Monday, November 24, 2008

From Bad to Worse

I think we're supposed to feel relief that Citi has been "saved" and that the financial system is therefore still "operative." But a quick glance at the terms of Citi's bailout package gives one a feeling of sea-sickness. It's a terrible deal and the political reaction against it will likely be ferocious, especially on the right. If you put this deal in front of the US House right now, it would probably lose 4-1.

That current management gets to stick around to manage this disaster is perhaps the biggest insult of all. That their "bonuses" are even discussed in the terms sheet is beyond belief.