We're so irresponsible and shortsighted that the only responsible thing to do is fire everyone, and pimp ourselves

IHT -Drastic steps from Citigroup and Merrill Lynch

By Eric Dash

Tuesday, January 15, 2008

NEW YORK: Citigroup and Merrill Lynch - two of the largest U.S. financial institutions - announced a series of drastic steps Tuesday as they grappled with more fallout from the subprime mortgage morass.

Beginning what is expected to be a grim week for financial company earnings, Citigroup announced a $9.83 billion loss for the fourth quarter.

Citigroup also said that it would cut in its stock dividend by 41 percent and receive a $12.5 billion cash infusion to strengthen its balance sheet, including big investments by its former chairman, Sanford Weill, and the Government of Singapore Investment Corp. Citigroup further said it was writing down $22.2 billion because of soured mortgage-related investments and bad loans.

Merrill Lynch, meanwhile, said it was getting a fresh cash investment of $6.6 billion to strengthen its balance sheet, led by the Korean Investment Corp. and Kuwait Investment Authority, both state-owned entities, and Mizuho Corporate Bank, a Japanese investment bank, The Associated Press reported.

Facing rising expenses and deepening losses, Citigroup is expected to embark on a major cost-cutting campaign that could result in at least 4,000 layoffs. And thousands more could be in the offing in the coming months.

How can the morons at Citigroup look in the mirror without seeing Ken Lay? How can Merrill Lynch have believed the crap they tell the suckers they call everyday to spend money with them, on their advice?

The write-downs caused Citigroup to swing to a loss for the fourth quarter. Revenue fell 70 percent, to $7.22 billion from $23.83 billion. The loss was in contrast to a profit of $5.1 billion in the period a year earlier.

The write-downs included $18.1 billion from a sharp drop in the value of mortgage-related securities and heavy trading losses. The company also set aside an additional $4.1 billion to cover expected losses from bad loans.

Times UK -

The three wealthiest Japanese finance houses are set to step into the worsening sub-prime carnage as the “silent investment partners” of Wall Street and Europe's stricken banking titans.

Senior sources at the “big three” Tokyo megabanks told The Times that they had readied a combined cashpile of as much as $10 billion (£5 billion) and were open to negotiation with any struggling Wall Street bank that approached them for a cash infusion.

Mitsubishi UFJ (MUFJ), Mitsui Sumitomo Financial Group (SMFG) and Mizuho Financial - banks that have been scarred only very lightly by the sub-prime crisis in the United States - are understood to have already opened preliminary talks with several American firms.

One MUFJ insider said that his firm was planning to compete directly with the leading Asian sovereign wealth funds as a long-term investor in the troubled American banks. The Japanese banks, flush with cash and desperate to find ways of raising their return on capital, are keen to become central players in what some predict will be an all-Asian solution to the sub-prime woes contorting America and Europe.

Now, just imagine you are a small to mediun sized business owner and you are reading all this every day? Tell me what you are buying this year? Well, what will that do? So you're going to put off all those upgrades to Vista, huh?

And cancel that Dell order for those 12 Duo-Cores, and while we're at it, we'll limp along with that old analog copier another year instead of a spiffy new digital color machine. Hey, maybe I better increase the employee participation % in the health plans so I can reserve more cash, just in case. I know it will do a double whammy on their buying and saving power with the fuel prices which are driving up every cost they they have, but what choice do I have? Besides if I don't do this and things REALLY tighten, maybe I won't have to let so many go if I act now?

Where does that thinking lead us all?

Hey Citigroup, Merrill, Countrywide.....this partly japanese solution demands an ancient japanese tradition from those who brought us here.