Citi reportedly to unveil major re-organization

Financial-supermarket strategy may be replaced by focus on banking

 

"SAN FRANCISCO (MarketWatch) -- Citigroup Inc. will reportedly unveil a major re-organization that will end its efforts to build a global financial-services supermarket, according to media reports.

 

Citi said earlier Tuesday that it's talking with Morgan Stanley about a combination of the two companies' brokerage businesses. The deal could be set up as a joint venture. Morgan Stanley may pay $2.5 billion to Citi for a majority stake and have the option to buy the rest of the unit later, reports say."

http://www.marketwatch.com/news/story/Citi-give-up-financial-supermarket/story.aspx?guid={47DFDEBB-1325-4B92-904C-F38B4588F5C0}

 

I wonder how many 1,000s of employees are about to lose their jobs in the latest 'reorganization'?

Boatloads.

Retail sales plunge 2.7% in December

Weakest U.S. sales on record excluding auto sales

 

"WASHINGTON (MarketWatch) -- Stung by weak demand and falling prices, U.S. retail sales plunged a seasonally adjusted 2.7% in December from November, the Commerce Department estimated Wednesday.

 

Excluding a 0.7% decline in auto sales, retail sales recorded their biggest drop since record-keeping began in the early 1990s, falling 3.1%."

http://www.marketwatch.com/news/story/US-retail-sales-plunge-27/story.aspx?guid={7746B204-F4BB-4941-8769-47654E4A2902}

 

Cost Plus in the Cincy area and Elder-Beerman's in Hamilton are just the first domino's in this region to fall down. There will be more, many more here in Cincy, in Ohio and across the US.

 

Nortel files for bankruptcy protection

Onetime Canadian giant hurt by recession, missteps

 

"WASHINGTON (MarketWatch) -- Nortel Networks Corp., once the largest company in Canada, filed for bankruptcy protection on Wednesday, victimized by the deepening economic slump."

http://www.marketwatch.com/News/Story/Story.aspx?guid={D1118001-351B-464C-8F47-2FA18415C5A0}

This is one way to remove some nasty debt from your company. I would say Citi Holdings will simple go under or file for bankruptcy in the future. The surviving company will be Citicorp. I am surprised more companies have not done this, just create a new company and give it all of your bad paper and let it go under. The current share holders may or may not like it and the ones you owe debt to really will hate you, but....

 

Citigroup loses $8.3B, splits company in two

 

"After reporting a fourth-quarter loss of $8.3 billion, financial giant Citigroup said it will reorganize the company into two businesses.

 

The company announced that Citicorp will operate as a traditional banking business, and a separate business, Citi Holdings, will act as a holding company for risky assets, according to the Associated Press.

 

The fourth-quarter loss amounted to $1.72 per share and compares to a year-ago loss of $1.99 per share, or $9.8 billion. The 2008 fourth quarter included a $3.9 billion gain on the sale of its German retail bank.

 

...

 

http://cincinnati.bizjournals.com/cincinnati/stories/2009/01/12/daily72.html

Bank of America just got bailed out...AGAIN

^^ I' just as puzzeled as you are, Rage.

 

Why don't companies spin off their bad debt into a subsidiary, and then let it go under?  I guess companies are concerned that investors will shun them in the future, but as we all know, this will drag on for some time, and then investors have short memories.  Unless Citi thinks it needs money from market investors in the near future, I can't see a downside to this.  And with the gov't lending like it is, I can't see Citi needing investor's money at all.

^^ I' just as puzzeled as you are, Rage.

 

Why don't companies spin off their bad debt into a subsidiary, and then let it go under? I guess companies are concerned that investors will shun them in the future, but as we all know, this will drag on for some time, and then investors have short memories. Unless Citi thinks it needs money from market investors in the near future, I can't see a downside to this. And with the gov't lending like it is, I can't see Citi needing investor's money at all.

 

If this move 'works' I could see more companies following.

Calvin Klein is closing several stores and laying of 400.  Not a calvin Klein shoper, but I wonder what kind of bargains they'll have.  You skinny kids with no shoulders, hips or butts should be on the lookout for a good buy.

 

Several luxury hotels are going in to foreclosure.  I was thinking of going to Hawaii (some bitch I know planted that seed) and a hotel I was thinking at staying at for a night is in fore closure.  I just read the new W in Scottsdale is in foreclosure.

 

 

Flood of foreclosures: It's worse than you think

 

Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.

 

"NEW YORK (CNNMoney.com) -- Housing might be in worse shape than we think.

 

There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market.

 

The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called 'ghost inventory' could be substantial enough to depress already steeply falling prices when it does go on the market.

 

...

 

http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?postversion=2009012316

It is definitely worse and now will begin the traditional foreclosure cycle - by and by it was the acceleration of the foreclosure cycle from 30-32 that did lots of the damage. In the GD, people lost their houses and they owed as much as 90% of the house. Of course, this is why we moved toward the 30yr. fixed rate, because most financed for 6-15 years for the first third of the century, which made the period someone was paying for a house extremely risky.

^How could they afford 6-15 years? At the time, many women still didn't work, correct? That's crazy. It seems like construction today would be much cheaper the way things are efficiently fabricated.

>In the GD, people lost their houses and they owed as much as 90% of the house.

 

My great-grandfather paid interest-only for about 10 years on his home during the 1930s.  My grandfather and his brother slept in an unfinished attic space and had to walk through their sister's room to get to the stairs, who lived in the finished part of the attic.  My grandmother never slept in a bed or in a bedroom her until her brothers joined the army and moved out.  She slept on a couch out in the family room her entire childhood.  They'd probably call that child abuse now.   

 

Also, another thing to think about is all the people who are either moving back in with their parents, getting more roommates, or putting together some non-traditional mixed living arrangement.  Obviously increasing the number of people under individual roofs raises vacancies and contributes to landlords foreclosing on their properties. 

>In the GD, people lost their houses and they owed as much as 90% of the house.

 

My great-grandfather paid interest-only for about 10 years on his home during the 1930s.  My grandfather and his brother slept in an unfinished attic space and had to walk through their sister's room to get to the stairs, who lived in the finished part of the attic.  My grandmother never slept in a bed or in a bedroom her until her brothers joined the army and moved out.  She slept on a couch out in the family room her entire childhood.  They'd probably call that child abuse now.   

 

Also, another thing to think about is all the people who are either moving back in with their parents, getting more roommates, or putting together some non-traditional mixed living arrangement.  Obviously increasing the number of people under individual roofs raises vacancies and contributes to landlords foreclosing on their properties.  

jmecklenborg are you serious?

 

 

To David, basically folks saved up a lot more of their income before they committed to building/buying their house. Pre-WWI, it was tended toward the 6 yr. pay-off, the 20s were the first decade where it started to climb in length. Also the middle classes were smaller and wealthier relative to the great unwashed masses.

 

All those great Victorian houses were subdivided so folks could survive in 30s (and 40s) and it probably reveals a lot that only in the 70s and 80s did folks really accelerate the process of making those buildings single family again.

There was more rentals, too, I think.  But the savings thing is what led to broadening of home ownership via building societies, later called building and loans, like the one George Baily ran in "Its a Wonderful Life".

 

Building societies was how a lot of the working class housing in Dayton was built..or should I say financed.

 

 

 

To David, basically folks saved up a lot more of their income before they committed to building/buying their house. Pre-WWI, it was tended toward the 6 yr. pay-off, the 20s were the first decade where it started to climb in length. Also the middle classes were smaller and wealthier relative to the great unwashed masses.

 

All those great Victorian houses were subdivided so folks could survive in 30s (and 40s) and it probably reveals a lot that only in the 70s and 80s did folks really accelerate the process of making those buildings single family again.

 

People still save up 10-20% for a down payment.. or at least they're supposed to. I guess that's part of the problem today - the easy loans and the instant gratification/ADHD tendencies. I'm sick of the mixed messages. First 'spending money' is supposed to stimulate the economy but when it gets out of hand, we have to spend trillions on infrastructure and bailouts. The answer to the problem of spending is..more spending.

 

I had professor Powers (maybe you know if it you teach at UC) and he was giving the pro Keynesian reaganomics talk, then the next day he talked about how this country prospered because of the protestant work ethic and saving (sort of the route China is going with right now). I said wait a second... first you go from saying that spending stimulates the economy - that the government paying one person to dig ditches and another person to fill them back up will spur economic growth; yet now you're saying that saving, doing without while maintaining a good work ethic spurs economic growth. That's like telling us to sit and stand at the same time. I really think that the best way America will bounce back is if we're the savers and producers of goods and services that other countries splurge on. The problem I think, is that everyone in America wants the the president to do something, anything to take action now as opposed to everyone taking the brunt for their mistakes, saving as much as they can, working as hard as they can and waiting until things get better. That's not part of our cultural attitude starting in the 20th century. We need 'stuff' to validate our self worth if you ask me. Even if its infrastructure projects, it at least does something psychologically to let us know that we're taking action and that we have visual proof of it.

 

Just from seeing the whole home buying process of my parents, I put a lot of blame on the banks for the way they extend credit. My step dad had to cash in a bunch of his stocks just to make a down payment on their house which ended up being like $25 thousand for the DP. They approved my parents for up to a 275k house and although they settled for a modest 125k house in Pleasant Ridge it was tempting for them to look for something a lot nicer. In actuality it would have made zero sense for them to get the maximum loan they qualified for. Their finances just wouldn't support it. Whatever formula the banks used for calculating credit qualifications must have been severely flawed. A consumer should be careful not to get into trouble but I think the banks should be forced to be the responsible 'parents' in all of this. You just can't expect consumers in this day and age (who haven't personally experienced TRULY bad economic times - the kind that makes you want to save money and hide it in your mattress) to act responsibly with their money. It's hard to act rational when you have easy access to cash and have realtors that have no incentive to look out for your best interest.

The challenge is finding the balance between consumption and savings. It is hard to maintain a relatively stable industrial economy - it's natural tendency is toward boom and bust. Consumer economies have traditionally been easier to maintain - monetary policy is easier to manage and the masses can be induced to buy easier as well. After the horridness of the GD, we threw all our eggs in the consumerist basket, but most of the population had a memory of the GD so while they bought more and the like, they continued to behave as if the end could be around the corner. What seems to have happened since the mid-90s is that we lost the brake on the consumerism and for a lot of reasons we had been able to reduce our dependency on industrial manufacturing (though a lot of was simply automation rather than sending production overseas), thus we are screwed today. Since the dot com bust, we went through basically the last gasps of the old economy.

 

We need people to spend, but also to have fear. One checks the other, too much of one or the other and we have problems.

I had a college Econ professor who , after a long discussion on the Savings-Spending topic, said in conclussion:  "what was good for the individual was bad for the economy, and vice-versa".  In otherwards, its in the best interest of individuals to save, strengthen their personal balance sheets, invest, etc.  But it's in the best interest of the economy for individuals to spend all they can.

 

I guess the shift from Pre-1992 to Post-1992 America demonstrates this.

 

I think part of the overall problem is that wages have just not been increasing!  Since the year 2000, it's actually dropped overall.  And wage growth has really lagged in the Midwest, so it's dropped even more here.  Disposable income is droping.  You can't expand a consumer economy long-term with declining real wages and declining disposable income.

 

The layoff machine is really starting to roll. I feel for those losing their jobs. It more than just a numbers, its lives, families and much more.

 

Caterpillar to slash 20,000 jobs

Profit falls 32% in fourth quarter; 2009 sales expected to plunge 25%

http://www.marketwatch.com/news/story/Caterpillar-posts-32-decline-quarterly/story.aspx?guid=%7B2A73EC41%2D37B9%2D4D1F%2D855C%2DF7ADCF45D311%7D

 

Sprint to eliminate 8,000 jobs

http://www.marketwatch.com/news/story/Sprint-eliminate-8000-jobs/story.aspx?guid=%7B3EC36575%2DAF50%2D4BDF%2DB387%2D8F50ACA28DB7%7D

 

Home Depot to close Expo, slash jobs (5,000)

http://www.marketwatch.com/news/story/Home-Depot-close-Expo-slash/story.aspx?guid=%7B87AE6FB7%2DB424%2D4E25%2D9703%2D27E90EF37E9C%7D

 

Philips swings to first quarterly loss in five years

Group sees little room for optimism, plans to cut 6,000 jobs

http://www.marketwatch.com/news/story/Philips-cut-6000-jobs-after/story.aspx?guid=%7B7F29914D%2DCBB0%2D47C8%2D8B4B%2DA71208909CE1%7D

The layoff machine is really starting to roll. I feel for those losing their jobs. It more than just a numbers, its lives, families and much more.

 

Caterpillar to slash 20,000 jobs

Profit falls 32% in fourth quarter; 2009 sales expected to plunge 25%

http://www.marketwatch.com/news/story/Caterpillar-posts-32-decline-quarterly/story.aspx?guid=%7B2A73EC41%2D37B9%2D4D1F%2D855C%2DF7ADCF45D311%7D

 

Sprint to eliminate 8,000 jobs

http://www.marketwatch.com/news/story/Sprint-eliminate-8000-jobs/story.aspx?guid=%7B3EC36575%2DAF50%2D4BDF%2DB387%2D8F50ACA28DB7%7D

 

Home Depot to close Expo, slash jobs (5,000)

http://www.marketwatch.com/news/story/Home-Depot-close-Expo-slash/story.aspx?guid=%7B87AE6FB7%2DB424%2D4E25%2D9703%2D27E90EF37E9C%7D

 

Philips swings to first quarterly loss in five years

Group sees little room for optimism, plans to cut 6,000 jobs

http://www.marketwatch.com/news/story/Philips-cut-6000-jobs-after/story.aspx?guid=%7B7F29914D%2DCBB0%2D47C8%2D8B4B%2DA71208909CE1%7D

 

Some of those companys like Home Depot, Sprint and to a lesser degree Philips are poorly managed and now the lower level employess are going to suffer.

 

The HD train wreck started with Nardelli. Sprint was horrible when it was MCI and has gotten progressively worse now that it bought nextel.

 

Phillips can't keep market share with Sony or Samsung.  They're US office is a hot mess.  Whew!!

My company's sources are predicting a 2011 recovery.

My company's sources are predicting a 2011 recovery.

 

Any recovery would be welcomed right night.  Any ideas for the reasons your sources are calling for a 2011 recovery vs 2010 or a 2012?  It's always hard to call a bottom or a top, so I'm just interested in their reasoning for that date.

Our analyst have been saying end '11 / early '12 we'll see northward stability.

The other aspect of the changing nature of how people use income is the growing number of 'required' monthly items that used to be easier to drop or increase as the economy goes along its way. I'm thinking of things like cell phones, cable, internet and so on.

Is this recession THAT bad when I have a 27-inch television set to give away for free and no one at my office (none of us are financially comfortable!) knows of anyone who would want it? Finally, one of my co-workers took it because his son will want one when he goes off to college next year. When I told that to a friend of mine in Belorussia, she was surprised I even had an extra TV and that I would give it away for free. When I told her I had four televisions, she was left speechless.

Is this recession THAT bad when I have a 27-inch television set to give away for free and no one at my office (none of us are financially comfortable!) knows of anyone who would want it? Finally, one of my co-workers took it because his son will want one when he goes off to college next year. When I told that to a friend of mine in Belorussia, she was surprised I even had an extra TV and that I would give it away for free. When I told her I had four televisions, she was left speechless.

 

YES!!! It is.

I don't think four is that bad.

 

 

Ok I must be really luddite.  A 27 inch TV is undesirable now?  Everyone has a giant TV?  Up until a year ago when it finally died, the only TV we had was a 19 inch I got in 1990.  It happened to die right at the same time a friend's mother unfortunately passed away, and we got her even older set (but I think it's bigger, maybe 27 inches) and have been using that instead, even though the color in one corner is a little funky. 

I think people have so many tvs right now because of that drastic drop in the price of LCDs recently. All of a sudden 1000 dollar tvs were like 500. You can get a 32 inch flat panel for about $400 now. Some people have projectors but they only feel right for watching movies.

TVs in America right now aren't an accurate measure of wealth.  The digital conversion has almost zeroed out the value of non-compliant units.  I know, converter boxes... but those aren't free and it doesn't cost that much more to just get a new TV. 

I think people have so many tvs right now because of that drastic drop in the price of LCDs recently. All of a sudden 1000 dollar tvs were like 500. You can get a 32 inch flat panel for about $400 now. Some people have projectors but they only feel right for watching movies.

 

I see, I'm not a luddite, I'm poor (or just miserly).  I think $400 is a huge amount of money.  It doesn't matter if the original item used to be $10,000, it's still $400.  $400 isn't a huge amount of money to the average American?  Maybe that's why we're in a recession, I'm thinking.

TVs in America right now aren't an accurate measure of wealth. The digital conversion has almost zeroed out the value of non-compliant units. I know, converter boxes... but those aren't free and it doesn't cost that much more to just get a new TV.

 

I see them advertising free converter boxes on tv.

Plus you don't need a converter if you have cable.

I think people have so many tvs right now because of that drastic drop in the price of LCDs recently. All of a sudden 1000 dollar tvs were like 500. You can get a 32 inch flat panel for about $400 now. Some people have projectors but they only feel right for watching movies.

 

Not with 1080p you can't.  720 maybe.

They also offer free credit reports on TV but you can't actually get one. 

 

You can get coupons that take about 1/3 of the price off of a digital converter.  So a new TV is really a good bit more, contrary to what I said above.  But I still think that's why there isn't as much interest in used TVs these days.

 

Not with 1080p you can't.  720 maybe.

 

Those start at 600...:-)

 

You can get coupons that take about 1/3 of the price off of a digital converter.  So a new TV is really a good bit more, contrary to what I said above.  But I still think that's why there isn't as much interest in used TVs these days.

 

Actually, according to my math, it would be about 80% off....but who's counting?

 

You can get coupons that take about 1/3 of the price off of a digital converter. So a new TV is really a good bit more, contrary to what I said above. But I still think that's why there isn't as much interest in used TVs these days.

 

Actually, according to my math, it would be about 80% off....but who's counting?

 

You're right, I had the box price at about 120.  Looks like its closer to 60.

 

Not with 1080p you can't.  720 maybe.

 

Those start at 600... :)

 

 

 

HUSH!

I think people have so many tvs right now because of that drastic drop in the price of LCDs recently. All of a sudden 1000 dollar tvs were like 500. You can get a 32 inch flat panel for about $400 now. Some people have projectors but they only feel right for watching movies.

 

Not with 1080p you can't.  720 maybe.

 

Nerd  :roll:

I think people have so many tvs right now because of that drastic drop in the price of LCDs recently. All of a sudden 1000 dollar tvs were like 500. You can get a 32 inch flat panel for about $400 now. Some people have projectors but they only feel right for watching movies.

 

Not with 1080p you can't.  720 maybe.

 

Nerd  ::)

:P :P

 

Hey I watch hundreds of DVDs a year and I have to make sure our product looks right.  Blu-Ray is the wave of the future folks, the only way to see it properly is on a 1080p screen.

They also offer free credit reports on TV but you can't actually get one. 

 

 

So I have to listen to these commercials for no damn reason?

 

They also offer free credit reports on TV but you can't actually get one. 

 

 

So I have to listen to these commercials for no damn reason?

 

 

I love those guys.  I'm sure they'll come out with a record deal and cameo's shortly!

Also stores like Best Buy run ads every few months for 0% financing for 12-24 months.  So a $1,000 for a TV  when you actually pay $40-80/month is affordable for more people.

 

 

 

 

 

Also stores like Best Buy run ads every few months for 0% financing for 12-24 months.  So a $1,000 for a TV  when you actually pay $40-80/month is affordable for more people.

 

 

Financing a tv is so lame. That's worse than financing a french bulldog (which everyone does when they're trying to front like they're rich). Only thing I ever want to finance is an education and a house.

I'll be lucky if they'll let me finance both.  Financing is lame in general.

 

Edit:  Financing in lame in general, but only when they charge interest.

I don't think it's lame, nor do I see why it's lame.  If ours suddenly died and couldn't be revived and we had to buy a new one, buying it with 0% interest and spreading out those payments over several months would be the best way for us to do it.  Everyone doesn't have a no balance, low-interest credit card and the cash to pay it off at the end of the month, or just the outright cash to make such a large purchase.  All of the furniture I've bought new I've financed with 0% interest, always paying it off well in advance to avoid retroactive interest charges.  I don't see why it's "lame" at all.

why is borrowing money for free lame?  I've intentionally financed things at 0% even though I've had the cash to flat out purchase it simply to earn interest.

I don't think it's lame, nor do I see why it's lame.  If ours suddenly died and couldn't be revived and we had to buy a new one, buying it with 0% interest and spreading out those payments over several months would be the best way for us to do it. 

 

You wanna talk about a crisis..what if the water heater in your new home busts and the flood damages your basement. Now you have a deductible to pay on your homeowners insurance. In the mean time you have no heated water to bathe so you're boiling water on the stove and pouring it in your bathtub. Then by the time you fax everything and paid for it to be repaired, you get a call from your insurance company saying they won't pay for it because it's an act of God and isn't covered in your contract! At that moment I think I would have wished I bought cheap furniture or tv or whatever, off of friends/family, craigslist or a thrift store.

 

I'm cheap  :angel:

Having cash on hand as part of an emergency fund for house repairs (if I owned a house, which I don't. though I do have an emergency fund) doesn't have anything to do with not wanting to shell out $400 or $800 cash for a new TV.  Additionally and conversely, if I had plunked down the $400 cash and THEN the water heated broke right after, and I used my cash for the TV, I would be pretty mad I hadn't financed it and only had a $20 a month payment to deal with for a year and still have the cash on hand for my true emergency.  Sorry, but your argument doesn't work for me. I wouldn't use my cash in my emergency fund for a TV, that's not an emergency.  I would finance it at 0%.

Having cash on hand as part of an emergency fund for house repairs (if I owned a house, which I don't. though I do have an emergency fund) doesn't have anything to do with not wanting to shell out $400 or $800 cash for a new TV.  Additionally and conversely, if I had plunked down the $400 cash and THEN the water heated broke right after, and I used my cash for the TV, I would be pretty mad I hadn't financed it and only had a $20 a month payment to deal with for a year and still have the cash on hand for my true emergency.  Sorry, but your argument doesn't work for me. I wouldn't use my cash in my emergency fund for a TV, that's not an emergency.  I would finance it at 0%.

 

The lower your payments are, the more you end up paying and setting yourself back in the long run. That sounds a lot like....