The crap hits the roof – Citigroup

Merrill Lynch, UBS and now Citigroup. Years of lending money without the necessary precaution has lead to this day. The American economy is already in recession though no one wants to spell it out. Will it drag the world economy down or will the Asian dragon (China), Elephant (India) and the tigers (Korea, SE Asia) help to cushion the impact? Well, its going to be a defining year for the world economy for sure.

Citigroup, the nation’s largest bank, reported a staggering fourth-quarter loss of $9.83 billion on Tuesday and issued a sobering forecast that the housing market and the broader economy still had not bottomed out.

To shore up their financial condition, Citigroup and Merrill Lynch, which has also been rocked by the subprime mortgage debacle, both were forced again to go hat in hand for cash infusions from investors in the United States, Asia and the Middle East, for a combined total of nearly $19.1 billion.

Citigroup’s record loss was caused by write-downs from soured mortgage-related securities and reserves for current and future bad loans totaling $23.2 billion. Responding to a string of dismal quarters, the bank said it would also lay off another 4,000 workers, on top of announced reductions of 17,000 employees, and cut its dividend to conserve $4.4 billion cash annually.

Full article here.

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6 Comments

  1. dinsan says:

    wondering if Marx was alive today ( I am not a communist.. please note 😉 ) ..

    he will be Voowwed to see how large corporations can define the world economy itself !!!

  2. THey hope this will draw a line under the issue but I doubt it. THere are still more mortgage defaults to start.

  3. Liju Philip says:

    Dinsan, yup marx and all his commie colleagues the world over must be turning in the grave thinking of the grip that these MNCs are having over the world economy.

    Tejvan, of course there are lots of defaults on the way. I believe we are just seeing the tip of the iceberg. Other than the sub prime mortgage issue, there is another problem just waiting to blow up. The credit card repayment. Supposed to be as big as the sub prime crisis.

  4. JB says:

    Liju,

    I haven’t heard anything about the “credit card” repayment issue.

    Haver you got a link or anything that talks about this?

    JB

  5. JB says:

    Thanks Liju.

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