The Real Credit Crisis

I'm sure that in the coming years we will be given some glimpse of the real shenanigans behind this so-called credit crunch, but it is fun to see a few obvious signs. On January 16 Citigroup takes an $18.1 billion write-down on the value of the mortgages in their portfolio. This leaves them with a quarterly loss of $10 billion. Since a write-down is not actually spending the money, and we have no earthly notion, other than Citi's word, that this amount is necessary, let's do the math. $18.1 billion minus $10 billion equals $8.1 billion in earnings now protected from paying taxes upon. They then can take that money, now tax-free, and put it in the reserves that they are required by law to have been maintaining just for this purpose. Wow, we the tax-payers get to subsidize Citi's creating the cushion against loss that they should have had all along.
On January 17th, JP Morgan Chase wrote down $1.3 billion, reducing their taxable income by 34%. I wish I could be fiscally and legally irresponsible, then stick the tax-payers with the bail-out for my irresponsibility. Oh, yeah. I used to be able to do something similar by declaring bankruptcy, but Citi and JPMorgan Chase lobbied long and hard to clear up that loophole.