<TABLE id=msgUN cellSpacing=3 cellPadding=0 width="100%" border=0><TBODY><TR><TD id=msgUNsubj vAlign=top>
Coffeeshop Chit Chat - Why Citi be will be gone</TD><TD id=msgunetc noWrap align=right>
Subscribe </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE cellSpacing=0 cellPadding=0 border=0><TBODY><TR class=msghead><TD class=msgF noWrap align=right width="1%">From: </TD><TD class=msgFname noWrap width="68%">Metaphobia <NOBR></NOBR> </TD><TD class=msgDate noWrap align=right width="30%">Feb-27 5:42 am </TD></TR><TR class=msghead><TD class=msgT noWrap align=right width="1%" height=20>To: </TD><TD class=msgTname noWrap width="68%">ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 4) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft width="1%" rowSpan=4> </TD><TD class=wintiny noWrap align=right>8095.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Once it is partially nationalized, it simply means that currently there is zero or negative capital value.
The issue is how much value of debts vis-a-vis the assets.
At this level there is practically no lending to Citi in the inter-bank market, therefore there are only two ways to settle liabilities.
1. sell assets
2. ask froom shareholders.
3. ask from Governmetn
Given that liability is fixed, this means that the growth in liability increases like clockwork..
while assets in balance sheets cannot render value sufficeiently to meet those increased liabilities due to inetrest cost.
As the increased liabilities interestpayment are not going to be allowed to be extended into further liability in the balance sheet, Citi must pay cash.
Right now Citi is worth about 7-8 billion while the interest cost on liabilities alone is about 60 billion!!!
US government must match it or else Citi will fall.
If Citi goes into receivership, it will effectively means the 2 trillion worth of liabiliity and tens of trillion worth of derivatives will instantly become a nightmare far bigger than Lehman!
If the governemnt does keep on funding it like Fannie and Freddie, then it will mean GIC share will keep diluted to the extent of nothing!!!
Either way, we are gone!
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The issue is how much value of debts vis-a-vis the assets.
At this level there is practically no lending to Citi in the inter-bank market, therefore there are only two ways to settle liabilities.
1. sell assets
2. ask froom shareholders.
3. ask from Governmetn
Given that liability is fixed, this means that the growth in liability increases like clockwork..
while assets in balance sheets cannot render value sufficeiently to meet those increased liabilities due to inetrest cost.
As the increased liabilities interestpayment are not going to be allowed to be extended into further liability in the balance sheet, Citi must pay cash.
Right now Citi is worth about 7-8 billion while the interest cost on liabilities alone is about 60 billion!!!
US government must match it or else Citi will fall.
If Citi goes into receivership, it will effectively means the 2 trillion worth of liabiliity and tens of trillion worth of derivatives will instantly become a nightmare far bigger than Lehman!
If the governemnt does keep on funding it like Fannie and Freddie, then it will mean GIC share will keep diluted to the extent of nothing!!!
Either way, we are gone!
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