Tag Archives: Political Favoritism

What is the difference between Sirius and Citi?

Obama is choosing to allow Sirius to go bankrupt, while choosing to bail out Citi’s stockholders

IN SIRIUS TROUBLE – New York Post
Nearly two years to the day after announcing a plan to merge, Sirius XM Satellite Radio is plunging headlong into bankruptcy, The Post has learned.

Washington has allowed many firms, such as VeraSun, to go bankrupt. But Obama once again emphasized his deisre to prevent the shareholders of Citibank from experiencing the cost of failure.

For a taste of the cataclysm Citi’s reckless investment in subprime mortgages nearly caused, start watch from 2:20 to 3:45 in this video (h/t Weekly Standard).

The Citibank apologists at CNBC of course would protest, saying CitiBank has already lost “all” of its value. But of course it has not: Citibank’s stock price is non-zero. Further, one of the lessons of this financial crisis is that markets are as irrational as humans are: even if Citi’s stock price would decline to 99% of its original value, the difference between losing 99% and 100% is mentally a lot bigger than the difference between losing 98% and 99%.