The Bailouts Keep-A-Comin’

We’re starting to wonder exactly what the logic is up in Washington concerning these recurring bailouts … which of course is to presume there was ever any logic in Washington to begin with.

Politicians won’t give a bailout to the auto industry (don’t get us wrong, they don’t deserve one either) – but they will give a second bailout to Citi, another one of these financial services giants who contributed mightily to our current quagmire.

Anyway, from Seeking Alpha:

Apparently Citibank and the U.S. government (i.e., we taxpayers) have reached a deal whereby we will backstop something like $300-billion in screwed assets on Citi’s balance sheet. That $300-billion figure is, as we say in the business, way f*cking bigger than the $50-billion “bad bank” number that had been tossed around earlier in the weekend.

Here is the gist:

• Citi will carve out $300-billion in troubled assets, which will remain on its balance sheet:
  • The first $37-$40-billion in losses on those assets will go to Citi
  • The next $5-billion in losses will hit Treasury
  • The next $10-billion in losses will go to the FDIC
  • Any more losses will go to the Fed
• There will be no management changes at Citi, because, you know, they are all fine and upstanding people who have done nothing wrong.
• There will be some compensation limitations, but those have not yet been made clear.

Oh, and Citi also gets a direct $20 billion loan from the government on top of all that, which is on top of a $25 billion loan they’ve already received.

So yeah … nice work, government. We’re sure this will turn everything around.

You know it’s funny, we were reading the CNN article on the Citi bailout and stumbled upon one particular sentence that we’ve been seeing an awful lot of in the mainstream media coverage.

It’s not a direct quote from anyone, of course, but tell us if it sounds familiar to you, too …

“Investors feared that the bank’s collapse could leave the financial market in tatters …”

Well hell … of course they do. And of course these same investors want government to “do something.”

We hate to be the bearer of bad tidings here, but the financial markets are in tatters. And the only thing these bailouts have “rescued” is a bunch of bad decision-makers who now no longer have to face the consequences of their actions.

Politicians are digging America’s already astronomical debt and deficit holes even deeper because they can’t see these bailouts for what they really are – the most expensive confidence scam in American history.