Trouble in River Citi

| Fri Nov. 21, 2008 11:27 AM EST

TROUBLE IN RIVER CITI....Back in the hazy days of early 2008, Countrywide failed. But hey — they were hugely exposed to subprime mortgages, so that was hardly a surprise. Don't read too much into it. Then Bear Stearns failed. But they were the weakest of the investment banks and had unusual derivative exposures. The others were probably OK. Then Fannie and Freddie failed. But they were GSAs. And Lehman Brothers went under. But Richard Fuld had really screwed the pooch, and the federal bailout plan would keep the other investment banks OK. But then Merrill got eaten, and Morgan and Goldman turned themselves into bank holding companies. No more investment banks. But at least the big money center banks were basically OK, right?

So tell me: now that Citigroup seems to be on the brink of failure, what are we supposed to think? Is anyone safe? Is Brad DeLong right, and full-scale Swedish style nationalization is the only real option still open to us? Does Congress really want to go into recess without passing some kind of major stimulus package before January 20? Really?

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