Shares of Citigroup soared 65% this morning as the Government bails the company out by issuing $306 million in loan guarantees and providing $20 billion in cash. Citigroup is getting $27 billion in preferred stock from the Treasury requiring it to pay 80% in dividends. Citigroup will also cut its quarterly dividend to $.01. This frees up $64 billion in capital for spending.
In comparison, the Savings and Loan bailout in the 1990's cost the government $210 billion total.
The Federal Reserve has pledged $7.4 trillion in rescue funding to banks with frozen credit. This amount is 9 times the cost of both Iraq and Afghanistan wars to date, it is 1/2 of the GNP of the United States, it amounts to $24,000 for every American and dollar bills placed end to end would reach Pluto at the outskirts of our galaxy.
Paulson may ask for the last $350 billion to bolster consumer credit.
Obama's stimulus plan may top $700 billion.
Bush has announced, along with Citigroups bailout, that he will make more financial moves as necessary to stimulate the economy.
GM seeks to cut debt and change union rules to gain support for U.S. aid amid speculation that one of the Big three are likely to fail.