Citi being dismantled -- do you think other financial "supermarkets" like JP Morgan might be next?
Best Answer
2222 points
readytoretire answered 10 months ago …
I don't think that just because Citi splits up is reason for JP Morgan to. The reason that Citi did is that they got so desperate for earnings that they let the CDO segment go wild, with no restraint from the underwriters. JP Morgan does seem to have a better handle on its finances, and so it will be up to them if they think they can maximize stockholder share value by staying together or apart. That said, the media can drive it one way or the other if they jump on a bandwagon and carry nothing but articles about how JP needs to split up, the shorts will start selling stock and drive Morgan into the ground until they do.
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102 points
cnzalis answered 11 months ago …
yes, we do not have a handle on the true losses Citibank has sustained, printing more more by the Feds only reduces the value of dollar. what concerns me in deflation-- a spiriling effect, which would alter all business first in the US and eventually the world. Citibank is a dangerous player, deep in debt and most likely to require more TARP funds, perhaps a billion or more. The reality of that means banks cannot loan money because they don't have money to loan. Our thinking is in reverse, we need to fix the economy then money will become available not continue to throw money down the drain by printing more and depreciating the value of the dollar. Citibank MUST be broken up, with its core position be banking not everything else with banking as a secondary thought. Remember, it's the other enterprises that Citi was involved with that helped cause this problem. Stick to banking, make loans, mortgage lending, etc., but do the spade work yourselves, don't buy other peoples garbage just to get bigger. Bank America and Wachovia tried that and it does not work.
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3963 points
MNSL answered 10 months ago …
I agree with both.
If we decide to invest in banking and insurance sector we have to think twice now. Some banks will take longer period to adjust their balance sheets. Of course there are strong banks and they will become leaders in the sector oriented bull markets in the next 05 years.
Some of these global giants also should partly take reasonability for credit bubble,
Mortgage bubble, housing bubble etc. Now globally some banks are making ground for coming credit card bubble, commercial real estate bubble and insurance bubble.
Most of the financial institutions have given credit to inflated asset prices. Still asset prices are overpriced and in some emerging and less known countries property prices are overpriced by more than 70%.
This is the time to invest in next rotating sectors, neglected sectors and sectors going to outperform in the next 06 months, next 18 months and next decade.
678 points
BoxCar answered 10 months ago …
There's a politico-economic cartoon showing the Titanic as US economy with
taxpayers and US business onboard, while bankers & stock brokers are being
lowered over the side in LifeBoats (read "Bailouts") Automakers got a LIfeRaft.
The LifeBoats & LifeRafts clung together in groups like our Banks & Financials
Obama walks on water, but ARM resets in 2010 will finish sinking US economy.
After that what happens to passengers on the Titanic? (You recall some of the
ocean liners top executives stepped onto Lifeboats) A decision was made to
NOT pick up anymore survivors. Why? It would've swamped out the LIfeBoats.
In a nut shell, this is how our financial system will play out when 2nd shoe drops.
There's only so much LifeBoat capacity & its reserved for the ruling classes not us.
