Who Thinks Theres More In Store for Citigroup?
It looks like Citi is finally losing one of its Chief Economists. This would normally be great news for a company that has been run very poorly, has been consistently incorrect about its capitalization (or lack thereof) and well-being. The Economists at Citi obviously did not see this coming, and did not do much of anything to help the company avoid immanent economic problems.
What is startling about this bit of news, is that the economist in question is actually leaving Citi for another job. Now, who might be silly enough to want to hire such a person who failed to predict, act, understand, or prepare for this deteriorating economy? You guessed it! Uncle Sam!
Citi's Chief Economist Leaves for Treasury Post
Citigroup Inc.'s chief economist is leaving the New York company for a job at the U.S. Treasury Department, according to an internal Citigroup memo.Lewis Alexander, who has been at Citigroup since 1999 and before that worked at the Federal Reserve, will head to Treasury "to work on domestic financial issues," said the Citigroup memo, which was sent Tuesday.
Great! He obviously did such a great job working on "financial issues" with his previous employer, let's all welcome him onto the public payroll!
According to a government official, Mr. Alexander will be a counselor to Treasury Secretary Timothy Geithner. Mr. Alexander and a Treasury spokesman weren't immediately available to comment Tuesday. A Citigroup spokesman declined to elaborate on the company's memo.
Geithner is already so far off course, I can't imagine what this new addition will bring.
Mr. Alexander, who was the Commerce Department's chief economist from 1993 through 1996, is joining Treasury at a time when the department is scrambling to beef up its ranks of senior officials. The current staff shortage has fostered doubts on Wall Street and in Washington about the Obama administration's ability to get its arms around the financial crisis.
"Scrambling to beef up its ranks of senior officials." Sounds like they are being very, very selective. Why do they need to be beefing up their ranks right now, anyway? I think we might all be better off if the treasury sent everyone on a 2 year vacation instead (and this might be cheaper, too!).
Mr. Alexander's role as Citigroup's chief economist didn't entail significant management responsibilities. But his optimistic economic forecasts colored executives' views that the U.S. was unlikely to face a prolonged slump.
No significant managemente responsibilities, an optimistic economic forecast, sounds perfect for a government position! And think about it, how coul there possibly be a prolonged economic slump with all the optimism this guy has!
Mr. Alexander's Track Record
Let's take a look at his track record to see how well-suited he is for this new government position.
"I think that's not going to spill over more broadly into the economy, and so I think we're going to have a normal kind of housing cycle that's going to last through the middle of this year," Mr. Alexander said in a Feb. 28, 2007, interview on PBS.
In the past five quarters, Citigroup has booked a total of more than $37 billion in net losses, largely stemming from the company's overexposure to the U.S. real-estate sector. In a memo last week, Citigroup Chief Executive Vikram Pandit said the company was profitable in the first two months of 2009.
Let's note some key points:
- Didn't think subprime would "spill over more broadly into the economy"
- Thought we would have a "normal kind of housing cycle"
- Led his company to over-expose itself in incredibly risky assets
All in all, what more could you expect of a soon-to-be government employee?
Maybe We Could Do Better
I could imagine that maybe Peter Schiff, Lew Rockwell, Michael Shedlock, or any of the other austrian economists that saw this coming as early as 2003 and maybe before. Maybe any of these people would qualify a little bit more than Mr. Alexander, but maybe I'm wrong.
Citigroup's Christmas Comes Early
I think one thing is clear from this action. Citi is not done receiving gifts from Uncle Sam. You think Mr. Alexander is going to let his old buddies at Citi just go under? Now its a nice, close-knit family, and there's nothing to worry about because the taxpayers can foot the bill. Looks like its Christmas again for Citigroup.