All about investment

By David L Wells

Investing these days has become quite tricky, even treacherous!

There are bad investments all around us on a daily basis. The government seems to have a pretty good handle on bad investments as of late. They are spending $3.6 trillion dollars in the near future on programs we can only hope will help. Oh, by the way, that comes to about $25,573 dollars for each of our 139 million taxpayers. That's ok. Just put it on my bill, or better yet put it on my kids' bill.

Citigroup, for those who do not know, is the nation's largest banking institution. Chances are if you have a credit card or a mortgage, Citigroup is playing a part. Citigroup has been touted as the world's worst investment.

Former Treasury Secretary, Hank Paulson, made a terrible investment on behalf John Q Public. He purchased 7.8% stake in Citigroup for $25 billion dollars. Then he added guarantee's against 90% of future losses on $301 billion dollars in assets. Subsequently, we (taxpayer) injected another $20 billion dollars. So, for paying for about 100% of the market value for Citi, we got less than 1/10th of a company that was worth 1/5th of our investment.

Pretty good deal, eh?

That $45 billion dollar stake has a market value of just over ONE billion today. And, it's about to get worse. The Treasury Department has agreed to convert $25 billion of its preferred stock investment into common stock at Citi. This means the taxpayer's stake will rise to near 40% of Citigroup.

It's just another example of why these insolvent banks should be nationalized or FDIC Mandated, pre-packaged chapter 11, government funded reorganization.

David L. Wells
http://www.apg-llc.us
http://www.debt-negotiation-apg.com

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