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While kudos should be given to the Fed for trying to do whatever it takes to shore up the banking system, what is a bit more worrisome is how both Barack Obama and Hillary Clinton approach the problem. Obviously they started out by blaming President Bush for these problems.

According to an AP report:

"Now we are in the soup and we better get ourselves out of it before the consequences get drastic," Democratic presidential contender Hillary Rodham Clinton told reporters. Barack Obama said: "History will not judge President Bush kindly for his failure to act in a way that could've prevented or alleviated this economic crisis."

Does Obama think that the President could have prevented the entire economic crisis, had he acted differently? In fact I postulate that one of the major reasons that Wall Street is in the current situation is because of a precedent taken 10 years ago by then Treasury Secretary Robert Rubin. He bailed out his Wall Street buddies after they were set to lose billions in bad investments in Asia, among other places. Go figure that after they get saved once, they go ahead a decade later and continue to make investments without taking into account risk. They knew that they could get away with it because they would get bailed out. And guess what? They are going to get bailed out.

The fact is that the Fed, by injecting liquidity, is doing exactly what it should be doing to try and get the banking system back on track. Many economists believe that had the same strategy been implemented in 1929, there never would have been a Great Depression. Back then they took money out of the system and companies went bankrupt. The Fed is making no such mistake this time.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 3/17/08.

With news the embattled mortgage lender Northern Rock is being nationalized by the British government, until it can find a buyer, the question arises whether this is a good move or not?

Analysts at Bear Stearns said that the government's move is positive for the sector. The expected managed decline in the Northern Rock balance sheet should create less competitive mortgage market conditions," said analyst Robert Sage.

Who is this positive for? Certainly not the consumer. Competitive mortgage markets are the best thing that can happen to a consumer. Why should the consumer have to pay higher mortgage rates? Does this analyst think that the government setting mortgage rates is helpful in anyway? Let's not forget that the banks are responsible for this whole mess. Had they actually been careful in their lending practices, we wouldn't be in the mess we are currently in.

BusinessWeek reports that former Citigroup Inc. (NYSE: C) Chair Robert Rubin picked Vikram Pandit because Rubin thought Pandit could "drive the vision, drive the execution." I welcome a comment from anyone who can explain what that means. What comes to my mind is that Pandit is going to drive an execution squad behind him ready to gun down anyone who gets in his way.

I am not thrilled with Pandit's ascension and it looks like he is going to turn one of his weaknesses -- a lack of consumer banking expertise in a bank that gets half its income from that business -- into a strength. How so? Pandit looks poised to sell Citi's credit card business. I guess if Citi dumps all the consumer businesses, then he'll know something about the businesses that remain.

To increase the value of Citi's stock, I'd recommend three steps:

As expected, Citigroup Inc. (NYSE: C) today named Vikram Pandit as its new CEO, replacing the hugely unpopular Charles Prince. Acting CEO Win Bischoff replaced former Treasury Secretary Robert Rubin as chairman. Rubin didn't want the job permanently.

As pundits including CNBC's Charles Gasparino pointed out, Citigroup's board didn't feel that Pandit had enough experience to get both jobs. That's no slight against Pandit, who joined New York-based Citigroup after selling the company his hedge fund for $900 million. Few if any people are experienced in the huge variety of business at Citigroup which is why Pandit says "simplifying the company's organizational structure and aligning our businesses and resources with appropriate goals and economic realities will be among our initial priorities."

So what does that mean?

Will Citigroup exit its retail business and focus on corporate banking? Are more job cuts coming down the pike? Investors are demanding quick answers to these and many other questions.

``They need somebody who can get in there and put some color on exactly where the risks are and what they're doing to address that,'' Johnson Asset Management analyst William Fitzpatrick, told Bloomberg News. ``The stock's been in freefall for the last couple of months.''

Shares of Citigroup, which are down 40% this year, fell further today with other financial stocks amid disappointment over the Fed's rate cut announcement

Citigroup Inc. (NYSE: C) may name Vikram Pandit, the former Morgan Stanley (NYSE: MS) executive who sold his hedge fund to the New York-based financial services giant for $800 million in July, as the company's new CEO this week, according to various media reports.

The leak of Pandit's front-runner status is an interesting one. Clearly, the beleaguered Wall Street firm thinks that his appointment as CEO is going to be criticized by shareholders, so it decided to "get ahead of the story."

The problem, it seems, may be with former Treasury Secretary Robert Rubin, who became chairman after Chuck Prince was ousted. Rubin doesn't want the job permanently, which raises the question of whether Citigroup will ask him to stick around for a while if Pandit becomes CEO, whether it names a new chairman or whether it gives Pandit both jobs from the start, according to the Wall Street Journal.

Citigroup is in a pickle.

Shareholders abhor a leadership vacuum, but want the next CEO to be someone with whom they have absolute confidence. But if CItigroup doesn't give Pandit both jobs or a clear path toward both jobs, there is a good chance that he will be hired away by a rival firm.

Wall Street has to wonder why so many structured investment vehicles are being downgraded now? Are they really worth so much less than they were a month or two months ago? Since many of their assets do not trade due to a lack of market liquidity, there may never be an answer.

According to The Wall Street Journal (subscription required), "Debt-rating agency Moody's Investors Service, signaling a new turn for the worse for some bank-affiliated funds, said it downgraded or put on review debt totaling $119 billion that was issued by structured investment vehicles that have been paralyzed by lack of investor appetite." The value of many of the SIV assets linked to mortgages dropped by 22% between October 19 and November 21.

Citigroup (NYSE: C) has a continuing problem here. The financial paper adds, "the drop in the market values and the inability to finance the SIV debt is expected to put new pressure on banks such as Citigroup to support the billions of dollars in debt that SIVs face having to pay in coming months."

All of this raises the question of whether the $7.5 billion stake that Citi sold to an investment arm of the Abu Dhabi government will be enough to support the bank's need to improve its balance sheet, or whether it will have to raise additional funds. It begs the question of who would want the job of being Citi CEO, or whether chairman Robert Rubin will have to step into the spot in an attempt to get back some market confidence for the bank.

One thing is virtually certain. Some of the SIVs are near failure. HSBC (NYSE: HBC) took $45 billion in SIVs onto its balance sheet. The bank would not have done this unless an extreme measure was required. The same decision may have to be made at Citi. At $33, down from a 52-week high of $57, many investors think the bank's stock has bottomed.

That would be a mistake.

Douglas A. McIntyre is an editor at 247wallst.com.

This may turn out to be a holiday season only The Grinch could love.

The closely watched Conference Board index of consumer confidence fell to 87.3 in November, its lowest level since Hurricane Katrina in 2005, while house values fell 4.5% in the third quarter, the biggest drop since S&P/Case-Schiller started tracking them in 1988, according to Bloomberg News. Rising foreclosures will sap billions from major metropolitan areas next year, according to a report released today by the National Conference of Mayors.

To put it bluntly, despite the hoopla over Black Friday and Cyber Monday, all indications show that consumers are telling retailers "bah humbug." Does this mean that Santa (AKA Federal Reserve Chairman Ben Bernanke) will bring more holiday rate cuts? At least one fed official says no.

In a speech today in Rochester, NY, Charles Plosser of the Federal Reserve Bank of Philadelphia said that he isn't inclined to seek another rate cut unless growth in 2008 is much weaker than expected. Besides, a weaker economic outlook for next year was considered when the Fed cut rates in October.

The stock market, though, continues to act irrationally.

Today, the Dow Jones industrial average surged 215 points to 12,958.44 after Citigroup Inc. (NYSE:C) got a $7.5 billion investment from a fund tied to the government of Abu Dhabi. That's nice but as Bloomberg News points out, that investment came with a steep price.

"Citigroup Inc., the biggest U.S. bank, is paying a "junk bond'' rate to uphold Chairman Robert Rubin's pledge to preserve the dividend and weather this year's mortgage-market decline," the news service says. "The 11 percent interest rate on $7.5 billion of convertible shares that Citigroup sold to the Abu Dhabi Investment Authority is almost double the rate it offers bond investors."

This proves that there is no so such thing as a free lunch.

Bloomberg News reports that Treasury Secretary Hank Paulson keeps trying to cheer lead the dollar back up. His boss was a cheerleader at Andover so Paulson fits right in. Just one little problem -- government economic policies are at odds with the cheer.

This topic is important to everyone, particularly now as Americans climb into their cars for Thanksgiving. That's because oil is denominated in dollars so the weaker the dollar gets, the higher oil climbs. If you've been looking at the gas pumps recently, you know that the price of gas is rising.

Paulson's problem is he seems to think that confidence in the currency comes from repeating the phrase "strong U.S. economy." Or as he put it: "The U.S. has a very competitive, strong economy that's proven itself over many years. The dollar has been the world's reserve currency since World War II and there's a reason."

With all the focus on the US Dollar's current free-fall and pundits predicting further weakness for the greenback, a little perspective is in order.

First of all, where have all the pundits been for the last five years? It's not like the dollars fall from grace started yesterday. In fact the dollar's fall has been a result of global growth, not a faltering US economy. The fact is that even with the subprime mess, rising commodity prices and the war in Iraq, the US economy is growing just fine. Could all the doomsayers in the media have a political agenda? Remember, an election is approaching.

Citigroup (NYSE: C) announced $8-11 billion in write downs on its $55 billion exposure in U.S. subprime mortgages/CDOs.

C announced Charles Prince, Chairman and CEO has elected to retire from C. Sir Win Bischoff, will serve as acting CEO and Robert Rubin, will serve as Chairman of the Board.

C is recently trading at $37 in pre-open trading, below its close of $37.73.

Goldman Sachs lowered its 12-month price target to $48 from $51.

C November option implied volatility is at 72, December is at 51, above its 26-week average of 27 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

The New York Times reports that Citigroup Inc. (NYSE: C) may make Robert Rubin Chairman until it can find a CEO. This temporary solution is analogous to what Merrill Lynch & Co. (NYSE: MER) did by making Alberto Cribiore, a director, its interim non-executive Chairman.

Rubin, who has made $150 million at Citigroup since he left the Treasury Department eight years ago, has traded a sterling reputation at Goldman Sachs Group (NYSE: GS) and Treasury for a nice chunk of change at Citigroup. Unfortunately for him, making bank at Citigroup has tarnished his reputation -- despite his efforts to distance himself from Citigroup's problems. Meeting with clients and walking around without shoes offering advice -- known in his contract as "no operational responsibilities" -- does not seem to have buffed Rubin's reputation.

If the New York Times is correct, it remains to be seen how Rubin's role will change. It could be that his primary job will be to take the lead on recruiting Prince's successor. Will he take on an interim non-executive Chairman's role like Cribiore? I imagine he'll seek to evade legal responsibility for Citigroup's problems. Otherwise, he could end up spending more time than he'd like dealing with shareholder lawsuits.

In the weeks ahead, BloggingStocks will take an in-depth look at the U.S. dollar's decline, its impact on the global and U.S. economies, as well as on job creation, trade, and investment.

Remonstrations about the weak U.S. dollar are getting to be a little bit like what Mark Twain said about the weather:

"Everyone seems to complain about the weather, but no one ever seems to be able to do anything about it," Twain said.

Similarly, everyone seems to complain about the weak U.S. dollar, but no one ever seems to be able to do anything about it.

This time it was former U.S. Treasury Secretary Robert Rubin, who Tuesday told Bloomberg News that relying on a falling currency to increase exports isn't a "sound approach" and said policies should be implemented to strengthen the dollar.

The New York Times [registration required] reports that Citigroup (NYSE: C) and JPMorgan Chase (NYSE: JPM) are working with the Treasury Department to create a $75 billion fund to bail out Structured Investment Vehicles (SIV) -- of which there are thought to be $400 billion worldwide. What are SIVs? Why do they need to be bailed out? Why is the Treasury Department getting involved? Will the bailout plan work? Why should you care?

Before addressing these questions, it's worth pointing out that Hank Paulson, the current Treasury Secretary and former Goldman Sachs Group (NYSE: GS) CEO, has not had much success as a government servant. His efforts to talk China into loosening its currency have fallen flat. And a high-level government source told me that Paulson's brusque personal style has not endeared him to other economic policy makers.

When Paulson took the job in May 2006, I speculated that the reason he took it was so he would have the chance to outshine Robert Rubin, another former Goldman executive, whose tenure at Treasury was widely perceived to have been brilliant. I thought then that Paulson thought a financial crisis would occur under his tenure that would enable him to demonstrate his financial crisis management skills. The SIV crisis is a big problem but I doubt he'll rise to the occasion like Rubin did.

Bloomberg News reports that on August 17th, in the midst of the August credit crunch, Fed Chairman Ben Bernanke sought the advice of Citigroup (NYSE: C) Chairman and Former Treasury Secretary Robert Rubin, mortgage backed securities inventor Lewis Ranieri and hedge fund honcho Ray Dalio of $32.1 billion Bridgewater Associates. Kenneth H. Thomas, a Wharton lecturer, obtained the information on Bernanke's calls and contacts under the Freedom of Information Act.

Although there are no details of what Bernanke discussed with these investment luminaries, I applaud him for making the effort. One of the things that helped Alan Greenspan to make decisions was the network of business and finance leaders which he had created when he headed his own consulting firm prior to his move to Washington. Such real world contacts are particularly important for Bernanke to develop given his academic background.

It would be very helpful for investors to know how Bernanke makes his decisions. But this little glimpse into his schedule reveals an obvious point -- it would be very difficult to believe that anyone Bernanke spoke with would not have obtained very valuable information from which they could profit. And we'll never know whether Rubin, Ranieri, or Dalio did just that.

The rest of us can always eat cake.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Henry Paulson, former CEO of Goldman Sachs Group (NYSE: GS) and current Treasury Secretary, has been spouting pablum about how he's never seen such a strong global economy. He's just following in the footsteps of cheerleader-in-chief, George W. Bush.

But Paulson is no dummy. He knows that his words have a tremendous impact on investors around the world who are nervous about the recent rapid market break. The key question is whether he knows enough to keep all the economic imbalances in the global markets from making his optimistic comments look foolish.

I'd like to hear how he would keep the massive debt load which the U.S. economy is carrying from creating a sharp economic reversal. Specifically, if the economy is so strong, I'd like to hear Paulson explain away these questions: