Citi Never Sleeps

Two days after Lehman Brothers filed bankruptcy on September 17,2008 a bearish raid knocked the stock of Morgan Stanley down 24%. A combination of complicated financial instruments called Credit Default Swaps (CDS) and the subsequent shorting of the stock of Morgan Stanley contributed to this huge decline. Last week a bearish raid on the stock of Citigroup(C) was responsible for a decline to $3.50. The Federal government could not allow another financial company to fall. This past weekend negotiators for Citi and the Government came up with yet another rescue plan. Hopefully this plan will stabilize the financials. We have to remember that all of these capital needs are based on the deterioration of the economy and the subsequent accounting write-downs that must occur. If the government can stop these bearish raids on our financials, then we will beat the potential depression.

Random thoughts....It seems that everyone agrees that President Obama's financial appointments will solve our problems...what will happen to Ben Bernanke (chairman of the Federal Reserve)...his term expires in 2010.....he is hoping for a quick recovery...a good way to play the backstop of financials by the government is the XLF (a financial ETF).....