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Written by José D. Roncal
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Tuesday, 25 November 2008 04:45 |
It was no big surprise that the U.S. government stepped in to bail out Citigroup by guaranteeing $306 billion worth of toxic assets plus another capital injection to the tune of $20 billion. It was no surprise because Citigroup is simply too big to let fail.
This latest bailout news caused the markets to rally with the Dow climbing another 397 points. Bank shares also rose including Citi which had a 58% gain over its closing price of $3.77 on Friday November 21st. So for the time being there is relative, though temporary, optimism in the otherwise flailing markets.
While the plan does call for certain measures, such as monitoring executive compensation, it falls far short of something we should get seriously euphoric about. I’d prefer to see a little more structure to these bailout plans, one that treats each corporate debacle on a case by case basis instead of what we have now: a one size fits all policy we might as well call UCPR, “Universal Corporate Rescue Plan.”
How this Citigroup plan is supposed to instill a shred of confidence in the financial system is beyond me. If the Feds can’t start by first digging out the root of Citi’s problems, this fix will amount to nothing more than applying a band-aid to a dying patient.
Members of Citigroup’s Board of Directors have been at the helm for eleven years and have failed miserably in their fiduciary responsibilities. It would be fascinating to examine how each and every one of those members have adhered to their board responsibilities, including exercising accountability to shareholders. I suspect there wouldn’t be much there to sift through.
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Written by José D. Roncal
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Wednesday, 19 November 2008 01:14 |
Top executives from three Detroit automakers are back on Capitol Hill today looking for a $25 million hand out to keep their businesses afloat. Yesterday they appealed to the Senate, today it’s the House.
In the hearing entitled, “Stabilizing the Financial Condition of the American Automobile Industry,” some lawmakers argued that a bailout was unfair, while others claimed that an immediate rescue was necessary, not just for the auto industry, but for the overall economy.
But don’t look for any quick fixes. There are too many details to weigh before a vote can be taken seriously.
Many congressional leaders were blatantly skeptical and critical saying that bailing the industry out in the short term does nothing to change the fundamental management problems in the long run. They questioned Detroit’s ability to compete in the global marketplace and pointed to what they perceive as the major problems: the vehicle quality, high labor costs and the competence of their senior management.
Senator Christopher J. Dodd, Democrat from Connecticut and chairman of the banking committee was previously known as a staunch supporter of Detroit. But now . . . not so much.
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Written by José D. Roncal
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Friday, 14 November 2008 00:53 |
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Nations look for financial solutions
China might work with IMF on global crisis
Could help countries hurt by the global financial crisis andcontribute to a bailout fund.
Japan ready to help ailing nations
Couldlend $100 billion to the IMF to support those reeling from financial crisis.
EU launches humanitarian aid appeal
EU Commission calls for theG20 summit to address the subject of poverty.
African nations call for G-20 support
South Africa is the only African nation invited, but vows on their part toboost economic reforms and national cash reserves.
India to attend G-20 economic summit
India has a vital stake in finding solutions to global financial crisis.
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