Tuesday, June 9, 2009

Quote of the day

AlphaNinja - The "new business model" From Citigroup CEO Vikram Pandit:

“When you look at the last five, 10 years, there were two engines of growth. There was the U.S. consumer and credit creation. None of those are likely to be the engines of growth going forward…I’m optimistic that we might start seeing stability in the financial markets, but that’s stage one. Stage two is about what kind of world we want to have going forward, what’s the new business model? And that’s what we’re really focused on at Citi.”

The "US consumer and credit creation" were pretty intertwined I'd say. So how are we faring in our pursuit of a new business model? We've (artificially) gotten mortgage rates down to their lowest levels EVER, with Uncle Sam even pitching in for the down payment. Sounds like a reckless consumer + more credit creation to me.

Seriously - some of the world's most reliable AAA-rated companies would LOVE to borrow at 4.5% (granted some do, but not on 30-year debt)- instead the taxpayer subsidizes that rate for your neighbor Chuck who fibbed about his income.

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