Save The Economy, Save The World

Last week, while the federal government continued tossing life jackets to other members of the financial community, Citigroup hit an iceberg. Everyone heard the unique crunching sound that is made when a ship smashes into ice. Then again, maybe it wasn’t ice crunching as much as the cash in our wallets shrinking in value as the feds printed more money to handle the ongoing crisis.

On Tuesday afternoon shares of Citigroup closed at $8.36 on the New York Stock Exchange. By Friday afternoon those same shares were worth just $3.77. Shareholders lost more than 55% in 72 hours. Like investors at other banks and investment firms before them, the investors at Citigroup were shocked to learn that Citigroup had also sunk a lot of money into very risky investments.

Citigroup is in trouble, big trouble. As Congress debated the Great Bailout of 2008, many pundits were asking, “How big must a company be to be ‘too big to fail'”? Apparently, we know the answer to that question. ‘Too big to fail’ is now defined as bigger than Citigroup. We’re just not sure how much bigger.

As late as Sunday afternoon, the White House said they were unaware of any rescue talks, but hours later we learned a deal had been in the works for days. It appears the feds will be investing quite a bit of pocket change in Citigroup to go along with all of the other investments they have made over the course of the past few weeks. But just wait until you hear what the feds have planned to help keep Citigroup from sinking.

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One Week Into The “Rescue”

Here we are, one week since the “Great BailOut of 2008”. It’s been one week since some members of Congress stood up and said they thought the items in the bill were a bad idea but they were voting for it anyway. It’s been one week since others told us this was the best thing to do for our country.

Leading up to the bailout we were reassured that it would:

a) restore confidence in the credit industry

b) stabilize the market

c) save us from even greater financial ruin

In the past week, there has been anything but confidence in the credit industry, the market is far from stabile, and retirement plans have lost trillions of dollars. Let’s review the market activity of the past week.

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Another Down Day Has Me Wondering

Do you remember last week, when the U.S. House of Representatives failed to pass the $700 billion bailout and the Dow Jones dropped 777 points?

A whole lot of people, including President Bush, Treasury Secretary Paulson, Speaker of the House Nancy Pelosi, and Senate Majority Leader Harry Reid told us we needed a bailout bill and we needed it as soon as possible. They said if the bailout bill did not pass, we would be facing a certain financial downfall in our country.

The Senate added the contents from another bill, to make it more appealing for some members, and they passed the bill by an overwhelming margin on Wednesday. Fast-forward to Friday, when the U.S. House passed the revised measure and we were reassured by President Bush, Treasury Secretary Paulson, Speaker of the House Nancy Pelosi, and Senate Majority Leader Harry Reid and others who told us they had done the right thing. Some didn’t like it, but it was the right thing to do for our country.

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Were They Wrong?

Last week, the sky was falling. Congress had to hurry and send any bailout bill to the President’s desk for his signature. Remember. It was mission critical. Without the bailout bill, the economy (ours and the entire world economy) could come crashing down at any moment.

On Friday, enough members of the House of Representatives capitulated and the bailout bill passed. So everything is okay now, right? We’re good to go, yes?

Here are some of the pertinent ‘breaking news’ items I have received from BreakingNewsOn in the past four hours:

AP: President’s top advisers say financial markets remain “extremely strained.”
about 4 hours ago

AP: President’s top economic advisers pledge to work globally on financial crisis.
about 4 hours ago

BRAZIL STOCKS PLUNGE MORE THAN 10 PERCENT; US MARKETS OPEN. DETAILS SOON.
about 3 hours ago

DOW JONES FALLS NEARLY 300 POINTS IN FIRST MINUTE OF TRADING. DETAILS SOON.
about 3 hours ago

AP: Official: Treasury assistant secretary to be tapped as interim head of $700 billion rescue.
about 3 hours ago

DOW JONES INDUSTRIALS INDEX FALLS BELOW 10,000 POINTS AS GLOBAL FINANCIAL CRISIS WORSENS DESPITE $700 BILLION BAILOUT. DETAILS SOON.
about 2 hours ago

The Dow Jones has fallen 340 points, putting the index below the 10,000 mark for the first time since 2004; Nasdaq composite plunges 4%.
about 2 hours ago

The Dow Jones Industrials has fallen 360 points as the Federal Reserve announces $150 billion in 85-day credit through auction facilities.
about 2 hours ago

DOW JONES INDUSTRIALS FALLS MORE THAN 400 POINTS. DETAILS SOON.
about 2 hours ago

Europe’s Stoxx 600 falls more than 7%, its biggest drop since 1987, Bloomberg TV reports.
about 2 hours ago

DOW JONES INDUSTRIALS FALLS MORE THAN 500 POINTS. DETAILS SOON.
about 2 hours ago

The Dow Jones Industrials has fallen more than 570 points in another dramatic day on Wall Street; index now below 9,800 total.
about 2 hours ago

AP: EU presidency says all 27 members pledge “necessary measures” to ensure financial stability.
about 2 hours ago

BRAZILIAN SHARES PLUNGE MORE THAN 15 PERCENT. DETAILS SOON.
about 2 hours ago

As the financial crisis worsens across the world, the Toronto stock market (TSX) has tumbled more than 1,060 points (about 10%).
about 1 hour ago

Argentina’s Merval stocks plummet about 10.83% to 1.348,77 points; Dow Jones now down 460+ points.
about 1 hour ago

AP: The Icelandic government says it will guarantee all domestic savings deposits.
about 1 hour ago

AP: France’s CAC-40 share index down more than 8 percentage points near end of trading.
about 1 hour ago

AP: President Bush says “it’s going to take awhile” for the financial rescue plan to work.
29 minutes ago

What? On Friday we were told that a vote for the bailout bill would prevent this very thing from happening? What does he mean “it’s going to take a while?” What does that mean? Does that mean the market is still going to crash? Does that mean that even with the bailout bill nothing is going to change? Wow. Then, after following all of the news today, I read the following article from James Doran in The Observer.

Fears are mounting that many Wall Street banks and financial firms will refuse to participate in the US government’s $700bn bail-out package, leaving global markets and world economies in a perilous state for months to come.

‘There is a growing feeling that banks … might instead decide to tough it out,’ said Thomas Caldwell, chairman and CEO of Caldwell Financial, a $1bn-plus fund manager.

Now the banks are going to tough it out? You mean they didn’t ‘need’ the bailout? Wow. I thought our Senators and Representatives spent the past week telling us how bad the banks needed this to help “main street” America.

Were they wrong?

The Lies Of Our Leaders

As you know, on Monday, when the House initially rejected the $700 billion bailout, the stock market tanked 777 points. We were told that Congress had to act to “save” the economy.

With the economy on the brink of meltdown and elections looming, a reluctant Congress abruptly reversed course and approved a historic $700 billion government bailout of the battered financial industry on Friday. President Bush swiftly signed it.

Then what happened? The market dropped 157 points for the day. Oh yeah, I should tell you, the market was up almost 300 points when the House vote took place. So, in essence, the market dropped more than 450 points on the news that a bailout deal had been voted on and was to be signed into law.

Great job. We’re paying a high price for socialism, aren’t we? (And I’m not talking about the $700 billion).