It seems the announcement by the Treasury Department today that says the amount taxpayers will lose from the outrageous bailouts is far less that originally estimated, with Citigroup (NYSE:C), and other recipients of the funds, improving in share price and value, which will eliminate much of the costs, according to the government agency.
Along with Citigroup, the other companies included in the assertion are General Motors and Chrysler.
I’m surprised the Treasury even bothered releasing this information, as it’s so irrelevant as to make it appear to be demagoguery rather than a reality.
Assumptions of the alleged billions in savings were based primarily on the performance of these three companies, and Citigroup alone has shed a lot of market value since just March 31, completely skewing the amount that supposedly would be saved by their improved performance.
Almost all of this is based upon two things: the European sovereign debt crisis, and the inflation rising in China; both of which could cause dramatic cutbacks in imports for raw materials and products, which could easily bring the global economy back into an even deeper recession than we’re not even out of today.
With just Citigroup, their share price has fallen from the March 31 close of $4.05, and as of 1:52 p.m. EST Friday, is down 28 cents a share from then. The Treasury paid $3.25 for Citigroup shares, so as you can see, the gains have dropped off significantly from that time, making these estimates and attempted optimism look really lame, and in reality, somewhat dishonest.
And this isn’t even taking into consideration the changes in the other companies, which put even more downward pressure on the estimates made by the Treasury.