NEW YORK (AP) - Bad bets on mortgages led to a $10 billion loss for Citigroup Inc. in the final quarter of last year, the largest in its 196-year history. As a new wave of weak economic idea intensified fears of a recession, the nation's biggest bank also cut jobs, slashed its dividend and turned to foreign investors for an infusion of cash. The biggest hit came from a $18.1 billion write-down in the value of its investment portfolio. But the bank also set aside $4 billion on Tuesday to cover anticipated losses on loans to U.S. consumers—a sign that deflated home prices, high energy and food costs, and rising unemployment are making it difficult for many customers to keep up with their payments.The news sent Citigroup's shares skidding 7 percent, wiping away almost $10 billion in market value on top of the $125 billion the shares already have lost over the past year. Citigroup's tumbling shares helped send the Dow Jones industrial average plunging more than 230 points Tuesday when the government reported that retail sales fell in December and inventories of unsold goods piled up at manufacturers and wholesalers, signs that consumers are pulling back their spending.
Pat Buchanan says the presidential candidates are fiddling while the chickens come home to roost. The burning chickens. The ones named Nero:
This self-indulgent generation has borrowed itself into unpayable debt. Now the folks from whom we borrowed to buy all that oil and all those cars, electronics and clothes are coming to buy the country we inherited. We are prodigal sons, and the day of reckoning approaches.
Now, now. Hasn't Pat been listening to Limbaugh? Rush says the days of Reagan have not ended! The GOP's problem is it doesn't have any leaders who believe strongly enough. So says Rush, presumably with a straight face.
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'entitlement crash'? There are some very strange people here.
The reason we're about to have a crash is that banks decided to make off with as much money as possible, and, while doing that, created a bunch of money that is not actually matched to wealth, although a lot of people thought it was.
It doesn't have anything to do with government spending at all. We attempted to operate our economy by just lending people money, based on wealth that did not exist. Which is why banks are the first to go under.
And while we've been increasing this fictional wealth (rising housing prices), and having people live off this fictional wealth (mortgages), actual real wealth production (manufacturing and stuff) has declined more and more.
And housing prices are just the very obvious thing here. The whole economy is sick with the idea that money is not the result of wealth generation, that merely moving money and numbers around is the way to get richer.
And it has gotten the rich much much richer, so why should we argue with that? In fact,I'm wondering if this entire sickness is so the rich can become richer without using 'employees' at all, who have an annoying tendency to demand 'wages'. It's really just easier to move money around and suck it out of the housing bubble.
Taking existing wealth, assigning it a higher value, and then getting a loan based on that, or selling it to other people in trade for other over-valued wealth, so you can buy more wealth made somewhere else, is not a possible way to operate an economy. It's like trying to power an extension cord by cleverly plugging it into itself.
And now I sound like a crazed Ron-Paul gold-standard guy. No. Our monetary standard is fine. Money and wealth do need to be disconnected, basing money on a single type of wealth is very restrictive. What is not fine is how our businesses 'make money', which is to literally just keep moving it around through banks until there is more of it, and not actually manufacture anything.
Karth:
A liberal and conservative have some perspective in common.
I don't think things will be as apocalyptic as you say. But I do agree, as Neil Howe and Bill Strauss have pointed out in their research on generational issues, that Baby Boomer demands on both government and the economy may have stretched both to the breaking point. And the gravy train will almost certainly run out for them. (Smart Gen-Xers and Gen-Yers know it's already run out for ourselves.)
Or to put it in Dylanesque terms that even a narcissistic Boomer could understand, "A Hard Rain's A-Gonna Fall."
Smart "bulge" boomers aren't expecting a gravy train either.
Speaking for those of us who lived within our means, saved as much as we could, didn't fall for the yuppie dream and will pay off our mortgages well before retirement (and take in a renter if necessary), we expect a one-time lump of cold mashed potatoes, at best.
I'm with you Elizabeth but I admit to being a bit worried about those who didn't prepare getting caught up in a ferver of populism and raiding our savings.
Hammm… Nice article… Interesting.
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