Tuesday, November 25, 2008

Citi and Numbers

It looks like the government is getting $27 Billion in preferred shares in Citi, not $7 as I'd seen earlier. That's mildly better.

Citi's books are a mess of course, and they're nowhere near as "well-capitalized" as they claimed. Of course, when your press releases mirror those of Bear Stearns and Lehman Brothers before their collapse, this isn't unexpected.

The $249 Billion (after Citi's deductible and the 10% they're responisble for) is broad-spectrum. This was done so Citi couldn't just dump the toxic crap. So if it's mortgage-backed securities, it's ALL the mortgage-backed securities, not just the risky ones.

But it doesn't cover credit card debt or overseas lending. These will be big areas of loss for various reasons. Credit card debt is obvious, as its often the first thing to stop being paid by people. Of the holiday shopping that WILL be done (those discounts will be hard to resist), a very large portion will be done on credit cards that won't be paid off.

Oh, and more numbers, for ALL banks:

Bank deposits: $7.141 TRILLION. Cash assets? $871.3 BILLION.

So for every dollar deposited, the banks only have 12 CENTS on hand. Almost enough to make a guy want to deposit into the 1st national bank of strong box buried in the ground.


Schaubs said...

That's a recipe for a depression sir.

OhCaptain said...

If all the banks collapse, burying worthless paper isn't going to help. It would make perfectly good toilet paper and I'm quite sure you aren't gonna wanna dig it up when you realize you are out the good stuff.