Another day, another taxpayer bailout of a poorly run financial company. You would think I was used to it by now, but watching the underpinnings upon which our country was founded get shredded anew each day just never gets old.
This time its Citigroup (C), another firm whose managment made terrible investments in an attempt to compete with other firms making terrible investments, following the lead of terrible government policy. We've been over this before, but the absurdity keeps reaching new levels. (Just wait until the socialists are making ALL the decisions!)
C's market cap, the amount you or I could theorectically buy the company for on the open market, is around $33 Billion. We as taxpayers are giving C $20 Billion in cash and then guaranteeing around $300 Billion in 'distressed' assets. 'Distressed' is code word for 'crap', a technical financial term meaning taxpayers will end up paying $300 Billion more before its all said and done. And what do we get for it? An 8% stake in the company and some vague language about executive compensation. There should be NO compensation for running a $2,000 Billion company down to $33 Billion. I do not advocate private ownership by the government, but for the sake of argument in this crazy post-capitalist world, they could have at least owned the entire company for what they are paying.
This deal is messed up on so many levels. When you decide that you are no longer going to allow bad businesses to fail, you have to be prepared to deal with the consequences. Unfortunately, we have an ever growing segment of government that gets absolutely giddy over situations like this. They can artificially sustain a bad idea, while at the same time getting to berate the executives responsible for the failure on CSPAN and then blaming it all on the free market.
Folks, the free market had nothing to do with this. Don't let the talking heads convince you otherwise. The free market would have buried these banks long ago. The free market would have never allowed these bad mortgages to be made in the first place. This is the direct result of socialist policy at work and the outcome will be the governement's demand for more of it in the name of cleaning it up.
Citigroup, its your turn to walk through the Tunnel of Affirmation...