[roccman]

It will happen when most least expect it...the alarm bells are sounding yet no one hears them:

1. Generally stable economic data reflecting a healthy economy

2. Economists and financial analysts who largely ignore history (outside 20 years or so)

3. A populace that is focused on consumption and floating debt

4. Financial institutions that attempt to obscure the reality of their dire straits

5. MYOPIA causing an excessive level of focus on THAT DAY'S NEWS

What say ye?

[Zardoz]

Happy, happy, joy, joy:

Blue skies, shinin' on me, nothin' but blue skies do I see

$this->bbcode_second_pass_quote('', 'A')merican employers added almost twice as many jobs as forecast in October, helping steer the economy clear of recession even as the housing slump deepens.

[jasonraymondson]

WOW, where on earth do these people get their figures and how do they make them up.

UHM, the economy is doing great??? WTF Someone is doing some serious misinformation trying to keep s*** afloat.

[kadoomsoon]

That is correct, they infused billions and dropped rates just before black friday. It will grey up a bit for a while no worrries mate.

[Andrew_S]

I read that the New York stock exchange is suspending the restrictions on programmed sales after a certain % drop (those brought in after the '87 crash).

Why now, just after the recent action?

[FoxV]

$this->bbcode_second_pass_quote('roccman', 'I')t will happen when most least expect it...the alarm bells are sounding yet no one hears them:

[Plantagenet]

$this->bbcode_second_pass_quote('jasonraymondson', 'W')OW, where on earth do these people get their figures and how do they make them up.

[roccman]

There's a mystery on Wall Street. Merrill Lynch wrote off $8.4 billion in its subprime mortgage business, a figure revised up from $4.9 billion, yet Goldman Sachs reported an excellent quarter and didn't feel the need for any write-offs. The real secret of the difference is likely to be in the details of their accounting, and in particular in the murky world, shortly to be revealed...

Let's all play hide the peanut...

Please put your tray in its locked and upright position...the captain has turned on the fasten seat belt sign...and your seat can be used as a flotation device...

Thank you for flying Bendover Airlines...enjoy your stay in the abyss.

[static66]

Question of Solvency at Citigroup Market Watch is reporting Citigroup shares drop as dividend is put in doubt.


Citigroup shares tumbled more than 6% in afternoon trading Thursday amid new concerns that the financial services conglomerate may not be able to support its hefty dividend payout. In the near term, Citi (C) may have to raise more than $30 billion by either selling off assets, slashing its dividend, raising capital or resorting to a mix of these measures, analysts at CIBC World Markets said.

"Based upon our thesis that over the near-term Citigroup will be forced to sell assets, raise capital or cut its dividend to shore up its capital ratios, we believe the stock will be under significant pressure and could trade into the low $30s," according to CIBC.

Richard Bove, an analyst with Punk Ziegel & Co., doesn't dispute that Citigroup has issues, but solvency is not one of them, he said. Citi's had a profit of $13.6 billion and it had net free cash flow of $18 billion through the first nine months of 2007. Bove also said Citi has $240.8 billion in liquid trading account assets that can be used for liquidity.

"These numbers indicate that this bank is both liquid and well-capitalized," Bove wrote. "At the end of the third quarter, Citigroup posted $2.355 trillion in assets. This was more than any other American bank and possibly more than any bank in the world."
Notice how Bove cleverly pointed out the asset side of the equation while conveniently forgetting about liabilities. Let's rework Bove's statement to see the other side of the story.

"At the end of the third quarter, Citigroup posted $2.227 trillion in liabilities. This was more than any other American bank and possibly more than any bank in the world. A mere 5.4% decline in the value of Citigroup's assets would make Citigroup insolvent."

Citigroup's assets look great in a vacuum. However, those assets do not look so great in relation to liabilities. Leverage has never been greater, and much of that leverage is now in exactly the wrong places: residential and commercial real estate.

Citigroup CEO Chuck Prince's next "dance step" is likely to be out the door.

How Good is Debt Insurance?

Some think this debt is insured. For that, let's take a look at Ambac (ABK).

Ambac Financial Group, Inc., through its subsidiaries, provides financial guarantee products and other financial services to clients in the public and private sectors worldwide. It operates in two segments: Financial Guarantee and Financial Services. The Financial Guarantee segment offers financial guarantee insurance and other credit enhancement products, such as credit derivatives for public finance and structured finance obligations. It also provides financial guarantees for bond issues and other forms of debt financing.

Debt insurance is only as good as the solvency of the guarantor. The market is starting to question the value of those guarantees. For additional proof you might want to consider looking at a chart of mortgage guarantor MBIA (MBI).

Notice today's selloff in Bank of America (BAC) Citigroup (C), Countrywide (CFC), JP Morgan Chase (JPM), Washington Mutual (WM), Corus Bank (CORS), Bank United (BKUNA), etc. This selloff is not over a possible dividend cut at Citigroup, profit taking, diminished odds of further rate cuts or any other thing the talking heads might be saying.

Solvency is the issue here, and I am not just talking about Citigroup. I am talking about solvency of the system itself. Rate cuts fueled this mess. Rates cuts cannot be the answer.

Does anyone have a paddle.... and why does this water smell so bad???

[Plantagenet]

Well, it wasn't "Black Friday".

But things aren't good at Citi:

"Citigroup Inc. board members are expected to gather for an emergency meeting this weekend, two people familiar with the matter said.

It wasn't clear precisely what the meeting would address, but the subject of further writedowns could come up. The board may also consider the future of Chief Executive Charles Prince, according to people close to the company.


Robert Rubin, the former Treasury secretary who is the chairman of Citigroup's executive committee, is being considered as a possible interim replacement, but he has balked at taking on the responsibility, those people said. A Citigroup spokeswoman declined to comment.

Citigroup directors in recent months have publicly pledged their allegiance to Prince, and he received a key vote of confidence in early October from Prince Alwaleed bin Talal, the bank's biggest individual shareholder.

But the board's sentiment may have shifted in the wake of Citigroup's dismal third-quarter earnings report last month. Any change of heart may also have been spurred along this week after the board of Merrill Lynch & Co. ousted its embattled CEO, Stanley O'Neal.

Citigroup has lost more than a fifth of its market value since Oct. 12, the Friday before it reported that its third quarter earnings had slumped 57% under the weight of mortgage defaults and this summer's credit scare. The bank's shares ended trading down 2% Friday at $37.73." ---wsj.com

[MD]

Some cats are better at cover than others.

[sjn]

$this->bbcode_second_pass_quote('MD', 'S')ome cats are better at cover than others.

[TWilliam]

$this->bbcode_second_pass_quote('wsj.com', 'C')itigroup has lost more than a fifth of its market value since Oct. 12, the Friday before it reported that its third quarter earnings had slumped 57% under the weight of mortgage defaults and this summer's credit scare.

[TheDude]

$this->bbcode_second_pass_quote('jasonraymondson', 'W')OW, where on earth do these people get their figures and how do they make them up.

UHM, the economy is doing great??? WTF

Someone is doing some serious misinformation trying to keep shit afloat.

[paimei01]

Oil is at 95$ I see:
http://www.oil-price.net/
I feel like the end is here, the end of the "we can go on like this " thinking.
Because 95$ is not even big news, people realized that this price is here to stay. Like a party where the lights go out, very funny for some time until you realize they are not coming back on

[roccman]

$this->bbcode_second_pass_quote('paimei01', 'O')il is at 95$ I see:
http://www.oil-price.net/
I feel like the end is here, the end of the "we can go on like this " thinking.
Because 95$ is not even big news, people realized that this price is here to stay. Like a party where the lights go out, very funny for some time until you realize they are not coming back on