Citigroup: Crisis along with Shake-up

Citigroup, is changing its way significantly. Gary Crittenden as the new Chief Financial Officer, is being made responsible to manage all its underperforming and toxic assets. Crittenden has earned the confidence of the financial community. It is a welcome relief for the firm as they want to release these assets as soon as possible.Gary Crittenden along with Vikram Pandit wants to live with the dream to restore the third-largest U.S. Bank even after $38.5 billion in losses over five quarters.

Citigroup is also involved in some financial gymnastics to raise its sunken share price. Citigroup is planning a reverse stock split-equivalent of giving $10 billion to its investors in exchange for split. This lead to a short term rally in the share price of Citigroup since the beleaguered company is earning profits in the first two months of this year. To my view this won’t make a significant change in its fundamental outlook for the company. In financial terms a reverse stock split reduces the number of shares outstanding and therefore the share prices also increases proportionately. This financial housecleaning will also help in the bailout plan to go smoothly.

Credits : Manik Gursahani

What Interim Budget holds for India?

Where on one hand, the industry didn’t have much expectation from this four month period- interim budget and on the other hand; it had few adverse effects on the economy and especially financial markets. The interim budget gave away nothing yet left many asking if this was indeed the time to play it safe, politically. This interim budget had opened up new gates for the next fiscal and monetary policy by RBI in the coming period which might live up to high expectations towards economy. But looking at the current market conditions it will be difficult for RBI to make extraordinary changes. It’s an extremely dry budget as the major emphasis was on agriculture only. The hard-hit real estate sector had been leading the call for fiscal sops for it. This budget came as non-event for the entire corporate world as it would lead to one more year of uncertainty and investments.

The government had left out many things and is indirectly dependent on RBI & stimulus package, which might not be a luxury for economy. The government is mainly looking at new pump-priming, interest rate cutting kind of solutions; and they are not looking at new solutions for a new crisis. The government could declare excise holidays for items which are in great trouble like cars or even can add a special interest rates subsidy for new house buyers and many other things. Accordingly this government is handling this economic downturn and it is believed they would be able to handle it better than any new government coming up with various experiments, thus Dr. ManMohan Singh, the ball is still in your court.

Analysis Done by : Mr.Manik Gursahani

Exciting American Bailout...!!!

My friend Manik Gursahani mailed me, these interesting facts about American Bailout. I couldn't resist it posting it on blog.Read on.

"Adding in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars.
Some what around $7 trillion after auto bail out.....
People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Crunching the inflation adjusted numbers, we find the bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est),Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion"

Source : http://boingboing.net/2008/11/25/bailout-costs-more-t.html