Anyone know some good resources for buying foreclosed properties, specifically farmland, in Northern California? I just need a place to start. I'm a lawyer already, and I have some cash available I'd like to use for some distressed farmland.
So guaranteeing $300B in assets. What kind of losses are we talking about here? MER type losses of 5-22 cents on the dollar? Or somewhere North of there?
At 66 cents on the dollar we're still talking a hundred billion dollars. That would be it for the first tranche of TARP.
Look, we all knew there was going to be a bailout. Lehman insured that no major bank will be allowed to fail again. At least the feds are charging a high interest rate.
Anybody know how bad these $300B of assets are? As in how much is the Fed on the hook for? Not that it matters that much. Fed is going to print money anyway...
From WSJ:
"In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed."
Let's blame the accountants - how dare they mark these outstanding investments at something less than the principal. Didn't they know that Citi was holding them until maturity (i.e., someone else's watch).
This is the predatory credit card issuer that skirted usury laws in most states, gave cards to anyone, which sunk many whom shouldn't have had the credit, and in my opinion, set up the need for a housing bubble in order to postpone what would have been a smaller credit slump.
And they deserve 300 bn of our children's money?
Is congress taunting us to see what it takes to make us snap?
US: STRIKE TEAMS ON HOLD; NEGOTIATIONS TAKE POSITIVE TURN.
US: NEGOTIATION WITH PIRATES SUCCESSFUL; BLOODSHED AVOIDED.
SOMALI PIRATES: ALL RANSOM DEMANDS BEING MET ON SCHEDULE; PAYMENTS RECEIVED.
NEW YORK: CreditSights said an acquisition of Citigroup Inc by Goldman Sachs or Morgan Stanley would significantly add to earnings, if Citi's bad assets were absorbed by the US government.
"A potential acquisition of Citigroup would be significantly accretive to Goldman and Morgan Stanley's earnings as the potential buyer would be acquiring a significant future earnings stream for a relatively low price," said analyst David Hendler, in a research note.
"However, the potential need for mark-to-market adjustment on Citi's $2 trillion balance sheet would likely cause capital adequacy concerns for most buyers sans a government backstop," said Hendler, in the note dated Nov. 22. Citigroup's shares fell 60% last week to $3.77. Citigroup's executives last week debated options as the company's share price sank, including merging with another bank or selling off businesses.
Citigroup also spoke to the Federal Reserve and the US Treasury last week about the government making a public statement of support and perhaps even putting additional funds into the bank.
Time to break out the popcorn. I wonder how many more of these bailouts before the bank and government execs start getting high-velocity brain surgeries to "fix" the problem?
I smell Deflation......??????
That can't last for long. The more and more I think about this, the more and more I think the only way out is to force inflation to shrink the debt.
Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month
Umm. AIG found the way around this. Borrow from the Fed's CP facility to pay off the Treasury.
If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
Translation: citi, then taxpayer, then taxpayer (FDIC fund), then printing press.
Admitting to $300 BIL bad assets means that's probably what's blowing up now, and they feel they can lie and hide the next few hundred troubled BILs until the next bailout phase.
This is classic catastrophic reinsurance layering.
Citi self-insures the first $37B and then the additional layers kick in in order of layer exhaustion.
But curious as to why the order in the reinsuring entities? Since this is a banking situation, why isn't FDIC first instead of Treasury? Is there a limit on what Treasury can do before it has to go back to the congress for additional money? And why not just have the Fed do it all since they can apparently create mini-blackholes without any oversight at all?
so we get 8 percent of the infusion but up to a couple hundred billion in losses? This sounds like a great deal! Buffet would have negotiated similar terms I'm sure
Wow. New altitudes of self-delusion and absurdity. The idea that this could restore faith in Citigroup in anything other than a fascist sense is astounding.
on the contrary...all it means is that someone has decided to pump the futures market on the release of the news. You or I could accomplish this given enough money.
Anyone know some good resources for buying foreclosed properties, specifically farmland, in Northern California? I just need a place to start. I'm a lawyer already, and I have some cash available I'd like to use for some distressed farmland.
Hoopajoops LTD | 11.23.08 - 11:41 pm | #
SP only up about 8 pts and the east isn't reacting much at all post news. Be interesting to see how much upward reaction there will be.
Still amazing that they needed 300 Billion, and this is good news that they are in this kind of shape. Bad news we don't need, good news if we do.
Must be the parallel universe or the bizarro world.
Richard Parsons, an Obama advisor, is on Citi's board; along with John Deutch, a former head of the CIA. Oh, and Prince Charles too. So can C shareholders sue the Prince for breach of fiduciary duty? That would be entertaining.
In my opinion, the final nail has been driven. There is no turn off this road now. We may as well "guarantee" all asset values everywhere and be done with it since that is where we are going anyway.
What is especially rich in this bailout is the idea that Citi will cover the first 37-40 billion in losses which is about 90% of the money already injected into Citi by guess who? The government, thats right. Our esteemed leaders are playing the world's largest shell game.
Citi has been a crux of the banking crisis for at least 6 months as banks knew how toxic they were and wouldn' t lend to them nor anyone they thought was lending to C.
This doesn't solve the problem either. Round 2 will be just in time for Christmas as year end approaches.
"In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. [b]When[/b] losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed."
Washington, DC— The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access and capital.
As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.
In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC's mortgage modification program.
With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.
We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts:
* We will work to support a healthy resumption of credit flows to households and businesses.
* We will exercise prudent stewardship of taxpayer resources.
* We will carefully circumscribe the involvement of government in the financial sector.
* We will bolster the efforts of financial institutions to attract private capital.
"everyone must chill... this will all be over within the next 18 months. "
Sure it will...for those in charge. It won't be for you and everyone else that doesn't have a 7 figure income.
Keep two words in mind:
Alt-A resets
All the crap these banks have are mostly based on deterioration of sub-prime backed assets. The Alt-A train reset "line" is just starting up it's cross-country journey.
Hope springs eternal, look how they've got everyone fooled, but this is C's failure and sooner or later it's worth a bear market lower low in the 6000 bracket.
Isn't $10B a pretty sizable chunk of all the resources currently available to the FDIC? Last numbers I can find are from 4 months ago when the FDIC had $50B. Its gotta be less at this point.
Can this be stopped? I want to know who has the authority to spend this much money?
Those members of Congress thought they were going to have a peaceful Thanksgiving? I hope the email servers are liquid cooled. The response on this one is going to be a pretty severe public backlash.
Term of Guarantee: FDIC standard loss-sharing protocol: Guarantee is in place for 10 years for residential assets, 5 years for non-residential assets.
Dividends: Institution is prohibited from paying common stock dividends, in excess of $.01 per share per quarter, for 3 years without UST/FDIC/FRB consent.
A factor taken into account for consideration of the USGÂ’s consent is the ability to complete a common stock offering of appropriate size.
Executive Compensation: An executive compensation plan, including bonuses, that rewards longterm performance and profitability, with appropriate limitations, must be submitted to, and approved by, the USG
What is the most creative way YOU can come up with to arrest the decline of RE prices and make them start to rise again? That seems to be the crux of most of this shitstorm we are in.
Isn't $10B a pretty sizable chunk of all the resources currently available to the FDIC? Last numbers I can find are from 4 months ago when the FDIC had $50B. Its gotta be less at this point.
FDIC has two lines of credit with the Treasury that it still hasn't accessed.
So they've basically announced Citibank will lose $40Billion (and be worth -$20Billion), the Treasury will lose $5Billion, the FDIC will lose $10 Billion, and the Fed will lose everything beyond that.
With the $20Billion injection, that makes New Citibank worth exactly $0 - a perfect neutral value that gives it a fair chance to climb out and move on. Brilliant!
The biggest problem is all the money taxpayers will lose, and the fact that no matter what Citigroup does the Fed takes the financial consequences. But yeah, if keeping Citigroup going is the only thing that matters, they've succeeded.
Big scary step here. For the first time, the Fed is promising to possibly spend large sums of money it may not have when the time comes. Before all the risk was the Fed taking weak assets as collateral. The Fed could potentially take a bath, but it already had the money it might lose. Even if it lost it wouldn't be threatened with bankruptcy because it has no callable debt. Now, it may have to worry about meeting obligations.
Yes it can just print, but it's really been struggling to avoid that and printing on that scale will cause some nasty problems.
1)Where are the auditors and regulators that Citicorp could have been allowed to have $1.2 TRILLION in off balance sheet assets?
2) Three weeks ago Citicorp sealed a deal with the Government to takeover Wachovia until overbid by Wells Fargo.
Was this the penultimate no money down subprime purchase?
Does any analyst, shareholder, auditor, employee, regulator or auditor have any idea what is in this quagmire?
@ Hoopa
Yeah - I just clicked on the farm tab and the only one in CA is in the central valley. None in OR and only 2 in WA. Easier pickins in NM. last summer.
Didn't I say just two hours ago that the Fed was going to start purchasing MBSes? Didn't take long. Now they are effectively holding $245 billion worth. Nice!
Doesn't have an address, just a zip code. But check this out... the zip code is also the exact number of acres that dubya purchased in Paraguay: 98,840.
Funky. You can buy a refuge in the 98840 zip code. Dubya bought himself a 98840 acre refuge.
Yeah, it turns out Citibank was putting a classic -10% down on Wachovia. Businesses do this all the time - get back more than their downpayment in an acquisition by raiding their acquisition. Instant equity!
Well thank goodness at least one of our nation's financial giants, buffeted by the current economic woes, actually hews unhesitatingly to the gospel of free markets. Three cheers for good old-fashioned rugged individualism, no matter the temptation to seek a taxpayer-funded handout! What a tremendous example of self-reliance for the shiftless poor!
No doubt that will all change when the black Marxist radical is sworn in.
We are missing much information here. I think we focus on the USA without taking into account the rest of the world.
The world is calling bull shit on the abuse of the reserve currency status the dollar enjoys. Now that we have become a a pauper nation we have to dance to foreign demands. AIG and now CITI perfectly illustrate this point.
Get used to it because there is no way out when you go so deep in the hole. I believe we have dug into hell. Feel the heat?
Ponyless in NJ writes:
What is the most creative way YOU can come up with to arrest the decline of RE prices and make them start to rise again? That seems to be the crux of most of this shitstorm we are in.
RE price declines are the solution, not the problem.
Fair Economist writes:
Big scary step here. For the first time, the Fed is promising to possibly spend large sums of money it may not have when the time comes. Before all the risk was the Fed taking weak assets as collateral. The Fed could potentially take a bath, but it already had the money it might lose. Even if it lost it wouldn't be threatened with bankruptcy because it has no callable debt. Now, it may have to worry about meeting obligations.
Yes it can just print, but it's really been struggling to avoid that and printing on that scale will cause some nasty problems.
Fair Economist | Homepage | 11.24.08 - 12:19 am | #
~~~~~
yep, as i've been sayin', sovereign debt rating downgrade for US/us for starters, followed by defaulting on our debt, is the path we're being led on. we've yet to see the full scope of level 2 and 3 toxic debt being made mark to market, but take on more and more onto OUR balance sheets.
as Bondgirl said awhile back, "you can't make something solvent by changing the definition of solvency." hee hee, that still cracks me up.
If this is a new idea I want CREDIT.
If not, I second it.
No new currency is needed.
All future contracts will be adjusted by a price index of billions of transactions of any and all kind upated every second. The index will be freely accessible, based on open source software and hardware.
Gaming the index by false input of data will be policed by social ostracism and all other network tools familiar to users of e-bay, my-space, facebook, etc.
It could be accomplished by thanksgiving if some bright programmers set it up.
So I think this is just the next step down the slope. If this does not work, we really are in big, big trouble.
Nemo | Homepage | 11.24.08 - 12:28 am | #
Nemo, what do you mean by "work"? (This isn't a rhetorical question.)
@ Hoopa
LOL! I'll probably be underwater next summer - I bought the place for 31% of the sale in 2002. But, I've had all summer to put together my bunker. Almost there!
frank writes:
1)Where are the auditors and regulators that Citicorp could have been allowed to have $1.2 TRILLION in off balance sheet assets?
NOT a regulatory issue. Congressional action in the early part of this decade allowed for VIE's( the new name for off-balance sheet) to be created if they were properly insured. Done via swaps. That's one reason there's such concern about swap failures. It forces VIE's to be put back on the balance sheet. Hence enhancing the insolvency of said banks.
Nemo writes:
So I think this is just the next step down the slope. If this does not work, we really are in big, big trouble.
Nemo | Homepage | 11.24.08 - 12:28 am
This is the end game. The Fed is now effectively buying assets. They are scared to death of a deflationary death spiral.
If the market pops on this news participants are braindead.
Ministry of Truth writes:
In Argentina 2 Citibank branches were bombed in 2004 after the public got pissed off for being ripped off. Los Angeles Times bankbombs18
Here in America we will just pop another Prozac and turn on the boob-tube.
--
you mean pop another Prozac and leave a comment on a blog.
The Fed is slowly but surely exposing itself to actual credit risk. The idea, I think, is to keep the system afloat until it sorts itself out -- possibly with the assistance of some fiscal stimulus -- after which all the loans can get repaid.
By "work", I mean nobody actually winds up defaulting on a loan from the Fed. There is a reason they are last in line to take losses here.
"If the market pops on this news participants are braindead."
They are all insolvent....they have no choice but to attempt another whoosh up.
It will happen...how long it lasts is the real question.
We'll know about 40 minutes into tomorrow's session how much ammo. "tha boyz" still posses.
It could be huge.....or flat. I don't think it's going down. Not in a shortened week with historically low volume. That's not a coincidence...was C's position that much better last week? week before?
The idea that the needs of the financial sector can trump those of the productive sector are dangerous and destructive to our collective well being, and need to be combatted frontally.
I'm never entirely clear whether the Fed, or Treasury, or the FDIC, actually expect this all to work or whether it's just an effort to kick the problem down the road a bit. Bernanke doesn't strike me as the can-kicking type--none of the Fed governors do for that matter. I think I'm just cynical from too many years dealing with execs (fill in name of an officer of your favorite subprime mortgage origniator here) for whom can kicking was the business plan.
And I just can't believe they really think it can work, but I can imagine that they can't think of an alternative and they have no choice but to put on a brave face and push ahead. They have to act as if it's going to work, whatever their actual thoughts--if there's one thing that's been invariant in recent Fed policy it's a focus on expectations instead of on reality, as it's market participants' expectations that determine their behavior.
"The government is not expected to require any management changes, as that was seen as potentially being too destabilizing."
Yeah, can't have the crooks who created this mess suffer in any way for it! Far better to keep racking up the debt so we can eventually "fix" the economy through hyperinflation.
The real reason why the govt came to the rescue of Citi, is because the govt just switched over the govt credit card purchasing program to them, eff. December. ...otherwise we would've let them burn...
First
OK so who's next?
It's great to see a modern, Western capitalist system finally function as designed.
Anyone know some good resources for buying foreclosed properties, specifically farmland, in Northern California? I just need a place to start. I'm a lawyer already, and I have some cash available I'd like to use for some distressed farmland.
lawyerliz,
I thought you said g'nite? Or did you have more energy than your hubby??
The moral of this story? Hazard.
U.S. Agrees to Rescue Struggling Citigroup - WSJ.com
hah, I beat all you mechanized types.
Tarp, tarp, who's got the tarp?
Blush.
I'm not the only one who's been cuckolded here.
So guaranteeing $300B in assets. What kind of losses are we talking about here? MER type losses of 5-22 cents on the dollar? Or somewhere North of there?
At 66 cents on the dollar we're still talking a hundred billion dollars. That would be it for the first tranche of TARP.
Fugly. Very fugly.
$300B...astounding. Free markets still work.
Nemo writes:
OK so who's next
Who's on first.. what's on second
CR you need a new label thats some how bigger than "The Mother of All Bailouts"
How about "Super Massive Black Hole"
Wait, this can't be right. I tried searching the WSJ article for "dividends" and "bonuses", but my browser says "phrase not found".
another step closer to sovereign debt rating downgrade. step, by step...
Niagra Falls!
YouTube -
It's comedy when the market views this as good new. Amazing stuff.
Listening to these leaders is what it must have sounded like being in the congregation at Jonestown in the last hours.
Hoopajoops, there is a long tradition of lawyers taking over older farms.
But don't let Mr. Haney sell you the "guar-on-teed" tractor. It back-fires, if I remember right.
Look, we all knew there was going to be a bailout. Lehman insured that no major bank will be allowed to fail again. At least the feds are charging a high interest rate.
I'd like to know what the US Govt is getting in return for this $300B gurantee... blood ?
Anybody know how bad these $300B of assets are? As in how much is the Fed on the hook for? Not that it matters that much. Fed is going to print money anyway...
From WSJ:
"In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed."
Never mind, it's only another $1000 for every man, woman, and child in these United States. Put it on my tab!
Detroit is probably breaking out the bubbly. No way they don't get their bailout now.
is Bank of America next in line?
The government is not expected to require any management changes, as that was seen as potentially being too destabilizing.
God forbid .......
WHat does this expression convey?
http://www.huffingtonpost.com/huff-wires/20081123/lt-bush-apec/images/827a4567-efae-4285-975c-d601b936e139.jpg
I smell deflation..........
I like this plan. It gives every relevant agency a chance to lose taxpayer money.
So those 300 bil go to the repo window and come back as cash in Citi's pocket, nu?
Let's blame the accountants - how dare they mark these outstanding investments at something less than the principal. Didn't they know that Citi was holding them until maturity (i.e., someone else's watch).
This is the predatory credit card issuer that skirted usury laws in most states, gave cards to anyone, which sunk many whom shouldn't have had the credit, and in my opinion, set up the need for a housing bubble in order to postpone what would have been a smaller credit slump.
And they deserve 300 bn of our children's money?
Is congress taunting us to see what it takes to make us snap?
I stayed up for this? ARR!
US: STRIKE TEAMS ON HOLD; NEGOTIATIONS TAKE POSITIVE TURN.
US: NEGOTIATION WITH PIRATES SUCCESSFUL; BLOODSHED AVOIDED.
SOMALI PIRATES: ALL RANSOM DEMANDS BEING MET ON SCHEDULE; PAYMENTS RECEIVED.
waves, Americans don't snap. If they did, you would see every Citi branch window broken in by tomorrow morning.
NEW YORK: CreditSights said an acquisition of Citigroup Inc by Goldman Sachs or Morgan Stanley would significantly add to earnings, if Citi's bad assets were absorbed by the US government.
"A potential acquisition of Citigroup would be significantly accretive to Goldman and Morgan Stanley's earnings as the potential buyer would be acquiring a significant future earnings stream for a relatively low price," said analyst David Hendler, in a research note.
"However, the potential need for mark-to-market adjustment on Citi's $2 trillion balance sheet would likely cause capital adequacy concerns for most buyers sans a government backstop," said Hendler, in the note dated Nov. 22. Citigroup's shares fell 60% last week to $3.77. Citigroup's executives last week debated options as the company's share price sank, including merging with another bank or selling off businesses.
Citigroup also spoke to the Federal Reserve and the US Treasury last week about the government making a public statement of support and perhaps even putting additional funds into the bank.
BloombergUTV Industry News: Latest Banking Industry News, Banking Industry India, Banking Industry Reports, Banking Industry Statistics
Looks like the day of gluttony has come early!
Time to break out the popcorn. I wonder how many more of these bailouts before the bank and government execs start getting high-velocity brain surgeries to "fix" the problem?
I smell Deflation......??????
That can't last for long. The more and more I think about this, the more and more I think the only way out is to force inflation to shrink the debt.
All businesses could take lessons from the Pirates.....they manage to get net same day terms.....
Treasury officials will charge a higher interest rate for the capital injection -- 8% for the first few years -- than it has charged to dozens of other banks now borrowing money under the government's the $700 billion rescue package approved by Congress last month
Umm. AIG found the way around this. Borrow from the Fed's CP facility to pay off the Treasury.
US: SOMALI PIRATE LEADERSHIP TO STAY.
If losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed.
Translation: citi, then taxpayer, then taxpayer (FDIC fund), then printing press.
Admitting to $300 BIL bad assets means that's probably what's blowing up now, and they feel they can lie and hide the next few hundred troubled BILs until the next bailout phase.
"first $37 billion to $40 billion in losses"
What does that mean? The first beginning now or prior to any markdown?
This is classic catastrophic reinsurance layering.
Citi self-insures the first $37B and then the additional layers kick in in order of layer exhaustion.
But curious as to why the order in the reinsuring entities? Since this is a banking situation, why isn't FDIC first instead of Treasury? Is there a limit on what Treasury can do before it has to go back to the congress for additional money? And why not just have the Fed do it all since they can apparently create mini-blackholes without any oversight at all?
How long until some pundit claims "the govt will probably make money on this deal." The clock is ticking...
Criminals.
Since this is a banking situation, why isn't FDIC first instead of Treasury?
Because it is very very important that nobody think the FDIC is in any kind of trouble, ever.
Merry Xmas Citibank!!!
Taxpayers,
Here is some I.O.U. coal in yur stockings.
In Argentina 2 Citibank branches were bombed in 2004 after the public got pissed off for being ripped off.
Bombs Strike 3 Banks in Argentina; Guard Killed - Los Angeles Times
Here in America we will just pop another Prozac and turn on the boob-tube.
If the fed et al pays 300 billion, who gets the money?
Futures climbing now. 807 and rising.
Key for the stock market is how the bond market behaves this week, IMO. We nearly fell off the edge on Thursday but retreated on Friday.
so we get 8 percent of the infusion but up to a couple hundred billion in losses? This sounds like a great deal! Buffet would have negotiated similar terms I'm sure
Wow. New altitudes of self-delusion and absurdity. The idea that this could restore faith in Citigroup in anything other than a fascist sense is astounding.
Oh well, time ta get me some C.
on the run-
"the market views this as good"
on the contrary...all it means is that someone has decided to pump the futures market on the release of the news. You or I could accomplish this given enough money.
That is the real problem.
Ciao
MS
Nemo writes:
"Since this is a banking situation, why isn't FDIC first instead of Treasury?"
It's way too big a problem. A reactor cooling failure and a meltdown.
Anyone know some good resources for buying foreclosed properties, specifically farmland, in Northern California? I just need a place to start. I'm a lawyer already, and I have some cash available I'd like to use for some distressed farmland.
Hoopajoops LTD | 11.23.08 - 11:41 pm | #
Hoop
Try Real Estate Portal To Homes For Sale look at the usda/rural development area. I found a place several months ago!
SP only up about 8 pts and the east isn't reacting much at all post news. Be interesting to see how much upward reaction there will be.
Still amazing that they needed 300 Billion, and this is good news that they are in this kind of shape. Bad news we don't need, good news if we do.
Must be the parallel universe or the bizarro world.
Gotta try to get some of my future liabilities back
You guys know better than I do-
What's so wrong about bankruptcy?
I think a lot of voters would enjoy seeing citi go bankrupt.
Airlines go bankrupt all the time. Travelers hardly notice.
Richard Parsons, an Obama advisor, is on Citi's board; along with John Deutch, a former head of the CIA. Oh, and Prince Charles too. So can C shareholders sue the Prince for breach of fiduciary duty? That would be entertaining.
the dollar is toast
we will no doubt continue, for a while to experience general price deflation
but in time, and soon, i guess, we will go weimar
citi pony check
Aig pony check
Jp Morgan pony check
Wf pony check
Why no pony for bank of America
Oh I forgot ken lewis was too stupid to wait for the pony
brownbuffalo writes:
"REBear, take a deep breath. The government is not going to redistribute' your savings."
bbuffalo,
I'm worried about redistribution through hyperinflation.
This is not going to end well..
All Fall Down - Thanks man! I only wish this site did farmland as well.
Ministry of Truth writes:
In Argentina 2 Citibank branches were bombed in 2004 after the public got pissed off for being ripped off.
I like the Argentines- honest and straight-forward.
Schedule a bailout to occur on the opening week on one of lowest volumes (avg.) of the year....when the jap. market is closed for holiday.
Free market my ass.
If this pump lasts more than one hour the DOW will almost certainly close close to 8500 by friday.....especially if they can get it through tuesday...
Puts on everything will be on sale yet again....
Lather, rinse, repeat.
Ciao
MS
If it is inflation, then why not bet on oil?
Fire the management. Cancel the stock dividends. Nobody gets a bonus.
Oh, sorry. Those provisions aren't in there? In that case, how is the market for pitchforks?
In my opinion, the final nail has been driven. There is no turn off this road now. We may as well "guarantee" all asset values everywhere and be done with it since that is where we are going anyway.
What is especially rich in this bailout is the idea that Citi will cover the first 37-40 billion in losses which is about 90% of the money already injected into Citi by guess who? The government, thats right. Our esteemed leaders are playing the world's largest shell game.
Citi has been a crux of the banking crisis for at least 6 months as banks knew how toxic they were and wouldn' t lend to them nor anyone they thought was lending to C.
This doesn't solve the problem either. Round 2 will be just in time for Christmas as year end approaches.
"It's way too big a problem. A reactor cooling failure and a meltdown.
peAkcredit | 11.24.08 - 12:01 am | "
they...are...just...trying...to...keep...it...together...for ...just...two...more...months
(captain the engines cant take much more of this
scotty i need warp 7 for two more months
captain, i dont think shes gonna hold, the matter anti-matter reactors are godnna implode)
Taxpayers will make money on this deal.
Sorry, for a moment there I forgot that I'm not a pundit.
everyone must chill... this will all be over within the next 18 months.
Some exclusions may apply
Oh, and the corp jet leases have been cancelled?
No? Then as a partial owner, I have a trip to Dallas next week. I'd like to make a reservation.
Yves has finally done it.
Finance Has Lost Sight of Its Role « naked capitalism
The was a slight typo in that WSJ.com story:
"In addition to the capital, Citigroup will have an extremely unusual arrangement in which the government agrees to backstop a roughly $300 billion pool of its assets, containing mortgage-backed securities among other things. Citigroup must absorb the first $37 billion to $40 billion in losses from these assets. [b]When[/b] losses extend beyond that level, Treasury will absorb the next $5 billion in losses, followed by the FDIC taking on the next $10 billion in losses. Any losses on these assets beyond that level would be taken by the Fed."
There won't be a functional society in 18 months.
//everyone must chill... this will all be over within the next 18 months.//
scotty i need warp 7 for two more months
I'm an English major, not an engineer!
SIG
Good food in big D. enjoy.
Highschooleconomics
The more and more I think about this, the more and more I think the only way out is to force inflation to shrink the debt.
Yep, the solution TPTB has decided upon is to completely flood the system with liquidity. 4.5 trill so far.
Joint Statement by Treasury, Federal Reserve and the FDIC on Citigroup
Washington, DC— The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access and capital.
As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.
In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC's mortgage modification program.
With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.
We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts:
* We will work to support a healthy resumption of credit flows to households and businesses.
* We will exercise prudent stewardship of taxpayer resources.
* We will carefully circumscribe the involvement of government in the financial sector.
* We will bolster the efforts of financial institutions to attract private capital.
Perp Walk
Perp Walk
Perp Walk
Perp Walk
Perp Walk
Perp Walk
.
.
.
peAkcredit:
yeah, it's a reactor leak, but the Treasury is only in for $5B and the FDIC is secondary for double that amount.
Treasury gets off relatively cheap before they hand off to the guys who have no real pot to piss in anymore.
hmm...
What's so wrong about bankruptcy?
Unlike other corporations, banks don't go through Bankruptcy (Title 11). They have their own insolvency procedures, with its own vagaries.
"everyone must chill... this will all be over within the next 18 months. "
Sure it will...for those in charge. It won't be for you and everyone else that doesn't have a 7 figure income.
Keep two words in mind:
Alt-A resets
All the crap these banks have are mostly based on deterioration of sub-prime backed assets. The Alt-A train reset "line" is just starting up it's cross-country journey.
Key point that.
Ciao
MS
Hope springs eternal, look how they've got everyone fooled, but this is C's failure and sooner or later it's worth a bear market lower low in the 6000 bracket.
Isn't $10B a pretty sizable chunk of all the resources currently available to the FDIC? Last numbers I can find are from 4 months ago when the FDIC had $50B. Its gotta be less at this point.
The DJI 6000 area.
I feel like the opening scene to MASH. When the helicopters are flying in over the horizon.
Except these helicopters are full of money, and Benny B. is the pilot.
Got gold?
Can this be stopped? I want to know who has the authority to spend this much money?
Those members of Congress thought they were going to have a peaceful Thanksgiving? I hope the email servers are liquid cooled. The response on this one is going to be a pretty severe public backlash.
"Key point that."
--MS
Yup. Too big to save.
I don't know how much Alt-A is in Citi's portfolio, but whoever is holding that bag is going down next.
MS
I think you're right about the puts going on sale again. Should be good.
it comes in waves writes:
Is congress taunting us to see what it takes to make us snap?
it comes in waves | 11.23.08 - 11:53 pm
To paraphrase the late George Carlin:
"They don't give an f about you. THEY don't give an f about you. At all. AT ALL!"
From the summary of terms:
Term of Guarantee: FDIC standard loss-sharing protocol: Guarantee is in place for 10 years for residential assets, 5 years for non-residential assets.
Dividends: Institution is prohibited from paying common stock dividends, in excess of $.01 per share per quarter, for 3 years without UST/FDIC/FRB consent.
A factor taken into account for consideration of the USGÂ’s consent is the ability to complete a common stock offering of appropriate size.
Executive Compensation: An executive compensation plan, including bonuses, that rewards longterm performance and profitability, with appropriate limitations, must be submitted to, and approved by, the USG
Basel Too- thanks
What is the most creative way YOU can come up with to arrest the decline of RE prices and make them start to rise again? That seems to be the crux of most of this shitstorm we are in.
Satan... just repeating our leaders message from asia today... you do trust our leader, right?
sm_landlord: BAC on deck.
Isn't $10B a pretty sizable chunk of all the resources currently available to the FDIC? Last numbers I can find are from 4 months ago when the FDIC had $50B. Its gotta be less at this point.
FDIC has two lines of credit with the Treasury that it still hasn't accessed.
Did anyone not notice this on FRIDAY:
FDIC will guarantee up to US$1.4 trillion in U.S. bank debt
So they've basically announced Citibank will lose $40Billion (and be worth -$20Billion), the Treasury will lose $5Billion, the FDIC will lose $10 Billion, and the Fed will lose everything beyond that.
With the $20Billion injection, that makes New Citibank worth exactly $0 - a perfect neutral value that gives it a fair chance to climb out and move on. Brilliant!
The biggest problem is all the money taxpayers will lose, and the fact that no matter what Citigroup does the Fed takes the financial consequences. But yeah, if keeping Citigroup going is the only thing that matters, they've succeeded.
Big scary step here. For the first time, the Fed is promising to possibly spend large sums of money it may not have when the time comes. Before all the risk was the Fed taking weak assets as collateral. The Fed could potentially take a bath, but it already had the money it might lose. Even if it lost it wouldn't be threatened with bankruptcy because it has no callable debt. Now, it may have to worry about meeting obligations.
Yes it can just print, but it's really been struggling to avoid that and printing on that scale will cause some nasty problems.
1)Where are the auditors and regulators that Citicorp could have been allowed to have $1.2 TRILLION in off balance sheet assets?
2) Three weeks ago Citicorp sealed a deal with the Government to takeover Wachovia until overbid by Wells Fargo.
Was this the penultimate no money down subprime purchase?
Does any analyst, shareholder, auditor, employee, regulator or auditor have any idea what is in this quagmire?
@ Hoopa
Yeah - I just clicked on the farm tab and the only one in CA is in the central valley. None in OR and only 2 in WA. Easier pickins in NM. last summer.
I have a feeling that we are going to be putting bankers and their kids in incinerators within less than two years.
Didn't I say just two hours ago that the Fed was going to start purchasing MBSes? Didn't take long. Now they are effectively holding $245 billion worth. Nice!
Basel, $1.4T? Well, as long as its $1.4T of banks that are too big too fail it isn't that much of a guarantee...
So if you go to the website someone posted earlier, and search for surplus farmland, you get this, in WA state:
USDA Farms and Ranches for Sale
Doesn't have an address, just a zip code. But check this out... the zip code is also the exact number of acres that dubya purchased in Paraguay: 98,840.
Funky. You can buy a refuge in the 98840 zip code. Dubya bought himself a 98840 acre refuge.
Where is CSC?
Citi...50000 jobs...bail em out.
Auto...3,000,000 jobs...let em sink.
There's more to this story than we're being told.
satan,
"I have a feeling that we are going to be putting bankers and their kids in incinerators within less than two years."
Wouldn't that move hurt investor confidence?
How many depositors will keep their funds in Citi ?
The smart ones have already moved on but the headline tomorrow could cause a little stampede.
Yeah, it turns out Citibank was putting a classic -10% down on Wachovia. Businesses do this all the time - get back more than their downpayment in an acquisition by raiding their acquisition. Instant equity!
It would improve my confidence in the system.
RayOnTheFarm writes:
I'd like to know what the US Govt is getting in return for this $300B gurantee... blood ?
Nope. loss of blood is too "destabilizing".
"The government is not expected to require any management changes, as that was seen as potentially being too destabilizing."
but you get coke and a smile from every branch worker you meet, guaranteed.
Well thank goodness at least one of our nation's financial giants, buffeted by the current economic woes, actually hews unhesitatingly to the gospel of free markets. Three cheers for good old-fashioned rugged individualism, no matter the temptation to seek a taxpayer-funded handout! What a tremendous example of self-reliance for the shiftless poor!
No doubt that will all change when the black Marxist radical is sworn in.
Link to Paraguay:
http://www.plenglish.com/article.asp?ID={2DA7BAE4-061B-49B6-983F-3D69A4396E37})&language=EN
That will be least of your worry. S
//Wouldn't that move hurt investor confidence?
REBear | 11.24.08 - 12:23 am | #//
We are missing much information here. I think we focus on the USA without taking into account the rest of the world.
The world is calling bull shit on the abuse of the reserve currency status the dollar enjoys. Now that we have become a a pauper nation we have to dance to foreign demands. AIG and now CITI perfectly illustrate this point.
Get used to it because there is no way out when you go so deep in the hole. I believe we have dug into hell. Feel the heat?
"on an asset pool of approximately $306 billion of loans and securities"
That reads $306 in principle before losses.
Ponyless in NJ --
What is the most creative way YOU can come up with to arrest the decline of RE prices and make them start to rise again?
Pretty much the only options I think.
Ponyless in NJ writes:
What is the most creative way YOU can come up with to arrest the decline of RE prices and make them start to rise again? That seems to be the crux of most of this shitstorm we are in.
RE price declines are the solution, not the problem.
All Fall Down:
Oh, I'm betting the real easy pickings will start showing up as soon as people start going under.
Fair Economist writes:
Big scary step here. For the first time, the Fed is promising to possibly spend large sums of money it may not have when the time comes. Before all the risk was the Fed taking weak assets as collateral. The Fed could potentially take a bath, but it already had the money it might lose. Even if it lost it wouldn't be threatened with bankruptcy because it has no callable debt. Now, it may have to worry about meeting obligations.
Yes it can just print, but it's really been struggling to avoid that and printing on that scale will cause some nasty problems.
Fair Economist | Homepage | 11.24.08 - 12:19 am | #
~~~~~
yep, as i've been sayin', sovereign debt rating downgrade for US/us for starters, followed by defaulting on our debt, is the path we're being led on. we've yet to see the full scope of level 2 and 3 toxic debt being made mark to market, but take on more and more onto OUR balance sheets.
as Bondgirl said awhile back, "you can't make something solvent by changing the definition of solvency." hee hee, that still cracks me up.
Fair Economist --
Before all the risk was the Fed taking weak assets as collateral.
They are already buying commercial paper, which is not collateralized at all. (First time the Fed has made non-collateralized loans, ever.)
So I think this is just the next step down the slope. If this does not work, we really are in big, big trouble.
Citi now has a $40 billion deductible, with unlimited medical coverage above that from three different insurance companies.
If this is a new idea I want CREDIT.
If not, I second it.
No new currency is needed.
All future contracts will be adjusted by a price index of billions of transactions of any and all kind upated every second. The index will be freely accessible, based on open source software and hardware.
Gaming the index by false input of data will be policed by social ostracism and all other network tools familiar to users of e-bay, my-space, facebook, etc.
It could be accomplished by thanksgiving if some bright programmers set it up.
So I think this is just the next step down the slope. If this does not work, we really are in big, big trouble.
Nemo | Homepage | 11.24.08 - 12:28 am | #
Nemo, what do you mean by "work"? (This isn't a rhetorical question.)
@ Hoopa
LOL! I'll probably be underwater next summer - I bought the place for 31% of the sale in 2002. But, I've had all summer to put together my bunker. Almost there!
El Cliffo writes:
Citi now has a $40 billion deductible, with unlimited medical coverage above that from three different insurance companies.
And one insurance company gave them 45 billion for the deductible...
Tarp I complete.
The sequel is gonna suck.
ew thread folks
jump in the waters fine
frank writes:
1)Where are the auditors and regulators that Citicorp could have been allowed to have $1.2 TRILLION in off balance sheet assets?
NOT a regulatory issue. Congressional action in the early part of this decade allowed for VIE's( the new name for off-balance sheet) to be created if they were properly insured. Done via swaps. That's one reason there's such concern about swap failures. It forces VIE's to be put back on the balance sheet. Hence enhancing the insolvency of said banks.
Could they just be paving the way for a sale?
what this also means is that the original $25b from the first TARP injection is gone. They get another $20b which will get them to Dec. 31st
After that it's anyone's guess. But creative accounting and a new FY will soften the blow but by how much?
Full ban on shorting resumes after Dec. 31st
And I agree BAC is next.....March or April is my guess.
Ciao
MS
I own CPRM shares, which by default, makes me the happy recipient of government funds.
I guess I owe everyone here a big thank you for bailing out my portfolio.
I will take my outrageous div yield and run.
Nemo writes:
So I think this is just the next step down the slope. If this does not work, we really are in big, big trouble.
Nemo | Homepage | 11.24.08 - 12:28 am
This is the end game. The Fed is now effectively buying assets. They are scared to death of a deflationary death spiral.
If the market pops on this news participants are braindead.
Ministry of Truth writes:
In Argentina 2 Citibank branches were bombed in 2004 after the public got pissed off for being ripped off.
Los Angeles Times bankbombs18
Here in America we will just pop another Prozac and turn on the boob-tube.
--
you mean pop another Prozac and leave a comment on a blog.
stunney:
I take it you voted for the fascist traitor?
Nemo,
2 is kind of interesting. Maybe have the USG buy up 1M houses and demolish/burn them?
That should eventually prop back all other RE prices up, right?
1 000 000 * 250 000 = 250 000 000 000
That isn't that high of a price tag...
45 bil, of course, is a signficant premium to market cap
Yalt --
Nemo, what do you mean by "work"?
The Fed is slowly but surely exposing itself to actual credit risk. The idea, I think, is to keep the system afloat until it sorts itself out -- possibly with the assistance of some fiscal stimulus -- after which all the loans can get repaid.
By "work", I mean nobody actually winds up defaulting on a loan from the Fed. There is a reason they are last in line to take losses here.
We don't need the official CPI, PPI, FFR, Citi, Windows, etc.
Traders of the world, unite. Sign no contract without a world price index adjustment clause.
BDiego,
no. My comment was entirely facetious.
Why do Americans have such trouble grasping facetiousness?
because we cant face it
Does this mean my "thank you points" are safe?
no. My comment was entirely facetious.
Why do Americans have such trouble grasping facetiousness?
Because we have too many among us that actually use these terms and seriously mean them. It makes a big difference. Humor then is quickly lost.
"If the market pops on this news participants are braindead."
They are all insolvent....they have no choice but to attempt another whoosh up.
It will happen...how long it lasts is the real question.
We'll know about 40 minutes into tomorrow's session how much ammo. "tha boyz" still posses.
It could be huge.....or flat. I don't think it's going down. Not in a shortened week with historically low volume. That's not a coincidence...was C's position that much better last week? week before?
No way...
Ciao
MS
Protesters break into the main police station in Reykjavik.
Iceland is worsening.
Home | NewsFrettir - Icelandic news in English
stunney.... facetious or not my guess is you at least lean toward your writing. no place for racist or a- holes here, go away!
Nice, from Naked Capitalism... last sentence.
The idea that the needs of the financial sector can trump those of the productive sector are dangerous and destructive to our collective well being, and need to be combatted frontally.
I concur!
I am a lifelong socialist for pete's sake!
I mean, yikes!
How can C move the market at this point? Aren't they pretty much a micro-cap nowadays?
1 world currency (yogi):
Like the computer program idea.
But will it oink?
Thanks, Nemo, that's clearly put.
I'm never entirely clear whether the Fed, or Treasury, or the FDIC, actually expect this all to work or whether it's just an effort to kick the problem down the road a bit. Bernanke doesn't strike me as the can-kicking type--none of the Fed governors do for that matter. I think I'm just cynical from too many years dealing with execs (fill in name of an officer of your favorite subprime mortgage origniator here) for whom can kicking was the business plan.
And I just can't believe they really think it can work, but I can imagine that they can't think of an alternative and they have no choice but to put on a brave face and push ahead. They have to act as if it's going to work, whatever their actual thoughts--if there's one thing that's been invariant in recent Fed policy it's a focus on expectations instead of on reality, as it's market participants' expectations that determine their behavior.
Yalt,
If they expect it to work, they're idiots. If they're not idiots, they're kicking the can.
There's simply no incentive for them to do the right thing.
I don't know, Bear, it's amazing what people can believe when they have no choice but to believe it.
my comment above at 1236 was not intended as support
i like obama and have every hope that he will lead the country out of the mess the neocons created
Need a little cash for tires for car, beer, new big screen and speakers.
Just need say....$200 million.
Is that unreasonable?
U.S.A. too big to fail?
"The government is not expected to require any management changes, as that was seen as potentially being too destabilizing."
Yeah, can't have the crooks who created this mess suffer in any way for it! Far better to keep racking up the debt so we can eventually "fix" the economy through hyperinflation.
The real reason why the govt came to the rescue of Citi, is because the govt just switched over the govt credit card purchasing program to them, eff. December. ...otherwise we would've let them burn...