Thursday, 26 June 2008

Citigroup - the crash continues

One of the original sub-prime casualties, citigroup is again giving its shareholders the shakes. The cost of protecting Citigroup's debt using credit default swaps rose today. The reason for the surging insurance costs comes from Goldman Sachs, who speculated that the largest U.S. bank might incur $8.9 billion of second-quarter write-downs.

Quick, does anyone know the number of a helpful sovereign wealth fund?

5 comments:

Roy said...

The worst is over (not)...

Anonymous said...

Who would hazzaed a guess, citigroup insolvent?

aSteve said...

Citigroup are not going to be declared insolvent. An arbitrarily large proportion of money invested in Citigroup may be lost over the next couple of years, but they won't be allowed to stop trading, IMHO. They will likely stop being competitive and run most of their business into the ground - but that is a different thing all together.

It seems that this news has had a considerable effect on share prices around the world... and this is before a downturn in demand for commodities (oil, especially - but steel, copper etc. too) put a stop to the bull-run in energy and mining companies. If, as I expect, that happens before the banking sector recovers... I think we're going to see a market-wide rout... with a corresponding marked downwards revision in business confidence and, hence, employment.

Anonymous said...

asteve,

Agreed. But I still think Lehman's and Merrill will get spanked before City.

Nick

CityUnslicker said...

Goldman's are talking them down so they can buy in at a cheap rate; believe the hype, they want you to.

I wonder if Hank Paulson would allow that...ex-Goldman Alumni that he is...