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Citigroup Dividend Cut: Just Talk

Citi's dividends by year were:
Year Dividend Growth
2003 $1.10
2004 $1.60 45.45%
2005 $1.76 10.00%
2006 $1.96 11.36%
2007 $2.16 10.20%
The dividends grew are profits grew. Here are some comments:
1) There is nothing magical about the $0.54 a quarter / $2.16 a year dividend number, which is about twice what it was in 2003. Moreover, the dividend grew at a rate faster than it should have because profits were inflated by about $3 to $5 billion a year for the past few years by subprime excesses. The dividend never should have been raised to its current level in the first place so what's wrong with setting it back lower?
2) Stocks would have priced in a certain grown rate to dividends based on recent experience. E.g., Stocks would have expected dividends to grow by 10% to $2.38 in 2008. Just by keeping dividends the same in 2008 Citi is in effect lowering the dividend relative to expectations and also lowering the dividend if you compare values adjusted for inflation. If Citi doesn't lower the 2008 dividend and instead just keeps it unchanged for as many years as it takes for inflation and/or profits to catch up then that strategy isn't any better and, I would argue worse, for shareholders who collect dividends.
3) Employees of Wall Street Firms get bonuses that are tied to a company's profit. Employees have good years and bad years. Dividends should be a share of the profits… if profits are down, then bonuses will be down… and why not dividends too?
4) About the best reason I have heard to keep the dividend as-is is to help people who are retired who live off dividend income. However, that reasoning is flawed. That's because there is another way to extract income for living expenses out of a stock… to sell the stock. For example, for years Microsoft stock went up even though it didn't pay a dividend… and lucky retirees who owned Microsoft could have sold off some shares each quarter to mimic the effect of dividends. (I agree that dividend payments are different that selling stock when you take into account taxes… this difference should be of lesser consequence to retirees).
5) Citi's stock has already been reduced by about 40% in anticipation of a 40% cut in dividends. So I don't expect the stock to drop once Citi reduces its dividend…. the market has already priced it in. Citi's stock will go up when the dividend it cut as investors and Citi restores a strong capital base and that is a good thing.
6) When you say that the Citi CEO doesn't want to cut dividends because that is 'taking the easy way out' here is what I think… when I get lost I ask for directions… I take the easy way out rather than wander around lost. Sometimes the easy way out is the smart thing to do and the right thing to do.