The bailouts continue...

...this time, Citigroup:

The U.S. government unveiled a bold plan Sunday to rescue troubled Citigroup, including taking a $20 billion US stake in the firm as well as guaranteeing hundreds of billions of dollars in risky assets.

The action, announced jointly by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already crippled financial system and the U.S. economy.

The sweeping plan is geared to stemming a crisis of confidence in the company, whose stock has been hammered in the past week because of worries about its financial health.

"With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the three agencies said in a statement issued Sunday night. "We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks," they said.

It is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline — which was recently rejigged — to insurer American International Group.

From here. Just how long can they keep this up? It bewilders me that the US still has an AAA credit rating; the Rae government in Ontario was nowhere near as far in debt as the US is, yet its AAA rating was taken away early in their term. Of course, there's a difference; if the US defaults, the result could be a bigger devaluation of the US dollar than foreign investors are prepared to cope with. So maybe the bond rating agencies are reluctant to act even in the face of mounting evidence that the Yanks aren't worthy of such good credit, for fear of toppling the world economy into an even bigger mess than it's already in. It's noteworthy, though, that there may be limits to the agencies' patience:

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

From here, via the Huffington Post.