The Jury Talks Back

11/24/2008

Well, color me shocked…

Filed under: Uncategorized — Scott Jacobs @ 8:58 am

So it appears that CitiGroup is next in line to benefit from planned incompetence, as they are about to receive a generous, expansive care package from Congress – to the tune of $306 Billion.

Excuse me a moment as I ask a whiny, vulgar question of Congress:

Are you dipshits fucking HIGH?????

Seriously, double-yew tee eff, mate?  Considering that CitiGroup is in this pickle because of a rush to play in the morass of Bad Risk, I really, really hate this.  To be fair, I hate the government giving money to pretty much any private company for anything besides services rendered – even then I think the process by which we pay contractors is highly broken – but this is even worse.

We are rewarding abject failure.  And this isn’t the first time Citi has done this, either.

See, one of Citigroup’s biggest groups is CitiBank, which was – once upon a time – First National City Bank.  Back in 1920s, they repackaged bad loans to Latin America and sold them as safe securities.  I don’t need to tell you (I hope I don’t) what happened to these in 1929.

You’d think a company would learn, wouldn’t you.  That perhaps some form of institutional memory might come forth and say, like some sort of Ghost of Christmas Past, that what has come before may yet come again.  That perhaps, you know just maybe, this could be a bad idea.

But alas, non. Instead, we have a company once again acting foolishly (one might argue that they acted counter to their fiduciary duties), and everyone else paying the price.  I wouldn’t mind this all nearly so much as if the people who made these decisions didn’t have some sort of background that might warn/suggest that these were bad ideas, but such is not the case.  What we have are groups of otherwise intelligent people with educations that certainly must include accounting and economics (required for even the highly over-rated MBA – no offense, those who have them, I can explain my distaste for MBAs if you like).  Even I, a 30 year old idiot with but Econ 110 and 111, and a few accounting classes, could see these as Too Good To Be True deals.  Nothing pays the kinds of returns these things were promised to make (and for a time did make) and be completely on the up and up.  It just isn’t bloody possible.

But apparently, knowingly diving head first into a pile of Bad Idea is worthy of rescue.  It is worth Billions of dollars of money the Government doesn’t have because they are “Too Big To Fail”.

Bull.  If they were too big to fail, they wouldn’t be failing like a hooker at a nunnery.

I wonder what it would take get get myself classified as “too big to fail”?  I mean, if people who should know better can get away with a Metric Ass-Load (that’s 1.76 Shit-Tons, if you insist on using Imperial measure) of the people’s money, why not me?

Hey, I said I would TRY to not swear.  I said nothing about NEVER swearing.

Edit: whoops.  Deleted this post by mistake.  Feel free to repeat your witty comment, OIDO…

24 Comments

  1. Neither the Treasury Department nor the Federal Reserve System considers you “too big to fail” for the simple economic reason that you happen to be a moron.

    [That’s hardly an excuse – Congress wants to give the Big Three a bailout, and those people are hardly members of MENSA… -SJ]

    Comment by Official Internet Data Office — 11/24/2008 @ 9:03 am

  2. You really do get off on insulting the posters here, don’t you…

    You’re going to be one of those special commenters, I can tell.

    Comment by Scott Jacobs — 11/24/2008 @ 9:10 am

  3. Can I be a “special” poster too?

    Well my take is that – can I change my name to CITI Bank and how do you even cash a 306 billion dollar check?

    Another stupid question – since the government is buying working interest in corporations

    Do they pay taxes?

    Comment by EricPWJohnson — 11/24/2008 @ 11:12 am

  4. and how do you even cash a 306 billion dollar check

    I would suggest you do it at the end of the day, so the teller is rushed. :)

    Comment by Scott Jacobs — 11/24/2008 @ 11:14 am

  5. While I was earnestly trying to make a delicate distinction concerning Kevin Murphy’s post the other day about Proposition 8, you misunderstood what I said, Jacobs, and you called me a moron. As it turns out, you were also mistaken about that. Nevertheless, that doesn’t preclude you from being a loud-mouthed moron with a taste for gratuitous profanities, as you’ve amply demonstrated.

    Although you were commenting along with me on Murphy’s blog post and not on one of your own posts, I believe that as one of the new “bloggers” at The Jury Talks Back, you showed a laughable lack of restraint and judgment. You sound like the kind of dude who gets into bar fights.

    I have never insulted anybody on this blog, and I haven’t ever been called a name–except by you, Jacobs, the other day.

    [Sweety, I haven’t even started with the gratuitous profanity. I think I’m going to enjoy you, dear… -SJ]

    Comment by Official Internet Data Office — 11/24/2008 @ 12:23 pm

  6. OIDO – Your argument in that Murphy thread was pretty retarded. Just sayin’.

    Scott – Reading about the Citi bailout last night made me want to puke. A 90/10 loss sharing formula after they burn through the first tranche of losses? Why? Where do the bailouts stop? I say let one of these guys fail and see what happens otherwise we are going to keep doing them. The Democrats won’t be able to say no next year. A precedent has to be set this year.

    Comment by daleyrocks — 11/24/2008 @ 3:19 pm

  7. I’ll leave the whole Jury Talks Back fiasco now to daleyrocks, Jacobs, and any other mouth-breathers and knuckle-draggers. Have a nice life.

    Comment by Official Internet Data Office — 11/24/2008 @ 4:39 pm

  8. The Democrats won’t be able to say no next year. A precedent has to be set this year.

    That’s just it – it has been set. We’re looking at handout after handout for at least the next 2 years.

    Next year will see the buying of votes in the form of $700 billion in refund checks (ironicly mostly to people who don’t actually PAY anything in taxes), and at least 2 bailouts for the auto industry. Why two? Because GM (I believe it was) alone is on track to be utterly out of money by late 1st, early 2nd quarter, and the other two aren’t much better off.

    So either the gift basket is going to have to be bigger, or there will be a second – likely bigger – pile of cash for them probably early in Q3, late Q3 on the outside.

    The people will be pissed as hell, but Congress will be willing to bet that they can keep us happy with a second (or third) round of “stimulus checks” (come on, lets call them what they are – bribes).

    Ah well. Never much cared for that whole “Free Market” thing anyways.

    Obama’s gonna have use dreaming of the bright, halcyon days of Carter…

    Comment by Scott Jacobs — 11/24/2008 @ 5:06 pm

  9. Just don’t forget Scott, your man Bush is the one who spent the 300 million on them. Hopefully it won’t be that much, but that’s what’s at stake.
    I agree that this whole thing is a fiasco and rewarding bad business. Would you still be totally against it if the top brass was fired first?

    Comment by Psyberian — 11/24/2008 @ 7:07 pm

  10. Just don’t forget Scott, your man Bush is the one who spent the 300 million on them.

    Aside from some tax cuts, Bush hasn’t acted like a fiscal/economic conservative.

    And I would still be against it if the top brass got canned.

    Not AS against it, mind you, but it still flies in the face of how the Market is supposed to work, and thus I would be against it.

    The market it smarter than you, me, Congress, or anyone. It can fix itself, if you leave it alone.

    Comment by Scott Jacobs — 11/24/2008 @ 7:13 pm

  11. However, Psyberian, I should point out that in mere days the Pelosi pledge that the Big Three would have to present a comprehensive plan on restructuring and all that good stuff BEFORE getting a bailout turned into ‘Well, we aren’t going to make them actually hand that in’.

    That’s like… Like…

    Well, it’s pretty freaking ignorant, handing oodles of cash to a trio of businesses that have actively NOT produced cars people wanted to buy (at prices people would be willing to pay), and then dare claim they are victims…

    Sure they’re victims – of their own drooling stupidity…

    Comment by Scott Jacobs — 11/24/2008 @ 7:22 pm

  12. Scott – I didn’t know OIDO was that sensitive. I might have been less kind about his monumentally retarded argument in the Murphy thread about how he personally would never adopt the position he was advocating, but he would admire people who did.

    Comment by daleyrocks — 11/24/2008 @ 9:14 pm

  13. That’s not fair, daleyrocks…

    That’s so NOT what he was saying, if you don’t read the words he used to say it. :)

    *shrugs* OIDO is as welcome as anyone else to come and go. I certainly won’t do anything to prevent it…

    Heh… Mouth-breather… *snickers*

    Comment by Scott Jacobs — 11/25/2008 @ 6:25 am

  14. Michael Lewis of “Liar’s Poker” fame recently penned The End, an essay that traces the experiences of Steve Eisman. Eisman being one of the few who saw the Mortgage Meltdown for what it was, back when that train was still thundering sleekly down its straight, narrow tracks.

    You can draw a line from the Lewis’s character studies of the honchos of Countrywide and Moodys to the geniuses at Citi. And the puzzling “once in 500 years” (though also about once per decade) circumstances that brought us here, to Bailouts-R-Us.

    Apocryphally: apparently (Steve Sailer says) Paulson cashed out of Goldman Sachs to the tune of $700 million. So “700” is a lucky number of sorts, for rescue packages and the like.

    Comment by AMac — 11/25/2008 @ 6:25 am

  15. Hmm, my comment (with two URLs but no f-bombs) wouldn’t pass moderation. Perhaps I’m thinking spammy thoughts.

    Comment by AMac — 11/25/2008 @ 6:54 am

  16. I’ll fix that. Great, now *I* have to remember to check the filters…

    Comment by Scott Jacobs — 11/25/2008 @ 6:58 am

  17. Try again, AMac. I’m not seeing anything in the filters…

    Comment by Scott Jacobs — 11/25/2008 @ 7:01 am

  18. I do think government action was called for (as I said in my post and comments on the bailout) but the mechanisms used here look like they will end badly.

    For those who keep saying that Bush did a terrible job with his profligate spending: Yes. Republicans, generally, see that. For the Republicans who want to blame Congress: Bush had a veto stamp.

    I have some hope for Obama; he’s hiring smart experienced people rather than nutballs, as a general rule. If he keeps RFK Jr. away from any positions of power, I’ll consider that another good move.

    –JRM

    Comment by JRM — 11/25/2008 @ 7:09 am

  19. Scott – I did read the Murphy thread before I commented. OIDO should have gotten a speeding ticket for the rate at which he was moonwalking backwards.

    It shouldn’t prevent him from commenting anywhere, however. If he’s got thin skin about prior bad arguments, he’s going to learn from it. I don’t want to discourage him.

    heh…..knuckle-draggers

    Comment by daleyrocks — 11/25/2008 @ 7:59 am

  20. Apparently they gave generously to both parties, Paulson’s favorite charity, and paid Bill Clinton over $2 million for speeches over the last few years.

    Too big to fail–sure, the pols don’t want to stop the gravy train.

    Comment by Patricia — 11/25/2008 @ 8:55 pm

  21. I’m torn on the bailouts for financial institutions – they’re basically utilities in my book – but what I’d like to know is, can we at least tar and feather whoever it was at Citibank who thought it was a good idea to try to take over Wachovia when they knew Citibank was in almost as much trouble as Wachovia was, and to seek government assistance for that takeover also?

    Comment by Xrlq — 11/26/2008 @ 7:26 pm

  22. I support some of these bailouts and not others. I’d like to be a libertarian and oppose them all but that’s outweighed (in my book) with the need to give people confidence in the banking system. The problem is that the banking system is a nebulous and ever-expanding concept that covers many investment vehicles so it’s hard to draw the line where the bailouts should stop.

    Comment by DRJ — 11/26/2008 @ 7:56 pm

  23. need to give people confidence in the banking system.

    We can do that. Make sure you announce daily that deposits are still secured. That your money that you got in the bank is still there, no matter what.

    And then you let the companies that willingly made bad decisions fail. Banks won’t go away, but the idiots who destroyed the larger companies will.

    Win/Win.

    Comment by Scott Jacobs — 11/26/2008 @ 8:16 pm

  24. It depends on how you define banks, Scott. Do you cover accounts at brokerage houses that are essentially bank accounts, or are you willing to let them go? What about whole life policies with insurance companies? And then there are college savings vehicles, 401ks, health savings accounts, and pensions that are especially important to college students and older or sick people who need the money now.

    People don’t just put money in the bank anymore, which is one reason why this has been so hard to contain.

    Comment by DRJ — 11/26/2008 @ 9:19 pm

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