The problems at Citigroup persist with CNBC reporting massive job losses planned at the troubled bank. Analysts are predicting worst case scenario 45,000 jobs to be shed by Citigroup. Citigroup employ close on 320,000 staff world wide the job losses come on reported forecasted write downs in the fourth quarter due to credit-related losses. Citi wrote down $6.5billion in the 3rd quarter with a further $11bn expected in Q4. This clearly shows the sub-prime crisis is far from over. Bear in mind Citigroup are not alone with HSBC today shoring up two structured investment vehicles (SIV) which they manage to the tune of £17bn pounds ($35bn) by doing so the bank admitted they cannot see an end to the SIV funding crisis.
Some weeks ago I mentioned that Citigroup were in trouble added to this they would shed jobs world wide. More pain is around the corner as bank losses announced are just the tip of the iceberg. Only a small fraction of the likely losses associated with the US subprime market have been declared by the financial institutions expect more in 2008 for the problems associated with housing has spread to auto loans, credit cards and insurance. Some markets are factoring in another six months of uncertainty, added to this oil prices. UBS reckon $480bn of losses while Goldman Sachs warned we are headed for recession. For us in the UK we should pay attention to christmas retail figures and stirrings coming from the Bank of England will they cut interest rates early 2008?
More flexing of Middle Eastern muscle as Abu Dhabi buy a 8% stake of chip maker Advanced Micro Devices (AMD). The Mubadala Development Company pumped in $622 million to the troubled chip maker who have losses currently this year running at $1.6bn. This shows just how the Middle East is buying up chunks of American business with over $10bn invested alone this year. China, Saudi Arabia and other Middle Eastern and Asian countries have set up such funds, which control an estimated $2.5 trillion in assets. Is America for Sale?
Gold prices rose, while the dollar fell against other major currencies. Gold now trading in the UK at £399 a oz.
Just more bad news today as investors were unnerved by another series of announcements that pointed to continuing problems in the credit markets, the result of home loan debt going bad under the weight of a faltering housing market. How far will the Dollar go?
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