Citi Drops Below the $1 For The First
It’s an absolute blood bath today on the stock market. Yesterday’s rally proves wholly unsustainable as Wall Street plunges. Right now, the Dow is down more than 250 points. And Citi has dipped below $1 for the first time.
Citi is struggling back above the $1 mark, but it is a choppy ride today. Part of the problem with Citi is that the government’s plan to increase its stake is expected to wipe out what’s left of Citi shareholder value. The fears causing problems for Citi, though, are prevalent throughout the banking industry. MarketWatch reports on Citi and the financial system:
Citi has received $45 billion in government aid under the financial rescue plan, as well as loan guarantees. Investors are fearful that the slowing economy and balance sheets stuffed with toxic assets could result in the nationalization of the largest and most troubled banks. Spreads on Citigroup credit default swaps rose Thursday.
Personally, I think it’s a little harsh of Wall Street to keep selling off. Investors have been getting what they want: Bailouts galore. Additionally, the government has made it clear that it is willing to prop up stock market darlings with trillions of dollars. What more do they want? Obviously, the stock market is not happy with the idea that the profits of these companies might be socialized. They’re fine with asking taxpayers to take on the risk, but once it looks like the representatives of the people start taking on some of the possible benefits, it gets ugly.
I wonder if we’d be on a faster road to recovery if we just let these guys fail. It would be a rather fast (if harsh and dramatic) way to see who is really fundamentally strong. Then, maybe, we could move forward, helping the companies that are more likely to provide strong performances in the future.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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