000 points on a Citi travel rewards type card. I'm not going to take them out. You do whatever makes you most comfortable. I just feel the chances of C going bankrupt are very, very low.

 

Banks don't declare bankruptcy though. The get shutdown by the Fed bank. Its a different mechanism.

[NorthSideSox72]

Banks don't declare bankruptcy though. The get shutdown by the Fed bank. Its a different mechanism.

bankrupt, insolvent, government control, whatever the terminology, I think its not going to happen.

 

[NorthSideSox72]

Thanks for the opinions folks.

 

Figured I'd play it safer and just cashed in $250 worth of gift cards. They'll get used at some point guaranteed, at that way I don't have to worry about it.

Careful which companies you get gift cards from. Some of them may actually go bankrupt (like Circuit City just did), and they might negate those too.

 

[Balta1701]

Careful which companies you get gift cards from. Some of them may actually go bankrupt (like Circuit City just did), and they might negate those too.

Circuit city is actually still honoring those. Went with Target, Applebee's, and Kohl's. All 3 will get used fairly quickly by my family.

[Balta1701]

Somali Pirates in Discussions to Acquire Citigroup

 

By Andreas Hippin

November 20 (Bloomberg) -- The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.

 

The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said.

 

"You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to

offer the shareholders anything," said Ali.

 

The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS's are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody's and S&P have already issued their top investment grade ratings for the PRBS's.

 

Head pirate, Ubu Kalid Shandu, said: "We need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets has allowed us to purchase Citigroup

at an attractive valuation and to take advantage of TARP capital to grow the business even faster."

 

Shandu added, "We don't call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better."

 

*CITI IN TALKS WITH SOMALI PIRATES FOR POSSIBLE CAPITAL INFUSION

 

*WILL REQUIRE ALL CITI EMPLOYEES TO WEAR PATCH OVER ONE EYE

 

*SOMALIAN PIRATES APPLY TO BECOME BANK TO ACCESS TARP

 

*PAULSON: TARP PIRATE EQUITY IS AN `INVESTMENT,' WILL PAY OFF

 

*KASHKARI SAYS `SOMALI PIRATES ARE 'FUNDAMENTALLY SOUND' '

 

*Moody's upgrade Somali Pirates to AAA

 

*HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD `VERY LOW' PARTICPATION

 

*SOMALI PIRATES IN DISCUSSION TO ACQUIRE CITIBANK

 

*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK

 

* FED AGREED OCT. 29 TO TAKE `WHATEVER STEPS' NEEDED FOR SOMALI PIRATES

[southsider2k5]

Circuit city is actually still honoring those. Went with Target, Applebee's, and Kohl's. All 3 will get used fairly quickly by my family.

 

Sharper Imagine cancelled all of theirs when they went under. Many other companies honor them for a fraction of their face value. That being said, the three you went with should be fine, but I would be most scared of casual dining places. I read a prediction that 17 food chains will fail in 2009.

[StrangeSox]

Sharper Imagine cancelled all of theirs when they went under. Many other companies honor them for a fraction of their face value. That being said, the three you went with should be fine, but I would be most scared of casual dining places. I read a prediction that 17 food chains will fail in 2009.

 

I've heard several reports urging people to forgo giving the usual gift cards for presents this year because the store might be out of business by the time they get to use it.

[southsider2k5]

bankrupt, insolvent, government control, whatever the terminology, I think its not going to happen.

 

Fair enough. After seeing as many places as we have go under, they are running through all of the classic steps towards failure. I tend to go with history. I could very well be wrong though

[NorthSideSox72]

Fair enough. After seeing as many places as we have go under, they are running through all of the classic steps towards failure. I tend to go with history. I could very well be wrong though

I just don't think a RETAIL bank the size of C will go under. I hope I'm right, but, I can't say I know for sure.

 

[southsider2k5]

I've heard several reports urging people to forgo giving the usual gift cards for presents this year because the store might be out of business by the time they get to use it.

 

If you do, stick with an actual credit card brand gift card ( IE Visa or Mastercard etc) vs a storebrand. If you go with a store, go with somewhere you know will be around, like a Target or Wal-Mart.

[NorthSideSox72]

If you do, stick with an actual credit card brand gift card ( IE Visa or Mastercard etc) vs a storebrand. If you go with a store, go with somewhere you know will be around, like a Target or Wal-Mart.

Unless Visa or Mastercard go under. But I haven't heard any news of that happening.

 

[southsider2k5]

Unless Visa or Mastercard go under. But I haven't heard any news of that happening.

 

There hasn't even been a whisper of those places.

[StrangeSox]

So anyone know why the market decided to go up 6% today?

[southsider2k5]

So anyone know why the market decided to go up 6% today?

 

The announcement of our new SecTres is what really got the market going. The funny part is that the NYT announced that Hill had accepted SecState, and the market sold off two hundred points. Then she came out and denied, and it rallied through the highs to finish on the highs of the day

[BigSqwert]

So anyone know why the market decided to go up 6% today?

Because of this

[Balta1701]

Marx/Engels: WSJ

The federal government was nearing an agreement Sunday night to rescue Citigroup Inc. by helping to remove billions of dollars in toxic assets from its balance sheet, people familiar with the talks say.

 

The agreement, which was still under discussion and could fall apart, would mark a new phase in government efforts to stabilize U.S. banks and securities firms. After injecting nearly $300 billion of capital into financial institutions, federal officials now appear to be willing to absorb bad assets, on a targeted basis, from specific institutions.

 

The talks Sunday centered on the creation of what is sometimes called a "bad bank" -- an outside entity designed to hold some of a financial firm's worst assets. That structure would help Citigroup cleanse itself of billions of dollars in potentially toxic assets, these people said.

 

Under the terms being discussed with top Treasury Department and Federal Reserve officials, Citigroup would agree to absorb losses on assets covered by the agreement up to a certain threshold, people familiar with the matter said. The U.S. government would then absorb any additional losses, these people said. One person said the new entity is expected to hold about $50 billion of assets.

 

That would mean taxpayers could be on the hook if Citigroup's massive portfolios of mortgage, credit cards, commercial real-estate and big corporate loans continue to sour.

 

It was unclear Sunday night whether the government would take an equity stake in Citigroup in return for the support. Also uncertain was whether Citigroup would get a government loan to finance the facility. The government took that approach with insurer American International Group Inc. in late September.

 

The amount of financial support provided for a bad bank is crucial to its success. If there is too little, investors might conclude that the bad assets will wipe it out, leaving the bank right where it was before. Such a structure was used successfully in the 1990s, with funding from private investors, to rescue Mellon Bank, now called Bank of New York Mellon, from a pile of bad debts.

 

Behind the push is a broad effort to shore up faith in Citigroup, which saw its stock price fall 60% last week to a 16-year low. Citigroup has been pounded by mortgage-related losses.

 

In addition to $2 trillion in assets it has on its balance sheet, it has another $1.23 trillion in entities that aren't reflected there. Some of those assets are tied to mortgages, and investors have worried they could cause heavy losses if they are brought back on the company's books.

[Rex Kickass]

It's funny, the government doesn't seem to bat an eye at propping up massive banks that made really bad choices these days. But automakers ask for less money than Citibank just got this weekend to keep over 300,000 blue collar workers in jobs, and its a hand-out too far.

 

I know the argument is that if GM/Ford/Chrysler can't survive on its own, any bail-out is going to forestall an inevitable death. If that's true, wouldn't it also make sense to spend some money now to spread the shock and pain around over time so that we don't suffer a 4% drop in GDP immediately with relatively little to absorb it?

[YASNY]

It's funny, the government doesn't seem to bat an eye at propping up massive banks that made really bad choices these days. But automakers ask for less money than Citibank just got this weekend to keep over 300,000 blue collar workers in jobs, and its a hand-out too far.

 

I know the argument is that if GM/Ford/Chrysler can't survive on its own, any bail-out is going to forestall an inevitable death. If that's true, wouldn't it also make sense to spend some money now to spread the shock and pain around over time so that we don't suffer a 4% drop in GDP immediately with relatively little to absorb it?

 

I'm more in favor of this bailout than any that have occured to this point.

[NorthSideSox72]

It's funny, the government doesn't seem to bat an eye at propping up massive banks that made really bad choices these days. But automakers ask for less money than Citibank just got this weekend to keep over 300,000 blue collar workers in jobs, and its a hand-out too far.

 

I know the argument is that if GM/Ford/Chrysler can't survive on its own, any bail-out is going to forestall an inevitable death. If that's true, wouldn't it also make sense to spend some money now to spread the shock and pain around over time so that we don't suffer a 4% drop in GDP immediately with relatively little to absorb it?

As important as the auto industry is to the economy, it pales in comparison to the financial community. The financial system, the banks of all kinds, have to come first. Without the efficient movement of money through the financial system, no other industry matters. They are just not remotely comparable.

 

[southsider2k5]

Marx/Engels: WSJ

 

Well there we go... Citibank was going to fail, the Feds had to step in and stop it.

[NorthSideSox72]

Well there we go... Citibank was going to fail, the Feds had to step in and stop it.

Sure. Chances of C failing were increasing, C couldn't be allowed to truly fail, so they stepped in. Shouldn't really be a surprise to anyone.

 

Also saw today in the WSJ that the money is coming with some stricter rules than previous chunks - rules about dividends, payback rates and periods, executive compensation, asset protection thresholds, etc.

 

I do want to say again, all these chunks of money had better be followed up by a rehaul of the regulations and laws, and the agencies that enforce them.

 

[StrangeSox]

So does the government ever plan on selling these shares back in the future? Or are we moving towards more permanent government influence over these institutions?

[NorthSideSox72]

So does the government ever plan on selling these shares back in the future? Or are we moving towards more permanent government influence over these institutions?

Well that is one of the big questions. Treasury says it will sell them back at later dates. but, I do not believe they are forced to within any set timeline. And of course the sell-to-close of those preferred shares, if done in any kind of bulk, will move the markets.

 

[kapkomet]

Sure. Chances of C failing were increasing, C couldn't be allowed to truly fail, so they stepped in. Shouldn't really be a surprise to anyone.

 

Also saw today in the WSJ that the money is coming with some stricter rules than previous chunks - rules about dividends, payback rates and periods, executive compensation, asset protection thresholds, etc.

 

I do want to say again, all these chunks of money had better be followed up by a rehaul of the regulations and laws, and the agencies that enforce them.

Sure, seeing as how Saudi Arabia and UAE owns a good chunk of C, they better have some real regulations.