Monday, January 12, 2009
"C"ing The Bottom
Somebody knows something. There was Citigroup all flush and happy with TARP money to swim in. Bloomberg reports an incredible piece of good news that proves financial engineering can paper over and structural defect. That article shows Citi "booking" a $10 Billion Gain on Morgan Stanley Deal. How you may ask incredulously? The pretax gain would come from writing up the value of Citigroup’s Smith Barney unit to a new price set by the deal, said the person, who declined to be identified because the talks are confidential. The gain of $5 billion to $6 billion after taxes would flow into Citigroup’s capital, a loan-loss cushion
Yep, a forced and subsidized merger of Morgan Stanley and Smith Barney for a fire sale $3 billion turns into a $20 billion deal.
Okay, look at the chart above. Look at the volume. Those of you so inclined can also look at the heavy volume on the open this morning (Mon, Jan 12). Somebody knows something and when the news hits the rest of us it will be in the form of a bill for the clean up.