CitiGroup eyeing merger in face of decline

mammasan

http://www.msnbc.msn.com/id/27839633/

Also WaMu will be laying off 1,600 employees today, in the San Fran area, and another 4,000, in the Northeast and Florida, on December 1st as it starts it conversion over to JP Morgan Chase.

DriftingByTheStorm

Pretty much their only hope, given the current share price.

If Citi does merge with JP Morgan Chase or Bank of America, we will have a real banking Duopoly in America, with Wachovia scratching at their heels.

I think last figure i heard was that JPMC, Citi, and BoA control almost 40% of ALL CREDIT issuance in America.

Cool!
More mergers.
TOO BIG TO FAIL, IS TOO COOL FOR SCHOOL!

decides2dream

it IS amazing what is going down....and how quickly. the entire banking industry is looking so different within 6 months time...imagine what it will look like 6 months from now?

saveuplife

mammasan wrote:

http://www.msnbc.msn.com/id/27839633/

Also WaMu will be laying off 1,600 employees today, in the San Fran area, and another 4,000, in the Northeast and Florida, on December 1st as it starts it conversion over to JP Morgan Chase.

I think this is simply a necessary catharsis. I'd much rather see these firms continue to maximize profits by cutting costs or merging, than continue to see the government intervene. I know you're on board with this message, but to anyone who's not, the government intervention is simply not working and actually may be making things much worse.

saveuplife

decides2dream wrote:

it IS amazing what is going down....and how quickly. the entire banking industry is looking so different within 6 months time...imagine what it will look like 6 months from now?

Six months from now, the economy will begin bouncing back. Recessions are a part of life. But, in this day and age of immediate gratification, people can't stand a downturn like this. Politicians know that and think the same, they intervene, make things worse.

By definition, the business cycle has peaks and troughs. We're in a downturn... a bad one... but, it's simply that, a downturn. We'll pick back up soon,... you'll see.

"No matter how cold the winter, there's a spring time ahead."

mammasan

saveuplife wrote:

I think this is simply a necessary catharsis. I'd much rather see these firms continue to maximize profits by cutting costs or merging, than continue to see the government intervene. I know you're on board with this message, but to anyone who's not, the government intervention is simply not working and actually may be making things much worse.

I agree that it is far better for them to merge, or be sold off in pieces, than to have the government bail out yet another company. My problem with a merge, with say BoA or JP Morgan Chase is then you are creating a company that is "Too big to fail". I say chop 'em up and sell them off to other banks so you don't have the mega banks that control a massive amount of the market.

DriftingByTheStorm

mammasan wrote:

I agree that it is far better for them to merge, or be sold off in pieces, than to have the government bail out yet another company. My problem with a merge, with say BoA or JP Morgan Chase is then you are creating a company that is "Too big to fail". I say chop 'em up and sell them off to other banks so you don't have the mega banks that control a massive amount of the market.

EXACTLY!

The REAL solution to this mess is antitrust type action against the banks, NOT more goddamn corporate consolidation and centralization of regulatory power influenced largely by ex-CEOs from those few megabanks.

BREAK THESE FUCKERS UP.

saveuplife

mammasan wrote:

I agree that it is far better for them to merge, or be sold off in pieces, than to have the government bail out yet another company. My problem with a merge, with say BoA or JP Morgan Chase is then you are creating a company that is "Too big to fail". I say chop 'em up and sell them off to other banks so you don't have the mega banks that control a massive amount of the market.

Well, the thing is, you can always use anti-trust law to split them up afterwards. The problem with your alternative is that this needs to be done quickly. I say let the market work and see where we are in a few months. If you need to "regulate" newly merged firms like BoA and JP, and split them up, do it then down the line. Atleast these firms have the capital to "privately" bail out other firms. Let them use those economies of scale right now. Meantime, gov't saves resources and can always chop them up down the line.

The way I look at it, I'd rather have a duopoly of major players and a bunch of tiny guys.... than socialistic style banking system. We've tried the gov't intervention stuff... it's not working. Time to try laissez fair. I'm serious, I was on board with the original bailouts. Now I see that I was wrong. The problem with government involvement is how we got into this mess in the first place. Government CAN alter markets. But, typically it's the wrong way. We had awful monetary policy (supported by fiscal policy that desired more homeownership) that created a bubble in housing. The bubble burst. That problem filtered in MBS, which exposed all those with MBS to the downturn in housing. The problem in the mortgage market filtered into other credit markets. Afterwards, certain players were bailout by the government because they were quote "too big to fail". The government was not consistent though, which created a problem of moral hazard. Now companies (and others) are holding their hands out wondering if they will get money or not.

If the government never intervened I don't think the problem would have been as severe. The problem with government intervention is not that it can't help, it's that it can make the duration much much longer and it via multiplier effects, it can therefore, make it worse. I think the downturn would have been worse at first had the government not stepped in, but I think the recovery would have been much faster. On net, I think it would have been better to not intervene at all, but that's a monday morning QB. What I can say now is that the government should come out and say clearly "no more bailouts". The market may tank, but guess what... let it (it's going to anyway), I'll be it recovers more quickly if the government commits to "no more bailouts".

mammasan

saveuplife wrote:

Well, the thing is, you can always use anti-trust law to split them up afterwards. The problem with your alternative is that this needs to be done quickly. I say let the market work and see where we are in a few months. If you need to "regulate" newly merged firms like BoA and JP, and split them up, do it then down the line. Atleast these firms have the capital to "privately" bail out other firms. Let them use those economies of scale right now. Meantime, gov't saves resources and can always chop them up down the line.

The way I look at it, I'd rather have a duopoly of major players and a bunch of tiny guys.... than socialistic style banking system. We've tried the gov't intervention stuff... it's not working. Time to try laissez fair. I'm serious, I was on board with the original bailouts. Now I see that I was wrong. The problem with government involvement is how we got into this mess in the first place. Government CAN alter markets. But, typically it's the wrong way. We had awful monetary policy (supported by fiscal policy that desired more homeownership) that created a bubble in housing. The bubble burst. That problem filtered in MBS, which exposed all those with MBS to the downturn in housing. The problem in the mortgage market filtered into other credit markets. Afterwards, certain players were bailout by the government because they were quote "too big to fail". The government was not consistent though, which created a problem of moral hazard. Now companies (and others) are holding their hands out wondering if they will get money or not.

If the government never intervened I don't think the problem would have been as severe. The problem with government intervention is not that it can't help, it's that it can make the duration much much longer and it via multiplier effects, it can therefore, make it worse. I think the downturn would have been worse at first had the government not stepped in, but I think the recovery would have been much faster. On net, I think it would have been better to not intervene at all, but that's a monday morning QB. What I can say now is that the government should come out and say clearly "no more bailouts". The market may tank, but guess what... let it (it's going to anyway), I'll be it recovers more quickly if the government commits to "no more bailouts".

I understand what your saying and I would definitely prefer a duopoly over more government intervention. As far as laissez fair economics, I guess it depends in what aspect. Are you talking about less government oversight and regulations, which one could argue was a reason for the sub-prime collapse and the insueing credit crisis, or simply less government involvement (via the Fed) in interest rate manipulation.

Commy

merger is another word for consolidating power. Fewer and fewer hands control more and more.

saveuplife

mammasan wrote:

I understand what your saying and I would definitely prefer a duopoly over more government intervention. As far as laissez fair economics, I guess it depends in what aspect. Are you talking about less government oversight and regulations, which one could argue was a reason for the sub-prime collapse and the insueing credit crisis, or simply less government involvement (via the Fed) in interest rate manipulation.

The reason for the "sub-prime collapse" was not due to lack of regulation or lack of government oversight, it was due to the severe downturn in the housing market. That was inflated due to monetary policy (low interest rates). When the bubble popped, mortgage rates reset. That's what caused the sub-prime problem. Nothing else. That alone.

The other "issue" (that COMPOUNDED the already existing problem) was that banks lent to these sub-prime people when they most likely should not have. At the very least, banks should have known that there was a potential for the housing market to have a downturn. When subprime foreclosed, they got f'd, but it was somewhat their own fault.

The other "issue" (that COMPOUNDED the already existing problem) was that these subprime people were greedy. They took out loans without putting any money down, or putting very little down. They bought $450,000 homes when they were making $75,000/yr. using exotic mortgages. When rates reset... they got f'd... but, it was "somewhat" their own fault.

Bottom line, IMHO, this would still have been an issue with MORE government regulation. I know that "govt regulation" is the typical talking point and I know that many disagree, but IMHO I don't think government getting involved WOULD HAVE (have is the key word) done anything different. Remember, gov't wanted people in homes. So, they didn't have the incentive (nor did or do they ever have the foresight) to stop people from buying homes.

So, to properly answer your question. I want the FED to limit the pro-growth philosophy. They aren't there to look at economic growth. They are their to regulate inflation and the money supply (they are tied, but not identical). That's it. They should NOT ever overreach into other economic aspects. Greenspan was the king of this. His tenure was the problem. I also want the Federal Gov't to stop throwing money at problems. It's stupid and it doesn't work. They need to develop plans to address the real problem. The SOURCE is the housing market. The reason the downturn is so pervasive is that housing is tied into finance and credit.... and other industries as well. Address housing,..... that's it. Housing. Other than that, let markets work.

As I've said in another post and I'll say it again. Our problem today is simple, we ALL (including myself) are in need of immediate gratification in this day and age. What we really need is someone to calm us down. To say something like....

"This is a rough patch but it's part of a cycle. Just like life there's ups and downs. The same is true for the business cycle, hence why it's called the business cycle. We are in a downturn. But, there's no need for people to stop spending. We'll get through this. Actually, most economists predict that we'll be back into growth territory by mid-09. That's this summer. Don't bail on spending when now's the time to do it. Prices are low. Houses are a great investment at this price. Stocks are a greate investment. Oil is low."

Instead, we have people jumping out of buildings. The key to our economy is simple:

THE CONSUMER

Solve housing, by solving the consumer problem. My issue with Bush is he's terrible at this. IMHO, I don't like Obama at all, but he can do othis much better than Bush can. If Bush was wise.... he'd call in Obama and have several joint press conferences about what's going on, but stress the positives and "when" we'll get out. That's what we need now. That's good government... throwing money at holes in a sinking ship is not.... instead use the consumer to put a finger in each.

mammasan

saveuplife wrote:

The reason for the "sub-prime collapse" was not due to lack of regulation or lack of government oversight, it was due to the severe downturn in the housing market. That was inflated due to monetary policy (low interest rates). When the bubble popped, mortgage rates reset. That's what caused the sub-prime problem. Nothing else. That alone.

The other "issue" (that COMPOUNDED the already existing problem) was that banks lent to these sub-prime people when they most likely should not have. At the very least, banks should have known that there was a potential for the housing market to have a downturn. When subprime foreclosed, they got f'd, but it was somewhat their own fault.

The other "issue" (that COMPOUNDED the already existing problem) was that these subprime people were greedy. They took out loans without putting any money down, or putting very little down. They bought $450,000 homes when they were making $75,000/yr. using exotic mortgages. When rates reset... they got f'd... but, it was "somewhat" their own fault.

Bottom line, IMHO, this would still have been an issue with MORE government regulation. I know that "govt regulation" is the typical talking point and I know that many disagree, but IMHO I don't think government getting involved WOULD HAVE (have is the key word) done anything different. Remember, gov't wanted people in homes. So, they didn't have the incentive (nor did or do they ever have the foresight) to stop people from buying homes.

So, to properly answer your question. I want the FED to limit the pro-growth philosophy. They aren't there to look at economic growth. They are their to regulate inflation and the money supply (they are tied, but not identical). That's it. They should NOT ever overreach into other economic aspects. Greenspan was the king of this. His tenure was the problem. I also want the Federal Gov't to stop throwing money at problems. It's stupid and it doesn't work. They need to develop plans to address the real problem. The SOURCE is the housing market. The reason the downturn is so pervasive is that housing is tied into finance and credit.... and other industries as well. Address housing,..... that's it. Housing. Other than that, let markets work.

As I've said in another post and I'll say it again. Our problem today is simple, we ALL (including myself) are in need of immediate gratification in this day and age. What we really need is someone to calm us down. To say something like....

"This is a rough patch but it's part of a cycle. Just like life there's ups and downs. The same is true for the business cycle, hence why it's called the business cycle. We are in a downturn. But, there's no need for people to stop spending. We'll get through this. Actually, most economists predict that we'll be back into growth territory by mid-09. That's this summer. Don't bail on spending when now's the time to do it. Prices are low. Houses are a great investment at this price. Stocks are a greate investment. Oil is low."

Instead, we have people jumping out of buildings. The key to our economy is simple:

THE CONSUMER

Solve housing, by solving the consumer problem. My issue with Bush is he's terrible at this. IMHO, I don't like Obama at all, but he can do othis much better than Bush can. If Bush was wise.... he'd call in Obama and have several joint press conferences about what's going on, but stress the positives and "when" we'll get out. That's what we need now. That's good government... throwing money at holes in a sinking ship is not.... instead use the consumer to put a finger in each.

I agree that the problem now is one of confidence. I'm sure if the public felt as if there was strong leadership in Washington, who knew what they where doing, we would not see such a violent market.

decides2dream

saveuplife wrote:

Six months from now, the economy will begin bouncing back. Recessions are a part of life. But, in this day and age of immediate gratification, people can't stand a downturn like this. Politicians know that and think the same, they intervene, make things worse.

By definition, the business cycle has peaks and troughs. We're in a downturn... a bad one... but, it's simply that, a downturn. We'll pick back up soon,... you'll see.

"No matter how cold the winter, there's a spring time ahead."

i wasn't actually referencing the 'recession' just the actual make-up of what banks will actually still be around, who will be merged with whom, etc. how much it has already changed, and how much change is left to come......

Fighting Hellfish

I wonder if Citi's $20 million per year for 10 years naming rights deal with the NY Mets is in jeopardy now. That just looks pretty bad.

Can we have more taxpayer money please? We need to give $200 million to a baseball team so they will name their stadium after us

bootlegger10

saveuplife wrote:

The reason for the "sub-prime collapse" was not due to lack of regulation or lack of government oversight, it was due to the severe downturn in the housing market. That was inflated due to monetary policy (low interest rates). When the bubble popped, mortgage rates reset. That's what caused the sub-prime problem. Nothing else. That alone.

The other "issue" (that COMPOUNDED the already existing problem) was that banks lent to these sub-prime people when they most likely should not have. At the very least, banks should have known that there was a potential for the housing market to have a downturn. When subprime foreclosed, they got f'd, but it was somewhat their own fault.

The other "issue" (that COMPOUNDED the already existing problem) was that these subprime people were greedy. They took out loans without putting any money down, or putting very little down. They bought $450,000 homes when they were making $75,000/yr. using exotic mortgages. When rates reset... they got f'd... but, it was "somewhat" their own fault.

Bottom line, IMHO, this would still have been an issue with MORE government regulation. I know that "govt regulation" is the typical talking point and I know that many disagree, but IMHO I don't think government getting involved WOULD HAVE (have is the key word) done anything different. Remember, gov't wanted people in homes. So, they didn't have the incentive (nor did or do they ever have the foresight) to stop people from buying homes.

So, to properly answer your question. I want the FED to limit the pro-growth philosophy. They aren't there to look at economic growth. They are their to regulate inflation and the money supply (they are tied, but not identical). That's it. They should NOT ever overreach into other economic aspects. Greenspan was the king of this. His tenure was the problem. I also want the Federal Gov't to stop throwing money at problems. It's stupid and it doesn't work. They need to develop plans to address the real problem. The SOURCE is the housing market. The reason the downturn is so pervasive is that housing is tied into finance and credit.... and other industries as well. Address housing,..... that's it. Housing. Other than that, let markets work.

As I've said in another post and I'll say it again. Our problem today is simple, we ALL (including myself) are in need of immediate gratification in this day and age. What we really need is someone to calm us down. To say something like....

"This is a rough patch but it's part of a cycle. Just like life there's ups and downs. The same is true for the business cycle, hence why it's called the business cycle. We are in a downturn. But, there's no need for people to stop spending. We'll get through this. Actually, most economists predict that we'll be back into growth territory by mid-09. That's this summer. Don't bail on spending when now's the time to do it. Prices are low. Houses are a great investment at this price. Stocks are a greate investment. Oil is low."

Instead, we have people jumping out of buildings. The key to our economy is simple:

THE CONSUMER

Solve housing, by solving the consumer problem. My issue with Bush is he's terrible at this. IMHO, I don't like Obama at all, but he can do othis much better than Bush can. If Bush was wise.... he'd call in Obama and have several joint press conferences about what's going on, but stress the positives and "when" we'll get out. That's what we need now. That's good government... throwing money at holes in a sinking ship is not.... instead use the consumer to put a finger in each.

Why the hell are you listening to "most economists"? They did not see this credit issue coming. They did not see the stock market CRASHING. They predicted oil at $200 a barrell right now. They know nothing! To think that next summer everything is fine is ridiculous. Where is the good news going to come from in the next 8 months? Was the crash of 1929 followed by a rebound in the summer of 1930? I thought business cycles resolved themselves in 6 months?

DriftingByTheStorm

bootlegger10 wrote:

Was the crash of 1929 followed by a rebound in the summer of 1930? I thought business cycles resolved themselves in 6 months?

Sobering Reality Check:
THE PERSON WHO HELD HIS POSITIONS THROUGH THE CRASH OF 1929 DID NOT BREAK EVEN UNTIL 1945!

No.
EVEN THE FED ITSELF is NOT calling for things to be "Ok" next summer.
The latest FOMC minutes put job loss and GDP shrinkage clear through 2009, and don't anticipate GDP growth recovery until 2011.

Of course, by 2011, Social Security is going to fuck this whole country in the face. But that is another story. And one you won't hear the Fed talk much about. Though to his credit, Bernanke did bring it up in testimony several months ago.

saveuplife

bootlegger10 wrote:

Why the hell are you listening to "most economists"? They did not see this credit issue coming. They did not see the stock market CRASHING. They predicted oil at $200 a barrell right now. They know nothing! To think that next summer everything is fine is ridiculous. Where is the good news going to come from in the next 8 months? Was the crash of 1929 followed by a rebound in the summer of 1930? I thought business cycles resolved themselves in 6 months?

They did see this credit issue coming, they did see a bubble in housing, they did predict contagion into other markets, they did see a recession, they also knew that inflation rate slows during recessions... therefore, the price of oil would decline. No one listened because economic news at the time was good. I work for an economic forecasting firm and we've been calling for a decline to $50 oil for quite some time.

Economists are not perfect, you are right about that. They are frequently wrong. However, they are better at forecasting than anyone else. A consensus among economists is typically right. When I said that growth will resume next summer does not mean "everything will be fine". But, it means that the worst will be behind us and GDP growth will resume.

The good news is already happening. Look at the inflation rate. That's good; it shows aggregate demand has declined and prices have fallen. We need low prices now; this shows markets are working. Low prices for oil ect. is a plus, given our situation.

Finally, this is not the crash of 1929. It's a recession. Moreover, I never said things solved themselves in 6 months. I said, they will solve themselves in 6 months from NOW. If you hadn't noticed,... WE'VE BEEN IN A RECESSION for 8 MONTHS ALREADY. If you add 6 more (totaling 14), it's one of the longest recessions in the past 100 years. That said, I don't see a Depression.... and I'm not alone. But, please if you want to keep screaming that the sky is falling... let's talk this summer and we'll see who was right and who was wrong.

saveuplife

DriftingByTheStorm wrote:

Sobering Reality Check:
THE PERSON WHO HELD HIS POSITIONS THROUGH THE CRASH OF 1929 DID NOT BREAK EVEN UNTIL 1945!

No.
EVEN THE FED ITSELF is NOT calling for things to be "Ok" next summer.
The latest FOMC minutes put job loss and GDP shrinkage clear through 2009, and don't anticipate GDP growth recovery until 2011.

Of course, by 2011, Social Security is going to fuck this whole country in the face. But that is another story. And one you won't hear the Fed talk much about. Though to his credit, Bernanke did bring it up in testimony several months ago.

No, the FED predicts a contraction through next summer according to their minutes...

http://www.marketwatch.com/news/story/fed-says-recession-last-through/story.aspx?guid=%7B999E54C1%2D66E3%2D4D22%2DB928%2D7A63BFE115C0%7D&siteid=bulletrss

But, yea no one's saying "OK" next summer. Growth won't hit levels it has for sometime.... but, what I was saying is growth will resume and we won't be in a recession any longer.

bootlegger10

saveuplife wrote:

They did see this credit issue coming, they did see a bubble in housing, they did predict contagion into other markets, they did see a recession, they also knew that inflation rate slows during recessions... therefore, the price of oil would decline. No one listened because economic news at the time was good. I work for an economic forecasting firm and we've been calling for a decline to $50 oil for quite some time.

Economists are not perfect, you are right about that. They are frequently wrong. However, they are better at forecasting than anyone else. A consensus among economists is typically right. When I said that growth will resume next summer does not mean "everything will be fine". But, it means that the worst will be behind us and GDP growth will resume.

The good news is already happening. Look at the inflation rate. That's good; it shows aggregate demand has declined and prices have fallen. We need low prices now; this shows markets are working. Low prices for oil ect. is a plus, given our situation.

Finally, this is not the crash of 1929. It's a recession. Moreover, I never said things solved themselves in 6 months. I said, they will solve themselves in 6 months from NOW. If you hadn't noticed,... WE'VE BEEN IN A RECESSION for 8 MONTHS ALREADY. If you add 6 more (totaling 14), it's one of the longest recessions in the past 100 years. That said, I don't see a Depression.... and I'm not alone. But, please if you want to keep screaming that the sky is falling... let's talk this summer and we'll see who was right and who was wrong.

We haven't even begun to see the worst of it yet. Companies are having lay-offs and losses for the first time in their 50+ year histories. Banks in existence for over 100 years are failing. This isn't your average recession. McCain lost because he said the fundamentals are strong. There are no fundamentals.

saveuplife

bootlegger10 wrote:

We haven't even begun to see the worst of it yet. Companies are having lay-offs and losses for the first time in their 50+ year histories. Banks in existence for over 100 years are failing. This isn't your average recession. McCain lost because he said the fundamentals are strong. There are no fundamentals.

We are the middle of the worst of it, IMHO. Unemployment and Employment are LAGGING indicators. The economy turns DOWN, then companies make decisions to deal. We are at that point right now. Yes, the unemployment rate will increase from where it is now.... that's because it's a lagging indicator. Meanwhile, LEADING indicators (like the stock market) will most likely bottom soon and improve in early 2008.

The sky is dark and grey,... it's pretty damn bad.... but, it's not falling. As I said, the prediction of a 14 month recession is not an average recession.... it's well above average.

McCain lost because the President was Republican and we were in recession. It had very very little to do with him saying one sentence. But, as to your point, the fundamentals are not strong. I agree. But, I don't agree that there's no fundamentals.

jenmarie

I'm worried about Goldman- no talk of whats going on there-