Bank Collapse Watch: CitiGroup 3

No, I'm not removing CitiGroup from Bank Collapse Watch status. The government sponsorship is a sham.

What The Citi Deal Doesn't Do

Citigroup's stunningly complex rescue deal with the federal government buys it enough time to restore confidence, but leaves many issues unresolved.

The company still faces surging credit costs, potential losses from loans on its books and a massive restructuring project aimed at eliminating 53,000 employees by the spring. Its management remains intact even after the government rescue, but it is still unclear what the Citigroup of the future will look like.

Chief Executive Vikram Pandit wants to shed $500 billion of unwanted assets (he's 35% of the way there), exit unprofitable businesses and redirect Citi, all at a time when profits from its mainstay corporate and investment bank are hurting from the softening economy.

Emphasis added by me.

Ever been behind in rent to landlord? Ever bought extra time, hoping you'd come up with the back rent -- but you currently had no way in the world to do that? This is the position of CitiGroup.

The government will buy $20 billion in preferred shares in Citi, nearly doubling its equity investment in the company since October. It is also guaranteeing losses on $306 billion of assets in exchange for a $7 billion fee. Citi has to cut its dividend to 1 cent and will absorb the first $29 billion of losses on the troubled mortgage and other assets, with the government stepping in after that.

The guarantee is believed to cover most of an estimated $314 billion of residential and commercial mortgage loans and securities and some of $9.4 billion in related hedges, according to analysts at CreditSights. Those assets have weighed on Citigroup all year as the credit markets seized up.

But that leaves unguaranteed another $362 billion of credit card and consumer loans and $428 billion in corporate loans, asset-backed securities, derivatives and other assets. "We believe these assets are not guaranteed by the U.S. government for the most part and are not immune to weakness in the overall economy," CreditSights says.

Emphasis added by me.

So we'll wind up eating another third of trillion dollars?

Because no way no how is this going to work.

And still in the shadows, lurkling still unmentioned, is that one trillion dollars of off-the-books stuff CitiGroup is scared to death will come to light.

You think with this, CitiGroup is finished begging at the public trough?

Hardly!

There will be a second round.

Chronicles Of Depression 2.0: #437: Global

The world’s central banks must buy assets

The world economy is suffering from a Keynesian shortage of demand. Worse, it is trapped in a dangerous downward spiral of falling asset prices, rising bankruptcies, foreclosures and unemployment feeding into more of the same, along with falling commodity and now goods prices. Since no country is exempt, international co-ordination is needed and made easier because of the obvious common interest. The rapidity of the current contraction also means that fiscal solutions, though helpful, are not timely enough and create obvious free rider problems.

That is why monetary policy should be the first line of action. But conventional monetary policy has gone almost as far as it can in the US and Japan. The failure of the European Central Bank and the Bank of England decisively to respond in October was very damaging, but that is now history. Policy rates will fall further in December, but may make only a modest contribution to stabilising demand, given the further decline in bank balance sheets and rising levels of fear. It is therefore time for unorthodox policy, but one that is far better than Milton Friedman’s helicopter drops of money, because it is reversible.

Emphasis added by me.

This is the first article I've encountered calling for cooperation on a worldwide scale.

Why continue to throw bad money after good?

If demand is the problem, it can be created on a scale never before witnessed in the history of mankind.

This guy's "unorthodox" solution is merely orthodoxy writ larger.

Why call for worldwide cooperation and coordination for just that paltry effort? It wouldn't work anyway.

James Bond Vs. James Bond

I previously posted about the latest James Bond movie, Quantum of Solace.

It gnawed at me because I'd never read the Ian Fleming books and so my only exposure to the character of James Bond was via the movies.

Since that post, I've read two Ian Fleming books: Casino Royale and Dr. No.

I've also seen the newest Casino Royale and just finished watching Dr. No.

I'm still at a disadvantage because I'm sure the screenwriters of Dr. No -- and the other Bond movies -- read all the Ian Fleming books to compile the filmed mythos.

Still, I think I have enough information to point out a few things.

In the book Casino Royale, Bond is described by Vesper Lynd thusly:

He is very good-looking. He reminds me rather of Hoagy Carmichael, but there is something cold and ruthless in his ...

Let's do some photo comparisons. This is Hoagy Carmichael:



Then the classic Bond and the rebooted Bond:





Well, Connery wins the face contest.

But based on the "something cold and ruthless" bit, reboot Bond wins:



-- his expression after beating, strangling, and drowning a man! Now that is cold and ruthless!

Compared to the book, I couldn't help thinking what an absolutely stupid movie Dr. No was. An island mined for bird shit was turned into one mined for uranium and featured a nuclear-powered(!) telemetry beacon to override NASA signals for a moon shot!

I hadn't seen Dr. No in decades. Now I know where the Austin Powers joke came from.




No wonder so many things in Austin Powers were so funny. Even though I couldn't place the exact references, the basic framework had been drilled into my head for decades, not just by the Bond movies, but spoofs such as In Like Flint.

I'm not going to re-watch all the Bond movies. I don't know which one started the gadgetry kick. But that quickly got out hand! And I also don't know which one started the wisecracks to release tension in the audience after a violent scene. That quickly got out of hand too.

The libertine appetite of Bond must have been daring for its time. These days, seeing it dramatized in Dr. No, it all looks rather ridiculous. In the two books, there's no underlying explanation for Bond's appetite. We're left to think the guy is simply horny all the time. There's no clear psychological exposition tying his need for sex to the violence he's paid to commit.

One final thing. In the movie Casino Royale, I was really shocked by the line, "The bitch is dead." That was just cold. I was looking to pin that line on Paul Haggis. As it turns out, it was in the book itself:

The bitch is dead now.

Which, in the book, is even colder -- because it's the final line. In the movie, M tries to explain Lynd's actions as protective of Bond, which actually undercuts the line, making M seem like a Mommy to a childish, misunderstanding Bond.

Surprisingly, I have to say the two reboot Bond movies are closer in spirit to the Ian Fleming books than what I recall of the Connery series. (Roger Moore? Let's not go there!) I do think they've made the violence in the reboot movies absolutely brutal and graphic. But I understand why. That is what real-life violence is like.

Compare these two images:





The first is James Bond after a beating in Dr. No. The second is Bond after a beating in Casino Royale. The reboot Bond often winds up washing blood off his face!

So, in summary, yes, the 20th-century movie James Bond is dead. Make way for the James Bond of the new century.

-- thanks to filmmaker Philip R. Cable and Judie Lipsett who each provided reasons for me to read the Fleming books.

Kat Meyer Now Has A Blog

The Bookish Dilettante

It's all drenched in girly-girl polka dots and pinks and purples. But no cats!

And she needs some help in applying categories correctly. She lists this blog under "Highly Recommended, Life-Enhancing, Webby Distractions." Say what?

She needs a blog mascot. I recommend this one.

Writer Emma Larkins Get Story Idea Turkeys

A Fictional Twist on Traditional Turkey Day and Community Fridays Guest

All of these leave me thinking one thing: what's so bad about Thanksgiving? Does everyone really have such bad memories that all they can think about the holiday involves madness and mayhem?

I think she was shocked by no one offering a "traditional" Thanksgiving story idea.

The first person listed should be locked up!

Previously here:

The Charm Of Fairy Tales

Wayne MacPhail's Fake Farmer's Almanac

Previously here:

How Our Future Does Things
Wayne MacPhail’s Linux Vindication
Linux: The Best Reason For Windows XP

Chronicles Of Depression 2.0: #436: HYPERINFLATION!

Bloomberg: Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Update1)

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

Emphasis added by me.

God Almighty!!!

It gets worse:

“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”

The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.

The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.

Emphasis added by me.

Twenty-three trillion! Poof! GONE!

Worse still:

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

Emphasis added by me.

That $24,000 is on top of the existing debt.

Even more worse:

The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.

Emphasis added by me.

Near three-quarters of a trillion! Poof! GONE!

And yes, even worse:

Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.

Emphasis added by me.

Thank you, Bernanke, for turning us into the next Zimbabwe!

OK, here's the fatal shot to the head:

Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.

“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”

“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.

Emphasis added by me.

There! It's been said! The house of cards has collapsed. Economic orthodoxy is over.

What is not being said: This is going to destroy us. Under economic orthodoxy, Bernanke has just set the stage for a lethal hyperinflation crisis next year. That is the consequences of a Central Bank printing massive amounts of funds. There is no escaping that. Nation after nation has suffered this inevitable consequence. We are not immune from it.

And let me remind everyone again: $23 trillion is nothing. There's a quadrillion total out there. That's one thousand trillion dollars.

There is now only one way out.

This Is Your Sanity Prescription

They all say freedom is at the end. But freedom is at the beginning.

-- Krishnamurti

Two posts by others in the span of one week addressed a similar issue in different ways. With the second post, just today, I found myself wanting to rip out my hair. Because the confusion I witnessed was just so goddammed unnecessary.

The posts do not matter. The issue is knowing who you are.

Some people don't.

For the longest time, I didn't.

Some of us are not lucky enough to be have been born to parents with a large view of life. Some of us are born into families and neighborhoods where the biggest ambition is to be able to fill your belly and be grateful for having attained that basic goal.

Part of me really wants to rip into that, berating that narrow field of vision, but those people have been formed by their own experiences, their own disappointments, and even their own lack of ambition. The problem is that they pass that onto others as what is normal.

It's not.

We are not educated to inquire. We are educated to conform.

-- Krishnamurti

There is no "normal."

"Christ," Dickie muttered, scratching his greasy hair with the end of a ballpoint pen. "Another eccentric. What is this, are there more eccentrics these days or just fewer normal people?"

"There never have been normal people. It's a myth," I said as I reached under the sofa cushions looking for an antidepressant I might have dropped while I was opening the bottle. "Listen, Dickie, there are just crazy people and statisticians. Of course, there is some overlap."

-- The Music of What Happens by John Straley; pg. 25-26

Must I do the cliche thing and trot out the "crazy" to hammer home the point? Apple based an entire ad campaign on that theme!

I'm not saying other people of the same type of mind will rise to their prominence. What I am saying is that it's critically important for one's own life to recognize being one of them.



I flailed for years and years not fitting into any corporate pigeonhole. Not understanding what was happening when Me encountered Them. They -- to use that alienating term -- are, for varying reasons, different than Us. That in no way makes them better than us -- or us better than them. (Let me kill that poisonous Ayn Randian notion right now.)

But what happens on Our end is that We are made to feel deficient or defective or malfunctioning or -- even -- crazy.

Well, in three short words: Fuck. That. Shit.

It wasn't until about ten years ago I was pushed to read a book I'd heard about but never had the impetus to investigate. It was, as Gulley Jimson said when he gazed upon a painting that opened up new artistic vistas for him, something that skinned my eyes. It was to me a religious experience. That book is my Bible.

It's now the cornerstone of my Standard Sanity Prescription for people who don't know who they are.

This is the prescription:

Two movies:
The Horse's Mouth
A Fine Madness

Four books:
The Outsider by Colin Wilson
Touched with Fire: Manic-Depressive Illness and the Artistic Temperament by Kay Redfield Jamison
The Price of Greatness: Resolving the Creativity and Madness Controversy by Arnold M. Ludwig
Limbo: Blue Collar Roots, White Collar Dreams by Alfred Lubrano

I'm not providing links for the books because I want you to do some minor work to investigate them.

But don't click around and have them filtered through the eyes of others (one description I've just looked at of The Outsider is frighteningly misleading). Read them for yourself.

In fact, just frikkin buy them. You'll want to keep them.

The Outsider is my Bible. I saw myself on just about every page of that book.

Limbo is essential if you come from that socioeconomic background and might also be otherwise useful if you did not.

This, it seemed to me, is the basic difference between human beings. Some are perfectly satisfied with what they have; they eat, drink, impregnate their wives, and take life as it comes. Others can never forget that they are being cheated; that life tempts them to struggle by offering them the essence of sex, of beauty, of success; and that she always seems to pay in counterfeit money.

-- The Outsider; Twenty Years Later addendum, by Colin Wilson

Know who you are and no one, no thing can conquer you.

Forces of containment
They shove their fat faces into mine
You and I just smile
Because we're thinking the same lines

-- "I Like You" by Morrissey

Previously here:

How Writers Write Writing
Some People Ignore Hints
Microsoft Is Dying On Its Own
Never Ask
It’s Not For You To Know, So Don’t Ask

No Twitter For Hitler

Things have been grim around here, so it's time for the Nazis to be laughing fodder for us.

This is a classic movie clip that's been used over and over. This time, it gets the Twitter Treatment.

Some subtitles go by quickly, so read fast.

No Twitter For Hitler



-- via Twitter from redstarvip

BeBook Gets A Review

E-book review: Long term test of the BeBook

E-books are still a topic that manage to enrage the nation. Half are for, half are against, and most feel the price isn't justified. But is either side right? And if you take into consideration the price of an average book, surely paying a one off fee for an e-device that comes with literally thousands free to download isn't such a bad deal? I've been road testing the BeBook, and can now present to you my findings. And it's love.

Cough.

More:

This is one area the BeBook really excels in as it reads around 25 formats. I've opened lit files, JPEG's PDF's and txt files with absolutely no problem and have placed RSS feeds on it by syncing it up via USB to MobiPocket. I'm impressed it supports the DRM protected formats such as Microsoft Lit and Mobipocket as that places it heads and shoulders above its competitor, the [Sony] Reader -- which I'll get too soon.

The thing about both Microsoft LIT and MobiPocket file formats are that they are legacy. They're less likely to be around now that major publishers have agreed to support the ePub file format. I suppose the BeBook would be useful for people who already have a very expensive investment in those formats. But I think it'd be worth the effort to violate the DMCA and rip those eBooks to another format.

And then this:

I like how the BeBook site includes an online library that's free to download, even though the books are a selection of old classics.

Well, here's some Show and Tell. This is what the BeBook-formatted PDF of The Adventures of Sherlock Holmes looks like:





That is just gruesome formatting! It's the worst kind of amateurism.

I always use this story as an eBook formatting litmus test because Conan Doyle rarely used italics in his stories and in this one, "the" is critical. Here it is capitalized. Rubbish!

It continues with this bit:

The Sony Reader needs to be mentioned as it's the main player on the UK eBook market. So how does it compare? Well it's certainly more stylish to look at and has 12 shades of eInk compared to the BeBook's 4. On the downside, it's heavier, bigger and books are locked to DRM. That's probably the crucial factor at the moment and why the BeBook is worth the extra £30.

What? £30 more for something that can't do ePub? That can't borrow eBooks from public libraries (something which will be coming even to the UK, if it hasn't already)? Double rubbish! And there are DRM-free ePub eBooks available. (And by the way, the Sony Reader has 8 shades of gray, not 12.)

eBook Holiday-Buying Recommendations

25 e-books to buy before Christmas

We’ve all had a good look at books, and frankly, they’re outdated. All that paper is SO eco-unfriendly, and packing 10 John Grisham thrillers into the holiday suitcase takes up valuable space for more important sombreros.

E-book readers help solve all these problems, and we’ve trekked through the virtual internet library to see the best tomes on offer (we even got shushed by the robot librarian).

This is from the British magazine T3, so every eBook might not be available for purchase elsewhere. But it's still an interesting list to read. They do a bit of cheating, though, by including four free eBooks.

There's also this: Death match: Sony Reader PRS-505 VS Iliad Book Edition

Really, do I have to announce the winner? Moi?

Stanza: 40,000 eBooks A Day!

40,000 E-Books a Day

40,000-a-day. That's how many e-books are getting downloaded through Stanza, the simple e-book platform for the iPhone/iPod. I've got 35 of them sitting on my iPod. All of them free, public domain or creative commons, and DRM-free.

40,000-a-day. If you are a publisher, think long and hard about that number.

The reason I have 35 books downloaded onto my Stanza is: a) it is easy, b) it is free.

What does this mean for your business model? I don't know, but I assure you that when I finish War & Peace, I'll be buying a hard copy. And I also assure you: I love reading on that little thing.

Emphasis added by me.

eBooks Explored In The U.K.

Podcast/feature: Exploring eBooks

Electronic books (e-books) could revolutionise the way in which learners access information. A recent Exploring e-books event provided an opportunity to speculate, disseminate and evaluate the current issues and potential future of the e-book within UK further and higher education (HE).

Organised by Virginia Havergal at JISC's Regional Support Centre (RSC) South West, library and information professionals as well as technical experts and JISC Collections project leaders shared their experiences and research findings with a view to maximising the benefits of e-books for users and for institutions.

Caren Milloy is the manager of JISC Collections' national e-books observatory project. This is a study of the management and economic impact of e-textbook business models on publishers, e-book aggregators and HE institutions. Milloy singled out the top ten advantages of using e-books and the drivers informing the debate. Listen to the podcast interview, below.

There's more text, plus a link for the podcast at the bottom of the page.

And you can cheat, by reading only the transcript.

Want. This. Book.

Davies did some magnificent work in his Doctor Who scripts and often put in little touches that I'd like to ask him about.

I doubt this book will answer those questions, but it could be a start.

-- via Twitter from top_book

The Secret Of The Last Post

I have a bit of a secret.

It's the Last Post of the Day.

Whenever possible, I try to end the day with a post that I want to be widely seen. Since that post will be up for at least 10-12 hours, it's likely to be the first new post someone sees when clicking through from a single post to the entire blog.

Right now, I have a Sticky. So that somewhat pre-empts this strategy.

However, last night, it was the CitiGroup post.

Before that: Video: The Time Traveler’s Guide. This one, however, was unintentional.

Before that: See Writer Tito Perdue In Person! -- entirely intentional.

And before that: Chronicles Of Depression 2.0: #422: Cow Chips -- again intentional.

I don't know if there's anyone else who does this.

Things tend to get buried fast in this blog. So for something I want more people to see, I try to hold it as the day's final post. Sometimes that's not possible, when breaking Doom news hits, but it's what I deliberately try to do.

Maybe others with blogs will find this tip useful.

Chronicles Of Depression 2.0: #435: Delusions

This is another article stuck behind the Wall Street Journal paywall, but I can't resist this ridiculous headline and proclamation in the free part of the article:

APEC Leaders Say Crisis Can Be Overcome in 18 Months

LIMA, Peru -- The financial crisis threatening to plunge the world into recession can be overcome by mid-2010, Pacific Rim leaders said Sunday as they wrapped up a two-day summit.

"We are convinced that we can overcome this crisis in a period of eighteen months," the 21 leaders said in the statement. "We have already taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth."

Emphasis added by me.

I think it would be in bad taste for me to type in big red letters ROTFLMAO.

If I was confident that WordPress would still be around in eighteen months -- or, at the very least, still offering its free service and keeping this blog up -- I'd do a post timed to pop up eighteen months from now as a reminder, so we could all compare their pompous declaration against the prevailing misery.

Chronicles Of Depression 2.0: #434: Saudis

Saudi Arabia Moves to Boost Liquidity

This is behind the Wall Street Journal paywall, but the bit I want is in the sneak peek:

The country's stock market has fallen sharply, along with those of the rest of the world. But the drop on the Saudi stock market -- the biggest by value in the Gulf -- has been particularly steep. On Sunday, the market's main index fell 3.8%, extending a 9.2% drop Saturday. The index is down more than 61% year-to-date.

Emphasis added by me.

I think we keep forgetting other countries have stock markets too. It's good to be reminded how badly everyone else is doing.

Chronicles Of Depression 2.0: #433: Charts

A bit of Show & Tell.

The Dow Jones Industrial Average in the past year:



The Dow Jones Industrial Average in the last six months:



Must it hit 4,000 before you believe?

And what will your skepticism be then? "Lucky guess"?!

Chronicles Of Depression 2.0: #432: UBS

UBS loses favour with angry Swiss

In Zurich, UBS head office sits astride Paradeplatz - Parade Square to you and me.

But in recent months, the Swiss have renamed it Piratenplatz - or Pirate Square - to signify what they believe is the daylight robbery that has taken place over the last 12 months. Not of their biggest bank, but by it.

When the news began to trickle out that UBS was in big trouble because of its exposure to sub-prime mortgages, there was first surprise, then concern, and then finally, as the multi-billion pound extent of the losses became clear, fury.

Emphasis added by me.

And:

The Swiss know that UBS bosses earned among the highest salaries in Europe. Added to that were huge bonuses which they continued to award themselves even as the financial crisis unfolded.

Emphasis added by me.

Don't you think such smugness deserves a rope around its neck? I do.

And:

"Touch their money and the Swiss get mad," says Bernhard Weissberg, editor of the mass circulation Blick newspaper.

He should know, his desk is piled high with readers' letters that are so angry you can almost see them smouldering.

"UBS bosses," writes one reader, "give us our money back, or we'll feed you to the crocodiles."

Emphasis added by me.

Oh, but a rope is so much better. And it avoids abusing innocent animals.

And:

Management assurances that the bank was on the road to recovery were swiftly followed by a £40bn ($60bn) rescue package from the government, available to all Swiss banks. This caused more fury among taxpayers.

Emphasis added by me.

Isn't that the pattern of failed business now? Lie lie lie Deny deny deny there's any problem to the public while on the phone privately to the Government.

What I don't like reading is this bit:

"The whole sub-prime thing is an American invention," he says in a disgusted tone, "but a Swiss bank got involved."

Emphasis added by me.

That is bad. They'll want our necks in ropes. Or bodies thrown to crocodiles.

Bank Collapse Watch: CitiGroup 2

Citigroup seeks 'emergency cash'

Executives of Citigroup, one of the biggest banks in the US, are in emergency talks with the US Treasury to gain much-needed funding, reports say.

The bank is also said to have contacted certain shareholders to assess their interest in increasing their stakes as as it faces an uncertain future.

Emphasis added by me.

Really, do you think anyone can take weekends off anymore? When the history of this is written, we'll find out just how many 3AM calls were made.

Getting faster worse:

There are fears that without further funding the bank might not be able to survive. Any money would be in addition to the $25bn injection it received in October from the US Treasury.

Emphasis added by me.

Still think this is a healthy and going company?

In a bid to reassure investors, Citigroup is running advertisements in US and international newspapers on Sunday underlining its stability.

It is widely expected that Citigroup will issue a statement on Monday before the US markets open.

Emphasis added by me.

A world without CitiGroup is going to be a startling thing to witness.

Go grab a bunch of cash for safety. At some point those ATMs are going to stop working.