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November 20, 2008

Who Says There's No Credit!

This email from Citibank landed in our inbox this morning. With no prompting from us, they just increased our credit card limit by 50%. Go figure.

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Comments

braggart... jk.

*rob*

Posted by: PitbullNYC at November 20, 2008 10:04 AM

LOL...I can beat that. My brother got a pre-approved notice for a credit card from Chase in the mail. It wasn't addressed to either him or his wife but to Nikki. Nikki is the pet border collie.

Posted by: daveinbedstuy at November 20, 2008 10:07 AM

Dear Citi, can I please borrow $5.40 to buy one of your shares?

Posted by: Biff Champion at November 20, 2008 10:09 AM

Before you breakout the Champagne read this and understand.

Fractional-reserve banking

http://en.wikipedia.org/wiki/Fractional-reserve_banking

Money creation

The process of fractional-reserve banking has a cumulative effect of money creation by banks. In short, there are two types of money in a fractional-reserve banking system.

1. central bank money (money created by the central bank regardless of its form (banknotes, coins and electronic money loaned to commercial banks))

2. commercial bank money (money created through loans in the banking system) - sometimes referred to as chequebook money[9]

When a loan is funded with central bank money, new commercial bank money is created. As a loan is paid back, the commercial bank money disappears from existence.

Thats called deflation and you need to make new loans to keep the Mutant Asset Bubble going...

The What

Someday this war is gonna end...

Posted by: Return of The What at November 20, 2008 10:10 AM

Don't fall for it! Literally!

They want you to be filled with wild exhuberance, throwing your wife over your shoulder, injuring both her and yourself, so you can spend your new credit on pain meds, new furniture, and lots of apology filled candlelit dinners at expensive restaurants.

Crafty bunch, aren't they?

Posted by: Montrose Morris at November 20, 2008 10:14 AM

I have been getting letters like this also. I think the big banks are looking for the top tier credit guys and giving them more credit. I have been swamped by 0 percent offers from all my creditors.

Posted by: HOBOKENROCKS at November 20, 2008 10:19 AM

Mr. B...charge away!!! Go out there and max out your credit limit on downlights and a granite countertops.

Posted by: bayridgegirl at November 20, 2008 10:19 AM

And who says banks aren't lending and credit has frozen. This is the beginning of the end of the MAB. Tke that extra credit. Go out and buy yourself that high end Vulcan range that you've always wanted. Go out Saturday night and spend an enormous amount of money in a nice Italian restaurant with a five-course white truffle dinner.

Posted by: daveinbedstuy at November 20, 2008 10:20 AM

"Before you breakout the Champagne read this and understand."

Hmm, isn't it be more like "popping the champagne" or "uncorking the champagne" (unless you're referring to what you do at the liquor store when the manager's head is turned).

Posted by: Biff Champion at November 20, 2008 10:22 AM

no! use it for an open bar brownstoner party!!! share!

*rob*

Posted by: PitbullNYC at November 20, 2008 10:22 AM

forget all the celebrating...this really put a damper on my day.

'$5.40 to buy one of your shares'
I haven't looked at stock prices in a while.
Thanks, Biff, for reminding me, that 1/2 of my money is gone.

Posted by: bayridgegirl at November 20, 2008 10:31 AM

What,

You've only got yourself to blame for the extension of credit to Mr. B. Your rants, and the responses (hits) they generate, have improved Mr. B's financial position to the point where Citi is confident he can handle the increased credit.

We all thank for your contribution to turning the economy around.

Posted by: slopefarm at November 20, 2008 10:33 AM

What we have right now is a cut in the supply of money. Because credit has contracted as well as all asset prices money is now contractiNG. The fed is trying to fight this by printing the press. The fed has started to buy the long term bond because no smart person would and two because they want to lower rates on homes. This in effect will make it easier to buy homes. The fed will then start purchase assets creating a false bubble. Which asset he will do this to is beyond me. I write this because that is what he wrote he would do in his papers on the depression. Open the spigots and get out of the way because if you thought your house was going down our dollars will be too. This may create inflation which would help others but not people with dollars. I have already started buying actual gold...

Posted by: HOBOKENROCKS at November 20, 2008 10:34 AM

"Thanks, Biff, for reminding me, that 1/2 of my money is gone."

Not to make it worse, but the shares are actually more like 10% of what they were at just over a year ago. The half is only since Monday.

Posted by: Biff Champion at November 20, 2008 10:34 AM

Oops, and now it's $5.05. Citi, please adjust my loan application amount down accordingly.

Posted by: Biff Champion at November 20, 2008 10:35 AM

"The fed will then start purchase assets creating a false bubble. Which asset he will do this to is beyond me. "

The FED is not printing money!!!! I borrows it from short term debt! If the FED starts to print, there would be a BIG IMPLOSION in the Bond market!!

HOBO I very suspired at you for making such a statement and if you trade this is very important..

The What

Someday this war is gonna end...

Posted by: Return of The What at November 20, 2008 10:41 AM

aaaaarrrrhhhhh....stop it, Biff.
I have 500 shares of citi.
I am sitting on a mountain of cash, people.
Who wants white truffles???
I can propably get a pound and half.

Posted by: bayridgegirl at November 20, 2008 10:42 AM

Oooo! Me, me, me!

Finally, my investment scheme of not investing has paid off!

Posted by: Heather at November 20, 2008 10:51 AM

"I have 500 shares of citi."
That sounds like enough to wallpaper your apartment. I think wallpaper is probably more than $5.04 per square foot these days.

Posted by: Biff Champion at November 20, 2008 10:57 AM

Can you buy shares of citi with an increased credit line like Mr. B's....hhhmmmm.

I am tempted to buy more shares at this price, though.

Posted by: bayridgegirl at November 20, 2008 11:05 AM

Credit card companies are modifying limits according to the actual and forecast value of real estate in the area.

If you live in central Florida, for example, your credit line was snapped back to whatever your balance is. So was your HELOC. This has caused all kinds of problems with credit rating agencies because their formulas don't really work well when banks take that kind of action and millions of people's credit scores have been battered by no fault of their own, except that they live in an area where housing prices are falling.

On the other hand, banks make money by lending it. These loan-limit reduction actions have reduced risk, but are hurting the bottom line. So, they've correspondingly increased credit limits in areas where housing prices are going up (few) holding firm, or forecast to do so. You can read PMI's actuarial forecast published in October that says NYC real estate has only a 7% probability of being lower in value by October 2010. Banks read that and adjust people's credit card limits that live in NYC. Now, PMI's actuarial analysis probably preceeded the Great Asset Crash of October 10th 2008, so banks might have been rash. But these are big organizations and processes in the pipeline are often cheaper to push through than halt, even if there's a cost to pushing them through.

Posted by: yass at November 20, 2008 11:13 AM

What, do you really believe that the fed lets everyone know what they are doing. They have essentially started printing money if they are purchasing their own 10yr bonds which I hear is what they are doing. They have also started printing as soon as they start throwing money at bad companies. The tarp was originally intended to buy bad assets, assets that really had no intrinsic value. Monetization is the printing of bank notes by the central bank, that is what they have done when they started taking securities for currency , especially since alot of these currencies have no intrinsic value. The fed now has a huge balance sheet of little to no intrinsic value securities. That my friend is printing the presses. Its like the fed buying up that home that sold for 3 million last year for 3 million knowing quite well that it would only fetch 1.5. Though at least the home has intrinsic value those securities based on models have no intrinsic value.

Posted by: HOBOKENROCKS at November 20, 2008 11:13 AM

"I am tempted to buy more shares at this price, though."

BRG, seriously that is not a bad idea. It can't get much lower, but if it does, it'll be bailed out or taken over by JPM, BofA or someone else. The other alternative is financial spiders, which I think isn't a bad call these days.

Posted by: Biff Champion at November 20, 2008 11:17 AM

We get these all the time. They want us to to become total crackheads, but given how thinly we're stretched, it is they who must be the true desperados.

And Montrose, I've gotten a whole new picture of life behind your genteel facade!

Posted by: Brenda from Flatbush at November 20, 2008 11:22 AM

I got a similar letter, although not with such a huge increase. One thing I did notice however was my interest rate was like 7.5% or something.

That is simply insane.

Posted by: Polemicist at November 20, 2008 11:25 AM

I never get those, but I pay my balances off each month, so I'm not really a good customer. I remember a few years ago, my girlfriend had some crazy rate (like, over 20%) and she DID carry a balance, and her bank upped her limit, unsolicited.

Posted by: broadwayron at November 20, 2008 11:55 AM

This is just a last act of desperation before Citibank goes under. They are also offering a 4.5 percent return on six-month CDs, which is awesome. They're trying to attract business any way they can. Rumors of their demise have been floating for months, and now their stock is at an all-time low, which in the case of other financial institutions signaled imminent doom. I am a Citibank depositor, don't want them to go under.

Posted by: mopar at November 20, 2008 12:20 PM

"I have already started buying actual gold..."

How? How do you store it?

Posted by: DOW8000SP800 at November 20, 2008 2:08 PM

www.monex.com

Posted by: daveinbedstuy at November 20, 2008 2:30 PM

Thanks, DIBS. Finally something useful.

Posted by: DOW8000SP800 at November 20, 2008 2:40 PM

Most of my posts are useful. All of them are intelligent, witty and on topic.

Posted by: daveinbedstuy at November 20, 2008 3:11 PM

If you insist on buying Citi, look at the preferreds, which as of today are now yielding around 20%. That is, if they actually pay the dividends, a very big if indeed.

Posted by: denton at November 20, 2008 4:05 PM

"Most of my posts are useful. All of them are intelligent, witty and on topic."

Toot toooooooooot!!!

Posted by: DOW8000SP800 at November 20, 2008 4:05 PM

Guys,

May I change my handle?

Posted by: DOW8000SP800 at November 20, 2008 4:08 PM

I think you must DOW!

Posted by: cobblehiller at November 20, 2008 4:17 PM