Citigroup May Begin Layoffs This Week

WSJ ^ | 1/6/08 | WSJ

[jimbo123]

Everything is cyclical and the market eventually sorts things out. If the large-scale Citi layoffs truly start in earnest this week, expect the other banks to follow suit quickly. Everyone wants to get all of this nonsense off the books as early in the year as possible.

[JasonC]

Those advocating violence against other men for their free actions under capitalism, want to abolish free action under capitalism, and the only thing that can result is state mandated control of all deployment of capital, which is communism.

If you kill a man because his investments go bad, what, do you think you have provided an incentive to only make sound investments? Nobody can tell before hand where the line is. They have to take risks. It is just other people's freedom, and nobody deserves violence done to them for how it turns out.

Conservatives once knew this. The present breed of bloodthirsty populist screaming for the blood of the capitalists, on the other hand, can go straight to hell. It is where they are headed because it is where the belong.

[ROP_RIP]

There is no fraudulent activity involved.

How do you figure?

The level of risk posed by the investment vehicles in question turned out to be FAR higher than what anybody ever claimed.

People who were in the position to ensure that they were not reselling or facilitating the creation of bad debt, failed to do so.

Is this how you think the free market should work?

If you cannot trust the person you are doing business with, and you cannot trust the courts to uphold contract terms and punish fraud, there will be severe impediments to economic growth.

[grey_whiskers]

You've never read Dave Barry, have you?

Try Googling him and read a couple of his columns.

Cheers!

[JasonC]

The banks lent money to deadbeats. The reason there are higher than expected losses is because fewer people are paying *them* back, than they hoped would do so. The reason their estimates were off is the typical one in all financial innovations during monetary bubbles - they only had recent data under good market conditions, not data that averaged over a full cycle. Loan losses appear gradually as a loan "matures", because people take them out in circumstances where they believe they can repay them.

It is not fraud to be wrong about an estimate of someone else's creditworthiness.

The follow on losses are caused by those propagating up a chain of intermediaries. The rating agencies gave high credit ratings to senior tranches of packages of debts because they thought the overall losses would be limited, and therefore confined to the lower tiers. This proved not to be the case, primarily not because of originator failures, but because of loss of liquidity higher up the chain as confidence declined. Meaning, the SIVs and such could not sell their commercial paper, etc.

The credit mechanism is inherently unstable that way, and confidence can strike it anywhere. If enough people think investment form A among the intermediaries is a dodgy risk, then it will become a dodgy risk, as its interest costs soar and it cannot carry long dated assets. Good bankers are familiar with this and keep an eye on liquidity (aka the exits) in their investment strategies. But when times are good, it will always appear possible to increase returns by running more risk in such matters.

The underlying driver was not fraud, it was easy monetary policy coming from the Fed, and a resulting large spread in the rates that corporate paper cost to get capital, and the rates the lower credit tiers were charged to use it. And high valuations of long dated assets - here homes - from an expectation that IRs would stay low for long periods.

That is a typical forecast error. It is avoidable and the best financiers do avoid it. But we get bubbles and cycles because not all do - without it making any of it fraud.

The attempt to criminalize error in the deployment of capital plays into the hands of trial lawyers on the one hand and socialist grabbers on the other, as more and more decisions are pushed into the political arena or the courts, and fewer and fewer are left to free markets. That way lies sorrow, not sounder finance.

Believe me, it is quite punishment enough that Citi has lost 40% of its market cap inside of six months. It is not productive, nor needed, to add the pile-on of also demanding everyone's heads.

If you only ever got to keep freedoms that you exercised flawlessly by external standards of "flaw", you'd be a slave in a few year's time. Do not criminalize other men's use of their own freedom of economic action. Or you soon won't have any, yourself.

[JasonC]

I know, let's tell some really funny jokes about burning all the Jews, or murdering all the kulaks, or anyone remotely western. It'll be a scream! Obscence and obviously obscene, right? When it is bankers or capitalists, though, it is supposed to be entertaining. Well, did you hear the one about the commie agitator burning in hellfire?

[grey_whiskers]

I don't respect strawman arguments; in this case in particular it shows you haven't read any Dave Barry yet.

You could try his compendium Dave Barry Turns 40 or Below The Beltway for starters.

Cheers!

[captnorb]

As I read your comments to those attempting to have cogent discussions with you I find it interesting that you seem to hide behind capitalism as defined by the banking industry; ie, it is the market, it is the feds, it is the road going the wrong way, it is.....fill in the blanks. Everything but poor decisions and actions on behalf of your investors and depositors.

As many strong managers would ask: Yes or no; based on the performance of the individual do you believe bonuses and severance pay is warranted for poor performance? Please don’t say it was the Feds or the marketplace that held a gun to their heads. Yes or NO?

[grey_whiskers]

Read the last sentence in this article.

Whaddya think? /sarc>

Cheers!

[nkycincinnatikid]

Jason , I wish you well and please, lay off the coke buddy.

[mysterio]

They canned 10 percent, but I’ll bet they didn’t cut back on the bonuses they wrote themselves.

[RinaseaofDs]

These idiots aren’t capitalists. They are thieves.

[nkycincinnatikid]

Ok , I drive my employers flatbed to a liquor store on the way home to my apartment after work. I have $20. and I take a case of Bud to the clerk. The clerk is making 12% on any purchase and a bonus of $50 on every case of liquor she sells. All she wants me to do is sign a note to pay the bill later and she will empty the store onto my truck. I am scared but she says don’t worry just sign it Donald Duck. So who robbed the liquor store that night?

[JasonC]

I think somebody else needs to "lay off the coke".

[SlapHappyPappy]

WaMu has had at least 2 rounds I know of, only one formally announced.

And in case you wonder, they layoffs are not limited to the home mortgage sector employees.

And the credit crunch is also being applied to non home mortgage sector loans.

The banks are running scared.

[VxH]

[Bank executives, like anyone else, need to be held accountable if they enrich themselves through fraudulent activity.]

 

Yes they should.

 

 

This one,

 

 with the help of former Ameriquest Board member and current governor of Massecheussets, Deval Patrick, conned Citigroup into eating the fetted rotting corpses of Arnall's pirate crews: Ameriquest and Argent.

 

Apparently such gluttonous behavior can lead to food poisoning.    Serves Citi right.  They have a predatory history of their own and they are in like company with Argent,  Ameriquest and Arnall  (Note the three A's with  junk status).

 

Yes, step right up folks.  FICO FICO, which shell is the real, non-fabricated, FICO score hiding under...?

 

Perhaps the Ambassador should offer the new Arab suck... errr, investors an Alkaseltzer,  because,  somewhere in the gulf, a voice is mumbling:

 

"I CAN'T BELIEVE WE ATE THE WHOLE THING, ABDULAH!"

 

 

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