Cit Group

Posted by Ray on July 14, 2009 under Main | Be the First to Comment

We talked about Cit last week and the issues they face moving forward. Clearly the firm is in trouble and as soon as their $2B line of credit is used up they will have to either raise cash or get help from the Fed or government. Geithner said yesterday that he is watching the situation and indicated that the government is in a position to help if need be, well that is what I got out of the comments.

Regardless, we knew their were problems and this should not be a surprise for investors. The big question is should the government intervene? I do not think so at this stage. I know it is painful and investors could loose big time, but it is the way the market needs to sort through those who can survive and those too weak to survive.

We cannot continue to bailout every firm that “needs” it. Frankly, bailing out everyone is not possible and we the people have not received any benefit from these bailouts. Interest rates have increased, minimum payments on credit cards increased, costs for goods and fees have goner dramatically up and we are making less. These bailouts are for business, not the people.

So much for change and hope we were promised by the president.