Citigroup Failure Imminent

Subject: Citigroup Failure Imminent



Citigroup Failure Imminent by Martin D. Weiss, Ph.D.
Dear Subscriber,
Citigroup, the nation's second largest banking conglomerate, is on the brink of failure.
Its stock price collapse is the canary in the coal mine, wiping out over nine-tenths of the company's market cap since its 2007 peak, decimating two-thirds of its value just last week alone.
At the same time, the collapse in its market cap is also the bank's nail in the coffin, making it virtually impossible for it to raise the capital it desperately needs to save itself.
If it fails, it will be, by far, the largest banking disaster in history, involving $2 trillion in assets. That makes it approximately six times larger than Washington Mutual and three times bigger than Wachovia.
Moreover, the prospect of a failure by Citigroup poses far greater challenges to regulators than a typical large bank. Due to its massive derivatives holdings — side bets on interest rates, currencies, and the probability of defaults by other large corporations — it could be extremely difficult to save Citigroup without serious disruptions, raising serious questions about the global banking system and the world economy.
At mid-year, June 30, 2008, the Office of the Comptroller of the Currency (OCC) reported that Citi's primary banking unit, Citibank NA, held $37.1 trillion in total notional value derivatives, including $3.6 trillion in credit default swaps, which, in recent months, have proven to be the most dangerous category.
In contrast, Wachovia bank, bought out by JP Morgan Chase in a deal brokered by the regulators, had only $4.4 trillion in derivatives, among which $404 billion were in credit default swaps, or only one-ninth the size of Citigroup's.
Thus, whereas it was possible for the authorities to arrange buy-outs for banks like Wachovia and Washington Mutual, there is no buyer big enough in the United States to absorb Citigroup. Nor is it likely that an international consortium of banks would want to squander the precious capital they have left on a sinking titanic the size of Citigroup.
What will happen next? No one can say with certainty. However, it's likely that:
The Treasury Secretary, the Fed Chairman, as well as FDIC and Citigroup officials are currently holding tense and intense discussions in a desperate attempt to somehow stem the megabank's demise.
They will soon announce a massive federal bailout that could make the $150 billion AIG rescue seem small by comparison.
And, ultimately, these kinds of bailout efforts will fail.
It is preposterous to assume that any government, no matter how powerful it may seem, can save the entire world. It is naive to believe that a few government bureaucrats, with a grab-bag of gimmicks and tricks, are a match for billions of consumers in revolt, millions of investors desperate to sell, and thousands of banks pulling in their horns.
The government cannot repeal the law of gravity and stop markets from falling. Nor can it turn back the clock to reverse our financial blunders.
My recommendations are unchanged:
Recommendation #1. Keep up to 90% of your money in the highest rated, most liquid safe haven in the world — short-term U.S. Treasury bills, bought through Treasury Direct or a money market fund that invests exclusively in Treasury securities.
Recommendation #2. If you have substantial assets or securities held in any other venue — a brokerage account, insurance company, or bank — pull away a reasonable portion of those funds for safekeeping in Treasuries as well.
COET: Recommendation #3. For urgent self defense, go on the offense. Click here to read Mike Larson's latest report on how to convert this crisis into a steady stream of high-profit results.
Recommendation #4. Above all, stay out of the stock market. Do not be lured back in by so-called “bargains" or temporary rallies like Friday's. Our next target for the Dow is 5500, and it could get there very quickly.
Good luck and God bless!
Martin
About Money and Markets
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Tackling Bad Credit

Warning: Free Credit Report Imposter Websites Springing Up on the WebA recent amendment to the federal Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer credit reporting companies to provide consumers with a free copy of their credit report, upon request, once every 12 months.Access to the free credit reports has been phased in beginning last December in the West and will finally be nationwide by 1 September.

Tackling Bad CreditThe first time I heard the term credit history was when I approached a lender for a secured loan. Being a first timer I was completely ignorant of the procedure and didn't even know that a credit record of our transactions is prepared by some credit reference agencies.

Understanding Your Credit ScoreWhen you apply for credit one of the first things almost all credit officers do is check your credit score. Although not all of those officers explained to us what a credit score is, we are all rated according to it and the offers we receive were all dependent on that score.

Bad Credit Credit CardsChances are you've gotten your share of offers like this in the mail Bad Credit Credit Card, Bad Credit Visa Cards and Credit Cards for People With Bad Credit. Re-establish your credit with a bad credit credit card, credit cards for people with bad credit or pre-approved Visa cards regardless of your bad credit history, some with low introductory rates and other perks.

Credit WorthinessCredit Worthiness is an important business and personal asset each person has to manage. I mean this is an asset which could make or break business relationships and interestingly in some cases personal relationships.

Your Credit ScoreCredit scores: all lenders use credit scores to determine interest rates and credit limits.The credit scoring system was developed in the early 1950's.

How to Deal with Hire Purchase DebtWHAT IS HIRE PURCHASE/CONDITIONAL SALE?Although people often talk about "buying on HP", Hire Purchase Agreements are quite unusual these days. Cars are the most usual goods sold under Hire Purchase or Conditional Sale Agreements.

Bailiffs & Council Tax - Knowing What To DoThis article is about bailiffs who may call trying to collect Council Tax or Community Charge (Poll Tax) arrears. If a bailiff has contacted you to collect another sort of debt the law might be different.

It Is In Your Best Interest To Do The Math On Your Credit Card InterestIf you begin foaming at the mouth once a month when you receive your credit card statement, join the millions of Americans that are foaming along with you. There is a growing outrage at the seemingly endless journey towards eliminating the balance on your credit card and that is due primarily to the extravagant interest rates charged by credit card companies.

Harassment of People in Debt by CreditorsHarassmentHarassment of people in debt by creditors or their agents is a criminal offence under the Administration of Justice Act 1970. It is often difficult to know what to do when you feel a creditor is not dealing with your account fairly.

Credit Report HasslesThere is no end to the amount of pain that your credit report can cause you. If you have a bad credit history this is something that can follow you around and wreak havoc on your life without you even knowing it.

Bank Robbery Growing In U.S.Bank robbery has grown to become a huge problem in the United States but I am not talking about people robbing banks. I am talking about banks robbing people.

What Does Your Credit Say About You?A credit report is more than just a snapshot of your financial picture; it can assist credit grantors in determining your overall risk factor. Additionally, lenders, credit grantors, and even human resource departments often use it as a tool to determine a person's character.

Debt Collection AgenciesDebt collection agencies are often a viable option for receiving payment on overdue bills. Here you can earn how debt collection agencies work and what to look for in reputable debt collection agencies.

Have You Ever Opened a Checking Account?Maybe some of you are saving it in your trusty piggy bank, under your mattress or way back in a sock drawer. Although I'm glad that you are saving, your money is not doing anything for you locked up in your house.
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Refinancing Your Home Mortgage Loan With Bad Credit

Refinancing Your Home Mortgage Loan With Bad Credit. There are numerous reasons a person has bad credit. Late or partial payments, missing payments, and too many outstanding debts could all be factors that have left you with a poor credit rating. If you want to refinance your current mortgage but are afraid a poor credit rating will disqualify you, be aware that there are mortgage lenders that can help you qualify for a loan. Refinancing your home with bad credit is not impossible. Mortgage lenders can help you be approved for a home refinancing loan and will offer you advice on how to improve your credit rating.

Bad credit can result from many other factors besides missing or making late payments. Illness, unexpected expenses, and unemployment can affect your credit rating adversely as well. When you refinance your existing mortgage you may even be able to get cash back to help you pay off your debts and restore your credit rating. Regardless of your credit history, you can be approved for a home refinance loan. You could lower your monthly mortgage payments and have the extra cash you need to pay off high interest debts. Refinancing with bad credit is not only possible; you could be approved quickly when you apply for a refinancing loan online. Online lenders can offer you free quotes and great terms, even with bad credit.
If you have bad credit, contact a lender who specializes in sub prime refinancing loans. The application is fast and easy. You could be approved for a home refinancing loan in just hours and the low rates you'll receive will save you money each month, allowing you to pay off your debts and begin rebuilding your credit. Mortgage lenders can help you with refinancing your home even if your credit history is less than perfect. A mortgage loan is secured by your home, so the risks for the lender are much less than with a non-secured loan. Bad credit will not prevent you from refinancing your mortgage and may even put you on the path to freedom from debt entirely.
Apply to refinance your mortgage today and you could be saving money on your monthly mortgage payments in a very short time. No matter what your credit history, lenders are anxious to approve your loan today. Complete an application now to see the great interest rates and low monthly payments that are available to you.
To view our list of recommended bad credit mortgage lenders, visit this page: Recommended Bad Credit Mortgage Lenders.
Carrie Reeder is the owner of ABC Loan Guide, an informational website with articles and the latest news about various types of loans.
If you are looking to get into this investment market, experts suggest a careful and focused approach. Determine what type of investment is best suited for your situation. If you want a longterm investment, then certain rental markets might bring solid rental income and the potential for price appreciation as the market recovers. The key is to “buy it right” and negotiate the best price going in. By doing research into the market, you can determine that certain houses have been on the market for a long time. This typically makes them easier to buy at below market rates. This type of approach leaves you some wiggle room if you discover unexpected construction surprises or if the market shifts again.
How To Sell In A Buyers Market
If you are planning to sell in this market, the key is to be realistic. While the days of hefty profits may be behind us, there still is money to be made if homes are priced realistically. “People have an inflated sense of what something is worth and you need to let the market set the price,” Houses that are in good condition, with fresh paint and décor and working mechanicals, have always fetched top dollar. That “move in condition” is particularly important in today’s market, when inventory is high. Realtor's recommends that sellers take a close look at other houses on the market and find creative ways to distinguish themselves from the competition. This may involve hiring an interior decorator to give the home more pizzazz or throwing in some extra amenities. In the end, investors who watch the market carefully and work with conservative profit estimates can stay ahead. And, the units that are priced competitively will sell. “Real estate is always a good investment” .
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