Citigroup Will Be Liquidated

Citigroup will be liquidated. You heard it here first.

Citigroup in its current form can not survive. Most banks cant survive, but that's besides the point.

The losses, leverage, and lack of operating momentum at Citi will eventually doom the company. The Treasury will fight this to the end but in the final analysis they will come to the conclusion, lets break up the company, sell of the parts, and merge others to form a much better operation.

What I see happening:

Smith Barney/Brokerage will be sold to Morgan Stanley who already own 50% in a joint venture with the option to buy out the rest.

Investment Banking/Trading will be sold to Goldman Sachs who will then demand all Citi trading losses be subsidized by the government.

Retail/Private Banking Deposits sold to JP Morgan.

Credit Card Operations also sold to JP Morgan.

Insurance is a little tricky. This all depends on what the government does with AIG assets.

If the government can sell off AIG parts and keep the core AIG Insurance pieces, what makes you so sure they wont just merge Citibank/Travelers insurance with AIG Insurance assets, then just float the combined company to investors in late 2010? The core insurance business for both Citi/AIG is still profitable and extremely valuable.

There is still time to salvage tax payer money with regards to AIG and Citigroup.