Citigroup is announcing moves to further shrink its balance sheet. This is roiling the credit markets (along with other factors), as a major supplier of funds ... dries up. It's like a huge damn owner suddenly telling everyone down river that the reservoir spigot is just about to be shut off, rather than maintained, until the current drought is over (whenever that may be).
Why should the U.S. Economy go into recession, because the management at some behemoth banks and financial institutions ... basically sucked?
Is the answer smaller banks, rather than a few big ones that can cause such ruckus? Is it just a temporary change in regulation, that encourages banks like Citi to keep going, rather than retrenching? Is the solution to immediately create, with public dollars, funding alternatives and competitors to a closed-for-now Citi?
There is no silver bullet, but any rapid deflating of the "normal" credit cycle is really bad against the backdrop of an energy price spike ... ug!
Thursday, March 6, 2008
Citigroup Starts to Protect Itself
