Even with the bailout of Citi on the books now, it doesn’t appear that the auto-makers are any closer to getting their due share, which seems odd to me.  I hope this proves to simply be posturing by the government as this to me still seems bigger and more important than the likes of AIG.  The only difference, of course, being that most politicians don’t care who is in Detroit, but their buddies on Wall Street are a whole different story.

In other good news, President Elect Barack Obama appointed New York Fed President Timothy Geithner as Treasury secretary and Lawrence Summers, who has previously held the Treasury post, as director of the National Economic Council.  The reason that I personally consider this good news is that it represents an early decision which gives the markets time to accept and adapt to these decisions.  Thus, everyone knows what to expect.

At the same time, leaving mixed feelings, Obama has promised to jolt the faltering economy with a new stimulus package.  Another purchase, spending today for our children to repay in the future and ultimately creating new opportunities for India and China to increase their global financial strength relative to the United States.  If it doesn’t work, the additional millions of people that will be out of work may turn this recession into one of the longest yet, although at this time I think that another depression is nearly impossible.

So there are my market thoughts for today – more in a bit as I try to make sense of so much muck in the media today.

Ranter

The biggest problem here today is that Citigroup has both a liquidity and solvency issue.  Thy’re working to calm their investors, but the market is already so shell-shocked from the other failures to date that these reassurances are falling on deaf ears.  In retrospect, it’s easy to see how big a blow losing the bid for Wachovia was and following that with an announcement announcing the elimaination of 52,000 jobs worldwide compounded the problem from a public relations standpoint.

The good news is that Citi is trying to control costs.  They are reducing expenses.  They are making the changes necessary.  They have people willing to invest in them and idiots analysts willing to give them a buy rating even now.  The bad news is that, like so many others, there is a considerable unknown as to the extent of Citi’s losses and damages from their derivatives portfolio.  Add to that the job losses which will ultimately reduce consumer’s ability to pay their Citicard debts and you have what are likely too many unknowns for even a company of this size.

Finally, though, you’re going to hear what I think is wrong with Paulsen’s plan and the way that he has been using Tarp funds.  Forget about AIG.  Forget about the Big 3.  Think back to what the original funds were approved for – to prop up the financial sector.  Citigroup is a cornerstone of what most consumers see as the financial market – Paulsen should be making every effort to shore up their perceived value and their ability to prevail in these tough times.  Show America, without splashing it across the media, that Citigroup deserves to survive as much as AIG.

Can you imagine what it would do to consumer confidence if all of a sudden their Citibank card was declined in the market because the government was unwilling to pitch in and lend a hand when Citigroup and the country needed it most?  It’s unimagineable for me and I can’t see a scenario where this isn’t followed by the failure of bank after bank after bank.

Ranter

Some experts contend, and I would assume that they are correct, that the 158 year old Citigroup is simply postponing the inevitible if things don’t change in the economy as a whole.  Of course, it will curb the ever increasing number of foreclosures, but until the underlying problems get resolved its impossible to know what the long-term benefits of this halt will be.

From my chair, the government’s bailout (still be referred to as only $700 billion) is focusing too much on bailing out the financial institutions, which isn’t going to help the economy or, as is becoming increasingly obvious, the average American family.  People can’t get loans, jobs are being lost, and there is a tremendous amount of fear about what is going to come next.  The Mortgage Bankers’ Association recently revealed that 4 million borrows are at least one payment behind and 500,000 are in the process of losing their home.  These are the people that should be benefiting from government intervention.  It’s not going to fix the banks or solve their problems, but it will certainly save homes and families while benefiting the economy as a whole.

Unfortunately, that’s a lot more work, and we already know how the government feels about work.  It’s much easier to sit back and help your cronies so you can keep your dead-wood-ass in office to continue bilking the American public of their hard earned money.

Ranter