Who will I sign my paycheck over to?

The next several paragraphs will probably make your eyes glaze over, but please hang with me; it's important.

Citigroup -- which holds the only 30-year, fixed rate mortgage on the Southside (mine) -- has announced that it's taking a $22 billion-plus write down on its holdings after losing $10 billion last quarter. Citi is latest, but certainly not last, huge bank to admit that it's basically been making up the valuations of its assets in order to maintain the high stock prices that its executives' pay and bonuses are pegged to.

This is bad for countless reasons, but I want to focus in here on a few of the reasons that affect you and I, Dear Reader:

• Citi borrows money to loan out to others. Like any other borrower, Citi must show it has the assets to generate the money to repay its loan debts. Citi's write down means it's not worth as much as it has told its creditors it is; therefore, it can't borrow as much cheap money as it could before.

• Citi and its peers have made a big chunk of their money over the last decade by loaning money to corporations in need of cash. "Well, duh" you may say, but these corporations have borrowed more and more money because 1) short-term interest rates have been so low, and 2) corporations don't keep cash on hand anymore. 

Retailers and service providers have run down their profit margins and concentrated on sales volume to remain competitive. The execs are paid according to stock performance, rather than profitability. Loose cash is used to buy up existing stock or handed out in bonuses, so when corporations need dollars for purchases or unanticipated expenses they go out and borrow from Citi and pay it back later. 

Citi and the other banks won't be able to hand out free money anymore, so retailers and service providers will have to actually start putting money in their savings accounts again. Unless the managers of said companies are willing to part with their grossly inflated compensation packages, prices are going to rise to build up cash reserves. That means the U.S. government will no longer be able to deny that inflation is a really big problem.

• Citi and the other banks are starting to sell off big chunks of stock for cheap to foreign investors with little or no interest in my standard of living. An Arab prince or Chinese banker doesn't care how rashes of foreclosures would affect American neighborhoods. They've bought these mortgages and loan notes for much less than dollar-for-dollar, can afford to take houses and businesses, let them sit for months or years while the U.S. economy tanks and sell later when the economy is better (and the U.S. dollar is once again worth more than a used Kleenex).

All of this means that I should probably get back to making my mortgage payment by the first of each month. I need to think about trying to eat less, too.