Late Edition

Citigroup on the Ropes

Nothing really new here, but the music is about to stop and Citigroup doesn't seem to have a chair. The government will likely provide one, but what shape will it take is an open question. I think an AIG shape makes sense, i.e. shareholders and officers largely wiped out. Otherwise, too much moral hazard. At least we did not allow Citigroup to buy Wachovia. Then the price tag would be much higher. Then again, there is a theory that the FDIC financial support for the Wachovia deal with Citigroup was a secret means of financially backstopping and saving Citigroup and had little to do with supporting Wachovia. In any event, Bronte Capital (by an Aussie) covers the current mess and, as I recall, did a nice piece on the Citigroup/Wachovia reasoning at the FDIC. He knows his stuff.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ArjWNoRSKw&refer=home

http://brontecapital.blogspot.com/

Enjoy Cheap Gas While It Lasts

Oil companies are apparently storing millions of gallons of oil in tanker ships just waiting for prices/demand to increase. I don't think they would do this, and pay for the ships, if they thought curent prices would hold for an extended period. I mentioned yesterday that prices "rationally" would not likely go much lower, but who knows whether they might climb from here. If the oil companies know, then prices are about the rise. I wonder whether it would pay for me to install a few 10,000 USTs in the back 40 for gas and let it roll?

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ArjWNoRSKw&refer=home

Twenty Down ___ To Go

If you follow the flow, bank failures pretty much always happen on fridays , unless there is a political reason for them to happen on another day. True to form, we are up to number 20 for the year. Nothing major, but the recession beat goes on.

http://www.fdic.gov/news/news/press/2008/pr08123.html

Update: The FDIC closed three banks yesterday. While the number of insistutions closed is small in comparison to the S&L crisis, the dollars at issue are larger. For a good discussion of this, with cool charts, visit Calculated Risk.

http://calculatedrisk.blogspot.com/2008/11/graphs-fdic-bank-failures.html

Peace, Love and Serenity! Or not.