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You’ve said here and on RealMoney that you think the subprime meltdown will be contained to subprime lenders and not spread to the broader financial/banking system. According to Bill Fleckenstein, Citi today admitted to $50 billion in subprime exposure. If true, does that cause to reconsider? I can see an argument that it wouldn’t since even a complete wipeout would be less than half of shareholders equity, but it could still make waves.
Fleck (like some other financial commentators that I know) tends to be a sensationalist. I would ask him where he got that figure, because I don’t see it in my news feeds on Bloomberg.
If Citi has $50 billion worth of exposure, that is about as large as Cramer’s dirty dozen as a group. If true, would that make me change my mind? It would make me think again. Citigroup is big enough to affect the entire US banking system. Still, I think they could survive $50 billion of subprime exposure, but could they do it with other problems as well?
Fleck admitted today to (a) being taken in by a hoax, and (b) even if it wasn’t hoax being out by an order of magnitude.
Thanks
Poor Fleck. I like the guy, but when one gets too bearish or bulllish, it gets easier to get fooled, because you only look for stuff that fits your paradigm.