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Thanks Rockpuck for the information, this are big news after all as we can see the beginning of the socialization of the banking system right in front of our own eyes.
I wonder if the new 200 billions that will be set up by the TARP ( it got another name now) will indeed make the government own more of the Citi and BofA if they take more money.
At 454bp in gross yield, as calculated by the IRA Bank Monitor, real estate is the third most profitable area of lending for Citibank after loans to depository institutions (714bp) and miscellaneous loans (1,410bp), which is usually a euphemism for subprime loans. Indeed, looking at the high gross loan yield for Citibank's miscellaneous loans, which comprise 3.8% of total assets, subprime consumer loans is a pretty good bet.
At 110bp of default in 2006, C has one of the highest bank default rates of any large BHC and just below the 112bp of HSBC Holdings (HBC), which recently stumbled due to rising defaults and restatements related to subprime lending at its Household Finance unit. Here's the question of the week: Will C follow in HBC's unhappy footsteps and likewise be forced to restate past period results due to subprime loans?
In economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, a risk-free profit. A person who engages in arbitrage is called an arbitrageur - such as a bank or brokerage firm. The term is mainly applied to trading in financial instruments, such as bonds, stocks, derivatives, commodities and currencies.
If the market prices do not allow for profitable arbitrage, the prices are said to constitute an arbitrage equilibrium or arbitrage-free market. An arbitrage equilibrium is a precondition for a general economic equilibrium. The assumption that there is no arbitrage is used in quantitative finance to calculate a unique risk neutral price for derivatives.
Originally posted by Hx3_1963
All of this is a Illusion...0's and 1's in a computer somewhere...
The powers that be, "created" "Weapons of Fiat Destruction"...
You can't tell me that Citi...with thousands of Buildings around the world and the contents in them, are worth "Cap-Ex" of $5B...and it's stock is only worth a $1?!?!?
Our Gov has $120B+ into a business that is worth $5B now?!?!?
Someone has to see something is SERIOUSLY wrong in this picture...
Is it just me or...???
Originally posted by sad_eyed_lady
A new word has been coined.
baraknophobia (n). - an intense fear of someone taking your hard-earned money and giving it to someone else
Just keeping it real.
Zhou Pledges Fast, Heavy-handed Policies to Restore Confidence
By Li Yanping and Luo Jun
March 6 (Bloomberg) -- Chinese central bank Governor Zhou Xiaochuan pledged “fast and heavy-handed” policies to restore confidence and prevent the global financial crisis from deepening the nation’s economic slump.
“If we act slowly and less decisively, we’re likely to see what happened in other countries: a slide in confidence,” Zhou said at briefing in Beijing. The central bank has “ample room” to fine-tune monetary policy after a record surge in lending in January, he said.
The central banker said he saw “signs of stabilization and recovery” in the world’s third-biggest economy, echoing Premier Wen Jiabao’s confidence that the nation’s 8 percent growth target for 2009 remains within reach. Collapsing exports because of the global recession have dragged growth to the weakest pace in seven years and cost the jobs of 20 million migrant workers.
“This isn’t the time to be cautious with the measures you roll out, it’s time to overdo it,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “The outlook for the global economy has deteriorated dramatically.”