"This is presumably part of Citi's global ad campaign to tell everyone to remain calm, all is well. Let's hope it's not also a response to some customers panicking and taking their money out.
As a reminder: Most of Citi's deposits are not, in fact, guaranteed, at least not by the FDIC. Why? Because most of Citi's deposits are outside the US. American depositors may not be panicking, therefore, but it's not hard to believe that international depositors".
( And he basically says panicking )
So, I didn't agree:
Don the libertarian Democrat (URL) said:
John, Thanks for the comments. I was assuming that the guarantee was to save Citi, not the foreign investors. In doing that, they might or might not help out these foreign investors. But, given the implicit guarantees that have been acted upon so far, I might, as a foreign investor, have believed that the US Government would bailout Citi, and thereby guarantee my money indirectly. That might or might not be smart. I don't know.
I have also read, although not definitively, that we might have to save UBS, which, if I'm not mistaken, is a Swiss bank.
My only point, and I harp on it admittedly because I believe it to be so important, is that implicit guarantees can be as important as explicit ones, especially if you figure in the power of precedent.
One thing's for sure. If we did bailout foreign investors, we wouldn't call it that.
But feel free to comment more. I'm tempted to say something about the Titanic, but that ship has sailed.
Take care, Don
I have also read, although not definitively, that we might have to save UBS, which, if I'm not mistaken, is a Swiss bank.
My only point, and I harp on it admittedly because I believe it to be so important, is that implicit guarantees can be as important as explicit ones, especially if you figure in the power of precedent.
One thing's for sure. If we did bailout foreign investors, we wouldn't call it that.
But feel free to comment more. I'm tempted to say something about the Titanic, but that ship has sailed.
Take care, Don
Don the libertarian Democrat (URL) said:
John, I see this as favoring my position, but tell me what you think:
http://dealbook.blogs.nytimes.com/2008/11/23/plan-begins-to-emerge-to-rescue-citigroup/
"Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the government’s broader efforts to bolster the nation’s financial industry, according to people briefed on the plan, The New York Times’s Eric Dash and Gretchen Morgenson report.
Under the proposal, the government would shoulder losses at Citigroup if those losses exceeded certain levels, according to these people, who spoke on the condition that they not be identified because the plan was still under discussion.
If the government should have to take on the bigger losses, it would receive a stake in Citigroup. The banking giant has been brought to its knees by gaping losses on mortgage-related investments.
If approved, the plan could serve as a model for other banks, heralding another shift in the government’s morphing financial rescue. The Treasury Department initially proposed buying troubled assets from banks but then reversed course and began injecting capital directly into financial institutions.
The plan for Citigroup was still under discussion on Sunday afternoon, and it was unclear exactly how the arrangement might work. One question is how Citigroup and the government would determine the level of losses that the bank itself must bear before the government steps in. Another is whether any additional government money for Citigroup, which has already received $25 billion under the initial rescue plan, would come from the $700 billion industry bailout that Congress approved in October or from other federal sources, like the Federal Reserve or the Federal Deposit Insurance Corporation."
Take care,
Don
http://dealbook.blogs.nytimes.com/2008/11/23/plan-begins-to-emerge-to-rescue-citigroup/
"Federal regulators were considering a new rescue for Citigroup on Sunday, a step that could mark a third leg of the government’s broader efforts to bolster the nation’s financial industry, according to people briefed on the plan, The New York Times’s Eric Dash and Gretchen Morgenson report.
Under the proposal, the government would shoulder losses at Citigroup if those losses exceeded certain levels, according to these people, who spoke on the condition that they not be identified because the plan was still under discussion.
If the government should have to take on the bigger losses, it would receive a stake in Citigroup. The banking giant has been brought to its knees by gaping losses on mortgage-related investments.
If approved, the plan could serve as a model for other banks, heralding another shift in the government’s morphing financial rescue. The Treasury Department initially proposed buying troubled assets from banks but then reversed course and began injecting capital directly into financial institutions.
The plan for Citigroup was still under discussion on Sunday afternoon, and it was unclear exactly how the arrangement might work. One question is how Citigroup and the government would determine the level of losses that the bank itself must bear before the government steps in. Another is whether any additional government money for Citigroup, which has already received $25 billion under the initial rescue plan, would come from the $700 billion industry bailout that Congress approved in October or from other federal sources, like the Federal Reserve or the Federal Deposit Insurance Corporation."
Take care,
Don
Anyway, I believe I proved...lucky. Still, my point wasn't that off that it needed to be mocked, as history has shown.
Posts
Hello!
Maybe I was unclear, but my point was that Citi was guaranteed, and that the foreign investors didn't have to panic. Anyway, another blogger disagreed:
He had some fun with my name, and, as near as I could tell, found the idea that foreign investors thought that their investments were safe insane. How could he know that we live in a time of insanity?
A lot of people don't seem to like my name, which I explained when I started this blog, and, truly, who or who isn't a libertarian bores me. Anyway, he might have misunderstood me, so I replied. Twice: