TheStreet.com's Jim Cramer wonders -- can we handle this giant's failure? As always, it is Citigroup (NYSE: C) (Cramer's Take). My smartest guys tell me that Citigroup has billions in assets it can sell, that there is ample opportunity for the company to reliquify, that Vikram Pandit has things under control and the slow bleed cuts are going to work to get costs down.
Now I have total confidence in Treasury, particularly in Bob Steel, to take care of the shorts and to create brilliant shotgun marriages that reward the rich banks and punish the poor.
BUT, I have no faith in Citigroup, which because of the moronic acquisitions and bizarre off-balance-sheet liabilities may technically be insolvent. When you consider it is too big to fail, you have to begin to wonder -- what's the plan if it can't make it? How far can forbearance go? Will we tolerate this bank being majority-owned by the sheiks or the communist Chinese? Seems far-fetched, but when I read Meredith Whitney's words this morning over at OPCO I know that the losses are going to be too big for the current base of capital.
This note could not have come at a worse time, because now that Bear (NYSE: BSC) (Cramer's Take) is done, the shorts are going to refocus their prey, and I was hoping it was going to be on Washington Mutual (NYSE: WM) (Cramer's Take), which can be swallowed by Wells Fargo (NYSE: WFC) (Cramer's Take) or HSBC (NYSE: HBC) (Cramer's Take), and not Citigroup, which cannot be swallowed by anyone without choking.
Here's the thing: After the criticism that I have received for saying that it was safe to keep your money at Bear but not to own the stock, maybe I should say it is unsafe to have either when it comes to Citigroup, so I can be irresponsible on the deposit side so I don't confuse those who believe that I say the equity is safe.
When it comes to Citigroup, I simply think there are a thousand financials that I would rather own than this one and it remains my favorite short in this group after its pathetic run-up.
Random musings: We are overbought, tomorrow morning is the end of markup season. Take things off.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
3-26-2008 @ 10:22AM
rpopr said...
I hope that Jim is truly short this stock and I hope that Citibank finds its legs and fully recovers.
I don't know about others out there but I am sick at listening to this bone head (JK) open his mouth.
3-26-2008 @ 1:00PM
David Huston said...
When is someone going to cogently explain credit default swaps ("CDS"), and what role $56 Trillion worth of them could play in the collapse of our economy? The latest sideswiping reference to CDS's was with respect to Bear Sterns - to the effect that BSC was counterparty to $trillions in CDS's, many with JP Morgan, said to be holding a grand total of more than $7 trillion worth. Since the latest report is that Citigroup holds more than $1 trillion of these potentially toxic instruments, how does this all mix together? Does anyone know?
4-01-2008 @ 9:00AM
Karl said...
How can anyone listen to this "Expert" after he advised not to sell Bear, Stearns stock? His arrogance of yelling and screaming pretending he knows it all doesn't cut it anymore. How may millions did he lose for the viewing public?
4-07-2008 @ 6:20PM
VIC OLIVA said...
BRING SANDY BACK TO FIX CITI
5-09-2008 @ 1:48PM
Michael said...
Jim Cramer... I also agree I think the ship is finally SINKING.. for the pathetic run up with this stock. I think alot of people are going to be real sorry for owning such a position in a company like this. I think we see $10.00 real soon... "Go Short" $$$