Tuesday, December 15, 2009

Here's Some "Change" From Obama

$38 billion in spare change given to Citigroup, in a unique, unprecedented IRS ruling which, in effect, transfers $38 billion of potential tax revenue from the Taxpayers to Citigroup.  I borrowed this from Jesse's Cafe Americain because Jesse was too kind in his related commentary: 
The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis.

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.
Here's the link to the entire article from the WashPo:  Obama's "change" in action

Just when you thought Obama's charity to the banking industry couldn't get any worse, he goes and hands Citigroup $38 billion.  Oh don't worry, Barack, I'm sure every single public school district in the country, each faced with many millions in tax cuts, won't miss that tax revenue.  We'll just cut more teachers and close more schools so you can make sure the corrupt Vic Pandit and his band of merry bankers at Citigroup can pay themselves huge bonuses.

Barack, I hope you really enjoy your brief four years in the Oval Office.  And just like Clinton, I hope you turn your tenure as President into massive wealth.  But if elections were held today, judging from the polls, I think you would lose even to Sarah Palin.  I can't think of any fate more pathetic than that.


  1. LOL. This is beyond aggravating. Might be time to look for place to move out of the country. Might look into Uruguay.

  2. I'm renting an apt now, so that when I retire in 3-5 yrs I can move to the lowest tax area.

    Politicians have gone nuts. In the future, when budgetary pressures get even worse than today, they will be taxing anything that moves.

  3. Gary, you might want to think about liquidating your IRA, paying the 10% penalty and doing something else with that money. Even just keep in a taxable account or buy bullion with it and get that money completely "off the radar screen."

    A colleague of mine and I, back in 2002, predicted that the bankers/Govt would hold up the system until the elitists were able to sweep every last middle class wealth crumb off the table and into their pockets. Retirement assets, for those who have not already cashed them out to pay bills, are the last form of middle class wealth. Expect that the current Government will look to take advantage of that. Bush already ready tried once with his proposal to consolidate all tax-deferred accounts into one general Govt-administered account to be managed by Wall Street. Remember that?

    This move by Obama's IRS has, in effect, transferred $38 billion of potential wealth from the taxpayers to Citibank. Obama does not have our interests at heart.

  4. Dave, Saw that possibility 15 years ago. Bit the bullet and cashed out my 401K, paid the tax.

    Now I'm out of the system. Unbelievable relief knowing there's nothing hanging over my head (ie possible Govmnt takeover of my money).

  5. Dave, Recently I've even gotten paranoid about putting money in CD's because I've read that if crunch time ever comes Geithner will force time deposits of banks to Treasuries. With what I see now I'm thinking demand deposit account only. Will probably cost me some money but there's too much uncertainty now.

  6. Gary, souds like you're way ahead of the curve!

    CD's are very risky, even if an amount below FDIC coverage. Granted, if the issuing bank collapses, the FDIC, for now, will keep using Fed-printed money to pay out depositors, but you're getting paid in increasingly devalued dollars. At some point, that vicious cycle has to stop and CD investors will take gas.

    When you think about it, FDIC insurance in CD's only serves to magnify and perpetuate moral hazard, as the issuing bank is taking those funds, knowing there's no downside, and recklessly lending that money to commerical real estate developments and risky residential mortgages. At some point they'll be forced to end this insanity and CD investors might be vicitms once again.

  7. Dave, I've been checking bank balance sheets of prospective banks for when my CD's come due in feb/mar. Will stay in a savings acct. None are in great shape. Thinking maybe Fox Chase Bank outside Philly. Already have some gold/silver bullion. Have been considering small exposure to mining cos.

  8. Gary, to tell you the truth, I'd be inclined to keep as much as possible outside the banking system. Even when you look at what they publicly disclose, they have off-balance-sheet garbage they hide. Almost every regional bank/credit union has exposure to a lot of commercial loans and home equity paper. Fox Chase may be okay.

    You might think about opening a brokerage account with a non-bank broker like Schwab or Fidelity and keeping cash balances in really short Treasuries. You can link your brokerage account to a bank checking/savings account with what's known as a "money line" and you can move money electronically between your broker and the bank, usually overnight, and with no transfer charge. The difference between that and a Fed wire is that a Fed wire is guaranteed w/in 24 business hours and the moneyline transfer is not. I've never had issues with both Fidelity and Schwab.

    Mining stocks are the best way to play the "hyperinflate the money supply and the stock market goes bonkers" theme.

  9. Schwab is both my broker and my bank. When my local bank started paying zero interest on checking, I moved to Schwab, and have no complaints.

    Uruguay: I'm thinking about it too. I presume you read Sovereign Man: http://www.sovereignman.com/

  10. Thanks for the link - I had not seen that blog before. I've been researching places to move for quite a while. Right now I like the looks of Panama, Uruguay, Barbados. Been to Barbados but need to visit the other two.