Showing posts with label Citigroup. Show all posts
Showing posts with label Citigroup. Show all posts

Wednesday, 1 July 2009

Do accounting changes make economic changes?

This seems like old non-news to me, but here is an article on Bloomberg regarding AIG's credit default swaps and the ongoing risks of such things.  

An excerpt:

The $192.6 billion figure for the swaps is comprised mostly of $99.4 billion tied to corporate loans and $90.2 billion linked to prime residential mortgages, the insurer said in a May 7 filing. The combined total was reduced from $234.4 billion on Dec. 31.

Most of the home loans tied to the European swaps are first-lien mortgages for owner-occupied properties, the insurer said in March. The other transactions include secured and unsecured corporate loans.

The fair value of the derivative liability was $393 million as of March 31, compared with $379 million on Dec. 31, according to AIG filings.


But I think the new news part of it has to do do with the reclassifying of the reporting of these securities as "risks".  I could be wrong as the article is a bit shy on nitty-gritty-detail.  Missmc is confused because the last she heard on the topic was that the diminished value of these securities did not have to be accounted for as losses by the banks if they were held to maturity.  And that might be why Citigroup is still alive.  Murky murky murky complex changes.  Do accounting changes make economic changes?

When the loss is lost (but you can't say that), it is risk.  It does all make sense, but, only theoretically. 

Wednesday, 25 March 2009

Re-abstracting the Landscape

Corporate identity of financial institutions is undergoing a flux, to put it mildly.  Corporate identity in days of old was guided by the advertising industry and the field of logo design.  The news now has the upper hand, and, the abstraction of corporate identity runs past those little logos.  A sour pill has sullied the icons of the day.

Citigroup lost (actually, sold) its red umbrella sometime in 2007 and adopted the red arc which now reads as a red (dangerous) small bridge.  AIG has no little corporate abstraction, it stands with its initials.  If pronounced as a word -- "aig" - well, it rhymes with gag and brings to mind a kind of choking yelling noise.  Bank of America has an American flag as landscape, farmer fields on a distinctive curve as it viewed from above, perhaps a corporate jet.  RBS has a geometric tesselation that would make a fine wallpaper - arrows pointing inward to a blank circle...the emptyness of the inside does not read well these days either.

Redesign ideas?  An abstract metamorphosis of these logos will no doubt be coming soon. Colourwise, Missmc recommends out with the red and in with the green.  What else?  American references need to be avoided for a while.  Fonts?  They must get serious.  Times-Roman or something nostalgic.  Perhaps most importantly, all these institutions need to be renamed before they are re-logo'd.  I can see you all smirking with venomous ideas.  Stop that!

Friday, 27 February 2009

Go stand in the corner Missmarketcrash

What a complete non-ending.  Missmarketcrash, you ought to be ashamed of yourself.  Yes.  They certainly have been thinking.  But, what about you, dear girl?  You have left nothing of note behind on that last post.

Why?  Because you were busy.  Off you went, bored with the machinations of world rescue, onward on your own tangent.  You read about steak.  and stake.  You learned a steak is a steak because it used to be a stake.  A hunk of meat, on a stake, roasted.  You learned about steak fillers, specifically alginates (seaweed), and streptomyces mobarensis (protein and yes it is from skin and hair).  You resolved never to eat a "restructured steak" again.

Next, you went wandering off, into tangents too tangled.  Then you came back emptyhanded, and wrote the dry goods.  And all that you left behind, especially the restructured part, would have come in very handy with regard to the Citigroup thing.  Nobody would willingly eat that stuff.  Now go write your name on the blackboard 100 times and think about what you have done.

missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash,
missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash, missmarketcrash.....

Citigroup Day...

It is Citigroup Day.  Missmarketcrash has not read anything remotely cheerleader-y about what is expected to be announced.  It has been anticipated all week, and, what better day than a Friday?  Word has it that bailout number 3 has been structured in a way so that it is "not nationalization" and will depend on an equal contribution from private investors to justify the phrase "Government Stake" rather than the N-word.  On the news-for-the-people side, the criticism is massive by those that have deconstructed the rather complex plan down to its naked self.  From the murmurs of the investment world, it is "unclear" whether private investors would convert preferred stock, but, word has it both the Singapore Government Investing Fund and that Saudi Prince will be converting.  From the gambling side of individual investors, there seems to be some momentum to short the stock which will not particularly help matters.  With that, a Missoni-knit up and down chart is on the deck for the time being.

I shall await the announcement and get back to you, but, I must say, it does seem an awful lot of thought and discussion has gone into rescue number 3.  And no matter what, anything the banks or the U.S. government does will be met with criticism.  Perhaps a star or two can be given out to the Government for at least thinking about this one a bit more.

Tuesday, 24 February 2009

Sharing Vices

What we need to create is an addiction to banking stocks.  Right now.  Let's pair up Bank of America and Citigroup with Philip Morris and sell those stocks.  To the people. 

Inside every pack of Marlboro Lights could be a share of one of the banks.  Or two, in the case of Citigroup.  Take the tax off the cigarettes and use it to pay for the share.  

You could also pair up with brewers and bottlers like Jack Daniels.  All those toxic assets would be owned once again, by fans of vice.

And to be safe, let's say the shares are not sellable for a laddered number of years so they don't all fly back in the market at the same time...
Yes it is a flawed and twisted idea.

Monday, 23 February 2009

Rare or Medium Rare?

Pass the sauce.  It is not going to be called nationalization.  It is going to be called

Government Stake.

Yes this is my third post today.  The markets have just bled down to 1997 levels.  Citigroup has appears to have failed its stress test in a big way.  Worrisome bloody week even though it all seems so obvious.

And, no.  You can't have it well-done.

Green Banks

We are back to a state of Zugzwang in the banking crisis.  Whether it is a bad bank, a good bank, a zombie bank, a split bank or a nationalized bank has become secondary.  

The word nationalization seems to be the problem this week.  From a metasemantic perspective, there are overarching determinants for the word "nationalization" that are in conflict with America's system of "free enterprise".  

A quick journey into a dark room....(a reduced sauce)...
If one were lost in the dark, and, had a perception of which way the exit was, how "real" that mental map is is not predicated by whether the door is actually found.  The "realness" cannot be determined but, the picture inside ones head used to navigate can still be valid.  If the exit is found, it could be "luck".  On the other hand, perhaps there is a correlation between one's internal map and the external world that is not only linked, but also correct.  If one exits correctly, is it because the internal representation is an accurate map of the the dark room, or, is it due to some kind of natural instinct such as "always walk to the right"?  Lastly, it may be a reference to a past experience: perhaps it is a memory of a room one knew well as a darkened space (such as one's bedroom).

The word "nationalize" may be looked at in relation to the dark room problem.  It is a word we picture and project meaning on.  It is a word without context standing in a dark room.  We may have a valid picture of what nationalization means.  Or we might not.  If we do have an idea of what it means, the correlation of our idea of nationalization to the reality of it might be a match.  This could be down to luck, it could be down to instinct, or, it could be something resting on prior knowledge.  On the other hand, perhaps our understanding or the concept does not match up to the reality.  That only leaves us stumbling around in the dark if we do not shift the inside of our head to correlate it with the room itself.

Nationalization does seem a word that is burdened with conflict.  The handling of the banking crisis is becoming a minefield of semantics - choosing the correct word seems to be harder than choosing the right actions.  The naming of actions must be accurate and understood from a wide range of understanding.  How does one go forward into such complexity with simplicity?

The eco-labeling movement has had much success with marketing a slew of items -- why not twist the concept into action?  Green has a nice ring to it and the cleaning up of toxic sludge has a nice eco foundation to place it upon.  The Green Bank sounds like a marvelous place to relax.

Of course, I am talking nonsense.  But sturdy names are needed for sturdy concepts.  And, with diminished faith in governments these days, the term nationalization lacks credibility irrespective of the effectiveness of the concept.

Thursday, 15 January 2009

Not Walden Pond...

Yesterday both children were finally back in school after a long holiday and the sounds of silence transported Missmarketcrash back to Walden Pond.  Except it was not silent.  The sounds of widespread panic began to shriek from the computer with all the banks lining up naked to be fed or shot.  And more data on this and that began dripping red down the screen.  

So Missmarketcrash did what she could to ignore making decisions on finances in a panicked fashion (though this fast blog may give you an idea that I surely am panicking today) and started planning a party.

Burns Night is January 25th and a good excuse to drink whiskey.  Which is what Missmc drank when she chopped a bit of her finger off the other day with the new christmas kitchen cutting gadget.  This morning Missmarketcrash sent the Scotsman out to spend the rest of our meager holdings on whiskey and chocolate for the upcoming fete.  And she told him not to worry about money, just to spend freely, because it won't be there tomorrow.

And now, I must go and address the unavoidable and see if I can rescue more funds before they are held hostage.

Friday, 5 December 2008

I'd rather be playing scrabble...


Missmarketcrash is in the midst of a four day birthday celebration so would like to advise you that the quality of posts may be a bit...off.  Last night, the London Scrabble team kicked off the festivities and brought Missmarketcrash a cake decorated with gold chocolate coin money.  It was heaped on like a pirate's bounty and Team Scrabble looked on with careful anticipation - was Missmarketcrash going to laugh, or, burst into tears?  A trademark giggle from Missmarketcrash calmed the anxious air.  Continuing on the money theme, Missmarketcrash was presented with a series of Lottery tickets.  Now....Missmarketcrash is not the lottery ticket buying sort, but, gosh, her head started spinning.  Missmarketcrash's father once proclaimed (and he was probably parrot pontificating) - he once proclaimed that Lottery tickets were a sneaky tax on the poor.  So then (according to the parrot pontificator), they are useful to the government, inspire happiness, and create a bit of poverty where poverty is not needed.  Hmmm.  That is the current form.  Now...suppose we reverse that.  If there were something that created a bit of a hole for the government, made people sad, and created a bit of wealth where wealth is not needed....

We would then have arrived at the public sentiment regarding the current crisis.

But - I digress.  Back to the Lottery concept.  If ordinary citizens could buy a ticket with the names of companies that one could bail out during the current crisis in different forms - let's say you've got Citigroup, Chrysler, Motorola, UBS, Sun, and Ebay on your card.  There would be a good mix of companies from all over the world represented, and, no two cards would be alike.  If your ticket was randomly selected to be the winning ticket, those companies would be given a golden heart and a cash infusion and the ticket holder would be given a good number of shares (held through a third party) which may or may not be valuable at the current moment.   Deja-vu?  

A Lottery is the oddest kind of game.  It has no reliance on skill and the element of chance is both appealing and repellent (or at least for a control freak such as moi).  It is almost a "something for nothing" exchange as the rewards offered are often a million times greater than the cost.  There are "odds and probabilities", but, they seem almost hypothetical when one gets to the odds on the best prizes.  

Metaphorically and non, I'd rather be playing scrabble...


Friday, 28 November 2008

The price of things...


This evening, Miss Marketcrash is off to a holiday drinks party with the posh parents from that school that we pay for child number two to attend.  As some of you may remember, child number one has recently been pulled from his lovely sweet school and placed in the state school due to ummm....circumstances.  This week, a letter from the school arrived asking us if we would be so kind as to pay half the terms fees as a compromise from January until Easter whilst our child is not there and attending the free state school.   Well - a glance at the markets tells me I could propose a compromise of my own. Perhaps I could propose trading shares to cover my debt - a scheme modeled on the goings on in America?  Yes...I could volunteer to give them 285 shares of Citigroup.  Alas, I think they would rather take back my child for free than be burdened with Citigroup shares.

And that is what the market thinks of the burden as well.  The cost of buying a CDS - the price one is willing to pay to insure against the U.S. Government defaulting on its debt is sky-high these days.  If you are new to all this - I'll try to explain without spinning your head around -very simply -  the rising cost of a cds reflects the idea that default is a realistic proposition.    In fact, the cost of these little bullies are almost three times higher than on the Dawn-of -Doom in September when Lehman collapsed.  Indeed, the cost has risen astronomically in past few days as the world has digested the terms of the Citigroup bailout...

I must admit I kind of love the sheer folly of the idea that there exists such a thing as a U.S. Gov't CDS.   But what is really astonishing is that one share of Citigroup won't even buy you a pint of beer these days...never mind a G&T...

Not that I drink of course.

Sunday, 23 November 2008

Jolly Displeased....


Whilst Citigroup is almost old news, it will probably be making very large news tomorrow. Hence the mood of this house, and, of the lovely pink FT.  From the title of one of the fluff articles and the tone of the rest of the paper -- Jolly Displeased is the mood de jour.  

I began my day today in Mayfair, having brunch with the children.  Lest you think we've lost our frugal minds, brunch was courtesy of a family relative, a widower who a few years ago inherited a rather dauntingly large family business to look after and has done quite a brilliant job of it all.  At the same time she has raised an adopted son who is now 16 and was a welcome addition to the brunch table as he could hold a conversation with us and simultaneously keep my children enthralled.  Even I cannot do that.   After brunch we waltzed through the Tate Modern. For a day that started with the first magical snowflakes we'd seen and went on to more marvelous things, well, you would think we could shake the gloom.  But the conversation did not waver much from The Gloom and The Doom.

The understanding I had reached about the state of things quite a long time ago is now the prevailing mood.  So where does that take us?  Is it mood capitulation or is it something far far worse???   

Citigroup is somewhat like that big spider in the Tate turbine hall - it is sitting menacingly overhead, interrupting my brain.  It has been doing so for quite a while.  "We make money the old-fashioned way, we earn it" was an old Smith Barney ad featuring a dishevelled eyebrowed fellow.  It always made me laugh and conveyed a bit of a winking sincerity on the part of Smith Barney, and now, well, he just looks very very sad and very very tired.