Tuesday, March 17, 2009

Citigroup Chief Economist To Be Geithner's New Advisor

Citi's chief economist Lewis Alexander is said to be leaving for a post with the U.S. Treasury Department. Alexander will be a direct counselor to Tim Geithner. This makes some sense keeping in mind who Geithner's predecessor was.
Mr. Alexander's role as Citigroup's chief economist didn't entail significant management responsibilities. But his optimistic economic forecasts colored executives' views that the U.S. was unlikely to face a prolonged slump.

"I think that's not going to spill over more broadly into the economy, and so I think we're going to have a normal kind of housing cycle that's going to last through the middle of this year," Mr. Alexander said in a Feb. 28, 2007, interview on PBS.
All we need is another overly optimistic figurehead to provide the 3D rose-colored glasses to the masses. Additionally, now companies that have Citi as a counterparty are likely to immediately become elevated to too big to fail status. Sphere: Related Content
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Anonymous said...

Off topic question, Tyler (i am a new follower. you may have addressed this previously. if so please let me know and i will find the post)

What do you think the real effect will be on the major banks and/or insurance companies when Mark to Market is changed along the lines suggested by FASB?

Thank you.

Moat said...

Agreed on the rose-colored glasses.

I don't get the point on Citi's counterparties becoming "too big to fail" because of this guy's appointment. The government has already shown a willingness to make whole creditors at par value (see bailout money flowing to AIG's counterparties at par). What changes because of this?

ether said...

Interesting anecdote from here in Nor-Cal which raised a number of questions for me...

A buddy of mine stopped making payments on a house he paid $390,000 for in 06'. it's been about 5 months and he has been relentless about getting the lender to agree to a short-sale. They finally did, and listed it for $240,000. However, the rep for the lender on the 2nd told him that it wil be unlikely that any offer will be approved. He was told the more likely scenario will be that forclosure will commence, but not for at least 9-12 months!

Either way, he doesn't care, but i found it very interesting that the lender would choose to string along the loss for another year instead of just foreclosing on the property.

Short and sweet:

All the fucking numbers are going to be cooked.

They're starting with mark-to-ponyland for "illiquid" "assets... the banks know this, and they're positioning themselves for the slow-bleed of the U.S. taxpayer.

All the more reason i'm helping to spread the cancer of tactical consumer bankruptcy.

Fuck these fuckers.

ether said...

Oh, and the lender: current jewel of the moment in fantasy-ponyland:


House of Cards.

Anonymous said...

I used to work with Lew Alexander at Citi. Yet another incompetent hire for the Treasury (shocker).