Economy Fixed!

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  1. #1

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    Economy Fixed!

    Looks like with Citi, BoA and a few others sending emails to employees and declaring that they're profitable.... suddenly the economy is fixed.

    I personally think is a spectacularly dumb move by the various CEOs, specially when writedowns etc have not been factored in for the quarterly numbers.

    Am I the only one who thinks that these banks are putting themselves into a corner that they will have no hope in hell to get out of?


  2. #2

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    If they didn't have a monopoly on the money supply and friends in high places that might be true.

    A bank fleeces, for 100 million dollars,the guy on the street with defective products, like mini bonds --lets have an long inquiry and pass the buck. HSBC gets kicked down the stairs ,for 100 million dollars, on the exchange - they scrap the system ( invented by them ) that caused it, within 48hrs. Money and friends indeed.


  3. #3

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    You may be surprised to learn that invites from Citi and BoA to´lets do lunch´ have resumed after the Soonamee Hiatus, so things must be looking up.
    On the other hand I was accosted yesterday on leaving an HSBC ATM centre by a young lady who inquired if I could spare the time to follow her to her desk where she would sort out my financial plans.
    I wonder if HSBC still does the Friday curry tiffin?


  4. #4

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    >> she would sort out my financial plans

    i.e. get you to buy products which cost an arm and two legs?


  5. #5

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    Quote Originally Posted by shri:
    I personally think is a spectacularly dumb move by the various CEOs, specially when writedowns etc have not been factored in for the quarterly numbers.
    What gives you an impression that writedowns have not been factored into the numbers? The writedowns are rarely a "surprise" and the worst case scenarios are most often well known in advance. There has been a lot of misinformation and quite frankly some irrational panic spread around certain well capitalized financial companies (which really brought down their stock). People often forget just how much earning power there still is in this sector.

    Over the past few months numerous rumors have been spread about the solvency of the banks.....However, if we look at the numbers..in the past 18 months there have been less than 50 bank failures.... However if we look at the recession of 1986-1991 there have been over 2,000.. Perhaps more will fail still, but all is not that black and grim as the panicky Bloomberg TV commentators will have you believe.

  6. #6

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    >> What gives you an impression that writedowns have not been factored into the numbers?

    Have they?

    >> People often forget just how much earning power there still is in this sector.

    Well, they can earn just as quickly as they can loose.

    But seriously .... is it all fixed and over? Can I count on 5000 new expat jobs to be created in HK in the next quarter as the companies start hiring again?

    I'm willing to bet some money that we're going to see egg on the face in the next 3 months....

    Last edited by shri; 13-03-2009 at 03:08 PM.

  7. #7

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    in the past 18 months there have been less than 50 bank failures....
    But 17 of those have been this year.

  8. #8

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    Four Citigroup Inc. executives who bought the bank’s stock last week generated a $2.2 million paper profit within nine days, regulatory filings show.

    The executives, including director Roberto Hernandez, benefited as the company’s stock climbed 47 percent from March 10 through yesterday’s close of markets, after Chief Executive Officer Vikram Pandit said in a memo that the bank is having the best quarter since 2007. Their buying spree was the first by bank insiders since Jan. 14, filings show.

    ....


    Pandit wrote in the internal memo March 10 that the company was profitable in January and February, leaving him “encouraged with the strength of our business so far in 2009.” The comments triggered Citigroup’s biggest one-day percentage gain since Nov. 24, spurring global markets.
    Nice ....

    Citigroup Executives Gain $2.2 Million in Stock Bets (Update1) - Bloomberg.com

  9. #9

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    People often forget just how much earning power there still is in this sector.
    Well said... just proves how little I know about the real world.

    washingtonpost.com

    The bank booked a profit of $2.2 billion on the decline in value of its own debt, which is allowed because the bank could now repurchase that debt at the lower price. Other banks, including Citigroup, also have claimed billions in profits under the same rule. Some financial analysts regard the technique as obscuring the true picture of a company's health, because the companies have not actually repurchased the debt, so the gains could be reversed if the values rebound.
    I mean who cares about minor details like this ...

    It wrote off about $7 billion in loans and added another $6.4 billion to its reserves against future losses. The combination is a sharp increase over the cost of loan losses in the fourth quarter, and the bank said that loan defaults are still rising.

    The company's credit card division lost $1.8 billion in the quarter. Its mortgage division lost $500 million. Joe Price, Bank of America's chief financial officer, said that the rate of new delinquencies on consumer loans appeared to be slowing. That could indicate a reduction in the number of defaults -- the end of the process that begins with delinquency -- within the next few months.
    And where was Citi?

    Citigroup Inc (C.N) on Thursday posted a first-quarter loss, reflecting a large amount of writedowns and credit losses, as well as the impact of preferred dividends paid to the U.S. government.

    The company posted a net loss available to common shareholders of $966 million, or 18 cents per share, compared with a net loss of $5.19 billion, or $1.03, a year earlier. Citigroup had lost $37.5 billion in the previous five quarters, largely from exposure to housing-related and complex debt.
    Last edited by shri; 21-04-2009 at 09:38 AM.

  10. #10

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    just be positive! it has to end somewhere because with the amount of money in the world, there always is a point where lay-offs do not actually help you save money, where saving money actually kills you or your business.

    the good thing is that, for the next few years at least, people will be hopefully smarter with their money...

    the problem is that people are rarely as smart with other people's money


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