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Citigroup could axe 32,000 workers to stem lossesSuzy Jagger in New York
Citigroup is expected to cut up to 32,000 jobs to stem rising losses.
The world’s largest bank could lose 10 per cent of its workforce when it unveils full-year results next Tuesday. It is also believed to be considering the sale of non-core assets to raise capital.
However, Meredith Whitney, one of Wall Street’s top banking analysts, said that the only way Citigroup could repair its balance sheet would be by selling Smith Barney, the broker, for about $25 billion (£12.7 billion).
Ms Whitney, an analyst at CIBC World Markets, told The Times: “In these markets banks can only sell their best assets. The sale of non-core ones would not be material enough.
“To really reduce their leveraging, Citigroup have to sell a chunk of their mortgage or card portfolio, but there is no market for those assets. The only asset they could sell of any size is Smith Barney.â€
StuckInBA Says:
When he heard our offer, he looked exasperated. He openly said, “They are not going to like it. They think prices are going to go up in the springâ€.
If you don't mind telling us which house this was, I would be happy to make a 25%-off offer next week, followed by a 40%-off re-offer in the Spring. :-)
sa said:
Apparently he was surprised by how quickly market changed.
I would phrase it differently: "Apparently he was surprised by how much time he wasted in denial."
“After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,†Paulson said.
In other words, all of Paulson's cronies have now closed their long positions and taken a short-posture on housing and mortgages.
Welcome to the dark side, you bastard, even if you are still doing it for your buddies.
Guys, another data point personal observation. Gilbert, AZ seems to be back to 2001/2002 pricing. The reason I know this is because one of those 1st time 'real estate investors' who thought I was nuts when I cautioned him about the market in 2004 had told me what he paid and what his house was worth. His single level 4 bedroom house with a cracked slab was worth in the high 200s at the time. He had paid high 100s in 2002. Now, a nicer house is listed for $185K in his area, and a few more are listed under 200K. Just 6 months ago they were asking 240ish for those houses. Prices seem to have snapped back.
PermaRenter,
Now that McD has started marketing McCoffee products, SBUX will loose the aura of exclusivity and go down the drain.
An interesting question is, what will be the next fad....
Also in the news, Bush is rattling his saber against Iran, based on the supposed provocation in the persian gulf.
Here's my question: Where is the Navy video of what happened and where is the tape of the supposed radio threats? I would like them to be published, analyzed and authenticated.
justme: the tapes are still in production; apparently there was some problem finding anyone who speaks farsi.
Requiem,
They already had a translation that indicated a threatening radio message.
But now they need another translator for the msesage. Sounds fishy.
By the way, where did you read that they needed a translator?
I didn't, I'm just making snarky comments about how easy it is to release a "translation" but it takes some time to make the original if you can't find anyone who speaks farsi /and/ passes the political loyalty tests.
/joking
I'm also waiting to see some "production values", as they call it in Hollywood.
:-)
Malcom,
I've also noticed LV flirting w/ 2001-2002 pricing. At peak 185k would not have purchased a "repartment". Now it's a 1,600+ sq./ft. SFH! Like yourself, I spoke w/ a great many people that scoffed at the notion they would EVER be revisiting this pricing model.
Additionally NV has done away w/ stated income loans and this has accelerated the process. What has surprised me is Palm Springs prices seem to be holding up quite well? Any local observations from the SoCal crowd?
skibum
I'm still around. Not lurking often, but I scan the blog a couple times a month or so.
I'm on extended mental break from the housing crisis. We're still renting and preparing to escape our current McMansion rental for something more comfortable that will take us through 2009/2010 if need be. Home prices here in Marin aren't budging much, and foreclosures aren't helping much yet. I follow PropertyShark and ForeclosureRadar pretty closely, but anything halfway decent gets snapped up by some realtor-investor somewhere and relisted at a bloated market price.
I spent a few weeks wrestling with realtors on Zillow's forums mistakenly thinking that would serve as some form of free anger therapy. Instead it just proved to me that we're doomed. The level of ignorance among the realtor-set demonstrated there is astounding. More distressing is the willingness of "normal" people to listen to them over folks like those who read and post here. I get a headache just thinking about some of the tripe that passes over there...
I'm planning to relaunch my blog in coming weeks, but it will probably be taking on more of a software industry focus and less of a general economic rantings vibe. I'm hoping to unload the remaining realtors and second life cultists who thrive off of sending me monthly hate mail...
...and most importantly, happy new year to everyone!
Patrick, HARM, et al.:
One of these days you should start a thread on anecdotes of crazy debt-to-income DTI levels. I have a couple of odd stories for you. It would be interesting to see who knows the story of the highest DTI ratio.
Randy H,
Happy New Year to you as well! Can we still read your blog by going to Capitalism 2.0?
StuckInBA Says:
RE cycles are so much slower. Anyone who wanted to sell had all the time in the world to do it. To me this was nothing but slow. It has taken almost FOREVER for borrowers, lenders, policy makers and everyone involved to come to their senses. And they are still trying hard to avoid coming to their senses.
I think malcom said it well. We all knew what was coming but a lot of folks looked other way. How else can we explain big financial institutions holding the bag.
@Randy H,
Good to hear from you, and thanks for the update from up there. I'm not really surprised - I've come to the conclusion that to even want to be a Realtor, you not only need to possess utter obliviousness to surrounding economic realities but more importantly an eternally optimistic outlook. These guys are never going to sell homes as curmudgeons and wet blankets.
It's like they're the grasshoppers and we're the ants, only in the end, the government bails out the grasshoppers and steals from the ants' winter stores.
Wow sa, that's amazing. That's about as low as Accredited Home Lenders got when I was shorting them. I wonder if they will survive.
I still do get a laugh out of imagining realtors accepting skibum as one of their professional peers.
Hi DinOR, that is interesting about Palm Springs. Personally I could never live there, I like to visit it every now and then but I guess there are enough people who want to be there that it has stickier prices. That is a tough place to get a reasonably priced hotel room during any kind of event.
beignet,
That article sounded like a "how to" book for predatory borrowers about gaming the system for a few months, all justified by FBs claiming victim status from an evil lender.
There is a similar article in the Patrick Housing Crash News "Dumping Your House?" California Rosenthal Fair Debt Collection Practices Act which protects consumers from creditor harassment when they are represented by an attorney. If a lender contacts you after you tell them you are represented by an attorney, that you refuse to pay, and not to call you ever again, then they must stop or they are liable for statutory damages of up to $1,000 per act.
Gives it the feel of the Ambulance Chaser ads you see on TV.
Great to hear from you, Randy! Kudos for trying to break through the Gold Wall of Propaganda. The ignorance of basic economics and real estate routinely demonstrated by so-called "experts" could fill the Library of Congress, with enough left over for the Grand Canyon.
I recall trying the same on a few Realtor blogs and having my posts deleted almost immediately. No profanity, no vulgarity, not even a snide "told ya so" tone --just facts, logic and sources. And yes, the public *still* trusts used house salesmen as though they were impartial experts and fiduciaries operating in their best interests. Some are slowly learning otherwise. The rest will never learn and get sheared again on the next up-cycle.
That’s about as low as Accredited Home Lenders got when I was shorting them. I wonder if they will survive.
But Orange Man said during last results that they will be profitable in the coming quarter. You mean you don't trust him ?
Orange man eventually might be fitted for an orange jumpsuit, what with all the "re-created" letters never actually sent to borrowers and all. He'll be in (BK) court well before that day, though, given their recent stock performance.
baignet - good site. We'll see a lot more like that.
When there are millions broke and homeless, it's going to be pretty hard to pretend it hardly happens to anyone.......
sa -- the Dow is at about 8000 for those dealing in Euros.
[OT]
(very) Long time lurker here. Decided to pop in and wish everyone a Happy New Year but had some trouble getting a login so gave up. Had to try again today though, because Randy H has resurfaced. I have appreciated the information all of you have provided here and have benefited mightily by not buying. However, I always had a special appreciation for a select few of the posters here, Randy being one of them. When he vanished, I felt a gigantic void. Call it not a mancrush as it isn't; maybe a SavedFrombeingFB_Crush? Anyway, Happy 2008 to all and Randy, I hope you pop back in from time to time with your analysis. Good luck with the blog relaunch!
"re-created"
Is that anything like... forged? Funny thing was their legal dept. supposedly sent the letter to an address the borrower wouldn't have been living in yet at the time!
CFC is coming dangerously close to becoming a non-marginal security. What happens then...?
ex-sunnyvale-renter Says:
January 8th, 2008 at 12:22 pm
"sa — the Dow is at about 8000 for those dealing in Euros."
Interesting point, so with the weakening dollar, the DOW figure is actually masking an even weaker market. The solution, lower rates some more, and crank up the printing presses.
Not to confuse anyone so I'll add the footnote, basically the 12,600 today isn't the same 12,600 it was 6 months ago.
>> Are we gonna see 11K for DOW?
I am rooting for it. Very happy to see DOW and dollar decline so far ...
Countrywide Stock Plummets
Countrywide Shares Tumble, Lender Denies Bankruptcy Rumors
LOS ANGELES (AP) -- Shares of Countrywide Financial Corp., the nation's largest mortgage lender, plunged Tuesday after the company denied rumors that it was planning to file for bankruptcy protection.
The stock fell $2.13, or more than 28 percent, to $5.51 in afternoon trading after sinking to a 52-week low of $5.05.
In a prepared statement earlier in the day, the company said there was "no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company."
RE: CFC, funny thing is, they are still advertising great rates on CD's to Countrywide Bank, easily 100bp, up to 200bp better than most competitors. D'ya think they're in dire need of cash???
Airlines... any day of the week.
Retailers? Occasionally.
Mfrs? It's not unheard of,
But a Mortgage Lender?! C'mon people, when was the last a ML had to declare BK? Anyone?
Maybe Buffet will buy CFC now !
I sold my CFC put long time ago, but I am still happy - the sooner they disappear from this planet the better.
“re-createdâ€
Is that anything like… forged?
LOL ! There is no end to the surprises. Isn't there a point when people realize not to do stupid things anymore ? I mean enough already. CFC deserves the financial version of the Darwin award.
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Reader Bryan S. points out that "when a bank forecloses on a house, it's being recorded as a sale and it's being listed with a sales price of the amount still owed to the bank."
Since most recent foreclosures are houses bought in 2004-2006, the buyer paid the peak price and probably had no downpayment, nor ever paid off enough of the debt to have any equity.
The net result is that foreclosure sales are causing peak prices to get recorded as "sales" in the current year, even though actual prices have already fallen significantly and continue to rapidly fall.
Patrick
#housing