Citi posts $5 bln loss on another major write-down Citigroup Inc. reported Friday another oversized quarterly loss as the company wrote down about $12 billion of soured mortgage investments and other credit-related items while adding to reserves for further losses on consumer loans. "Valuations of our subprime-related exposures in fixed-income markets and leveraged-finance assets have further declined and credit costs in our consumer-lending businesses have increased," CEO Vikram Pandit said in a press release. It marked the second consecutive quarterly loss for Citi. Citi shares rose 6.5% as the results were generally in line with the wide range of analyst estimates. Investors appeared to welcome the aggressive write-downs.
RBS may seek $24 billion capital boost Royal Bank of Scotland, the U.K.'s second-biggest bank, is planning to tap shareholders for billions of pounds to shore up its weakened capital base, according to newspaper reports. Reports on the size of the capital raising varied. The Daily Telegraph newspaper claimed it would be at least 5 billion pounds ($9.9 billion), while the Times (of London) reported it could be as much as 12 billion pounds ($23.9 billion). RBS would be the first major British bank to seek more cash from shareholders since the credit crisis began, and could pave the way for other U.K. firms to boost their capital base. In a brief statement, RBS noted the speculation and said its interim management statement on trading performance and capital will be published in the coming week. Any announcement is likely to coincide with the bank's annual meeting on Wednesday.
China passes US as second-biggest exporter Global trade growth is expected to slow to a six-year low of 4.5 per cent this year but China has overtaken the US as the world's second-biggest exporter, the World Trade Organisation (WTO) said yesterday. Heavily influenced by the turmoil in financial markets and the sharp economic slowdown in leading western economies, global merchandise trade is forecast to rise by 4.5 per cent this year, against last year's 5.5 per cent. But the WTO gave warning that a stronger slowdown in global economic growth "could cut trade much more sharply, to significantly less" than the projected level of 4.5 per cent. Dr Patrick Low, WTO chief economist, said that in view of the downside risks, the agency will probably have to revise its projections in the third or fourth quarter of this year.
Has Capitalism Failed? It is now commonplace and politically correct to blame what is referred to as the excesses of capitalism for the economic problems we face, and especially for the Wall Street fraud that dominates the business news. Politicians are having a field day with demagoguing the issue while, of course, failing to address the fraud and deceit found in the budgetary shenanigans of the federal government – for which they are directly responsible. Instead, it gives the Keynesian crowd that run the show a chance to attack free markets and ignore the issue of sound money. So once again we hear the chant: "Capitalism has failed; we need more government controls over the entire financial market." No one asks why the billions that have been spent and thousands of pages of regulations that have been written since the last major attack on capitalism in the 1930s didn't prevent the fraud and deception of Enron, WorldCom, and Global Crossings. That failure surely couldn't have come from a dearth of regulations.
Another record low for Bay Area home sales A flood of foreclosure sales dampened the housing market in March, the traditional start of the spring selling season, and Bay Area home sales clocked another record low, according to a real estate report released Thursday. One-quarter of all homes sold in the nine-county area last month were foreclosures. Banks typically sell such homes at a discount, which further depresses prices, particularly in the immediate neighborhoods."It's the weakest kickoff to the spring home-buying season that we've seen in 20 years," said Andrew LePage, an analyst with DataQuick Information Systems, a real estate information service in La Jolla (San Diego County).
Barclays Capital Forecasts Dollar to Drop 2.5% on Oil Barclays Capital forecast the dollar will drop 2.5 percent against the euro in three months as record oil prices increase the U.S. import bill and prevent the European Central Bank from cutting interest rates because of inflation. The securities unit of Barclays Plc, the U.K.'s third- biggest bank, predicts the dollar will fall to $1.63 per euro, compared with a previous estimate of $1.50, analysts led by David Woo, London-based global head of currency strategy, wrote in a research note yesterday. Against the pound, the U.S. currency will weaken to $2.05 versus $1.97. ``The U.S. dollar is locked in a vicious circle,'' they wrote. The currency's drop is causing higher oil prices as oil nations seek to preserve their revenues and ``this in turn leads to further dollar weakness as the European Central Bank becomes even less likely to follow Federal Reserve easing.''
Bankrupt policies, empty stomachs No good deed ever goes unpunished. Asians are quickly discovering the wisdom of this idiom, as they suddenly confront staggering shortages in basic food items. The price of rice has gone up exponentially in the past few weeks, crossing US$1,000 a tonne, despite the absence of any discernible decrease in global production nor a concurrent increase in consumption. The upshot for Asian governments is increased social tensions in many countries where food shortages were unheard of until very recently, as well as a number of others where economic fragility has increased on the back of rising food prices. People have to eat, and if it costs them too much to eat, they will in turn demand to be paid more. This creates a vicious cycle of inflation that will eventually reduce the living standards of pretty much every
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