The $18 Billion Writeoff

Sometimes you just have to MICROMANAGE EVERYTHING. Chuck Prince let a few idiots load up several dozen trainfuls of sub-prime loans while he had his back turned, and it came back to bite him hard. $18 billion is a lot of money for one mistake. 10% of the countries on this planet don't have an annual GNP that large. Fewer than twenty guys in the world are worth that much. That's like feeding $574 into a woodchipper, every second, for an entire year. Ok, you get the point. Probably fewer than 50 guys at Citi screwed the other 350,000 employees out of any sort of real bonus in 2007, as well as making their options worthless and their dividend checks a lot smaller.

It's funny how the firms that have aspired to be the financial supermarkets (like Citi, B of A, and Merrill) are the ones who are being hit the hardest. Managing that many pieces of the financial puzzle is tricky during the best of times; being the buyer of last resort for other firms' sewage is sheer stupidity. Hey, I'll hook a hose up to the bottom of my toilet and send whatever comes down the pipe over to those firms too.

There will be a point in time, however, where buying Citi will be a smart investment choice. I've met with Vikram Pandit one-on-one a couple of times back in the 1990s. He is as smart as they come, and he will not allow Citi to make a mistake of this size again. Breaking up the company is the best option for most CEOs. Sandy Weill was able to hold it all together, and Pandit also has that ability, especially as a manager of risk.

But for the moment, Citi needs all the Vaseline you can send them.