Friday, March 06, 2009

Citigroup now a $1.02 stock...

Woke up this morning and found out that Citigroup (C) has fallen to $1.02. Anyone reading this blog shouldn't be surprised at this. The stock is now the playground of day traders and gamblers who buy and sell the stock throughout the day. If you check the Yahoo! message boards even those who buy this stock know the company is insolvent, they are hoping that short-sellers who have made enough (or are tired of sitting on so much profits) cover their positions and cause a temporary rally in the stock. Citigroup's market value is now smaller than Malaysia's Bumiputra Commerce Holding Bhd. If you check Bank of America (BAC) , the stock has fallen another 12%. BoA is where Citigroup was 3 months ago and JP Morgan is where BoA was 3 months ago. The train wreck continues. But all this does not surprise me given the information that is available. .

What surprises me was MM Lee saying that the GIC and Temasek invested in those banks "too early" [Link]. They invested in those banks more than a year ago. But what is the difference if they had gone in 6 months ago, 3 months ago or even 2 months? They would have lost most of their money anyway given these banks are insolvent. Citigroup stocks have fallen about 50% in the last 5 days. They had many months to discover their mistake and unwind their investments and save taxpayers' money. But they are unable to admit to making a mistake even today so we have Singaporeans' money stuck in these banks whose stocks are heading south everyday. It is highly dangerous to leave taxpayers' money in entities that are not completely transparent and it is even more dangerous when the people running them cannot admit their mistakes, learn their lessons and allow small blunders to turn into catastrophic losses. Even Warren Buffett, the world's greatest investor, openly admitted making "dumb mistakes". Why is it so hard for our elites to do the same? They could have gotten out of those bad investments and used to money to help needy Singaporeans who are suffering the worse recession ever but they rather deny their mistakes and leave the money in those banks to rot. What have Singaporeans done to deserve this? Did we not pay them enough to act responsibly?

32 comments:

Anonymous said...

There is one highly informed market analyst (http://suddendebt.blogspot.com/) who derided the theory of decoupling of stockmarkets. on the ground that in an interlinked global economy, such a decoupling theory is illogical.

He may be right but he probably misunderstood the real meaning of this theory.

Of course, markets will never fully decouple from each other but it is increasingly possible for Asia economic performance to become less and less affected by the US.

For that matter, Premier Wen just mentioned that inspite of the severe financial crisis China would still be able to achieve 8% growth this year.

I can believe that statement, given that China has previously even underestimated its growth by as much as a few percentage points.

Anyway, this "China phenomenon" if you will, looks like a paradox given that the US is down in the dumps.

But why not? Is China, or for that matter India, Russia, Brazil and the rest small countries? No, their total population are many times that of the US.

The US has historically been the driver of global growth but as we also know, this has mostly been achieved through overspending itself, splurging way beyond its means as its current economic problem brought up into relief quite clearly.

Another reason I think Asia might not be so much affected by the US is the law of karma or simply that of action and reaction. This is one law or dynamics that even physical science accepts as valid.

Since the problem had been created by the US, why do we think Asia must suffer for it in a big way?

This probably explains for the seemingly strange paradox of crowds of customers at the recent NATAS travel fair or at one property launch near St Patrick Sec School (as Lucky had pointed) and that new businesses continue to sprout forth in Singapore.

Perhaps this is the historical moment when the scale will start to tip to the side of Asia, to provide more sanity and balance to global economic dynamics.

For too long, observers including stockbrokers have frustratingly been questioning why Wall Street performance should always determine the trends of other stockmarkets.

May be the main reason is that there is too much belief that the US is so important. Even laymen would mouth forth things like this : "The US is a very huge market and hence very important to the world economy".

But no one seems to remember that Japan being the second largest economy is not far off but paradoxically its stockmarket performance does not matter half as much.

Perhaps it is all a matter of belief created through the reach of American mass media that constantly puts their nation at the apex of the world.

Taishan said...

LKY was never an economist. Goh Keng Swee was one. When lawyers make economic decisions that's the outcome. This, Suzhou and myriad others are the result of bad investment decisions by unqualified economists. He has to forego decision where he has little expertise and leave to themore qualified.
More disasters will be for-coming if he persists to meddle in where he is patently unqualified. But one will never be able to tell him so. Disaster looms.

Alba Tross said...

"What have Singaporeans done to deserve this?"

You cannot be serious!

The average Singaporean has done precisely nothing but abjectly crawl to Don Corleone and his crew and richly deserves everything that is coming to him. "Better the Devil you know than the Devil you don't" has been the excuse and he now has the kind of government that fits to a T his cowardice, apathy and feigned ignorance. If even the reckless squandering of one-third of his nest-egg fails to galvanise him to anger and open protest, then no sympathy is merited.

Last one out, please "off" the lights.

Anonymous said...

"What have Singaporeans done to deserve this? Did we not pay them enough to act responsibly?"

Lucky, you must correct that statement;

"Did the PAP gahmen take enough to act responsibly".

The answer is NO.

LKY recently commented that Singapore has massive National Reserves to ride out the recession.

Even after losing 200+ billions, he is still bragging that we have plenty, maybe that is the reasons why the "LONG TERM INVESTMENTS" are PEANUTS left to rot and decay.

What is our national reserves, it range from 10,000,000,000,000,000 Zimbabwe's currency to 1,000billions in USD, which is possible?
The Economist always state Singapore National Reserves as 120 Billion USD, have the Lees lost it all?

Unless the National Reserves position is clarified, he and his cronies would continue to puke garbage and take their world class salaries from our almost empty treasury. Look at the steady depreciation of the Singapore Dollars against USD and you will know soon see our SGD value dropped to that of Ringgits and than Baht.

Pathetic Singaporean

Anonymous said...

This IMF site reports that Singapore has USD167 billions in reserves.

About 15 years back, the government still published the breakdown of the reserves in terms of CPF savings and reserves proper (money collected by a government through taxes & levies).

The percentage of CPF savings was around 70%.

Apparently the PAP government now refrains from showing this breakdown. I gather this from the remark on the cited site which says right below the title :

"Information to be disclosed by the monetary authorities and other central government, excluding social security"

This social security can only refer to CPF savings given there is no other form of social security available, state welfare being a taboo with PAP.

So as you can see PAP is blatantly intent on obfuscating this very important matter. Through this means, on one hand it can lay claims to having USD167 billions in reserves thus promoting its reputation; on the other, it can set aside questions about the security pertaining to our CPF savings in the event of massive losses such as it has incurred.

Take away 35% from that figure of USD167 billions would be closer to the truth now.

Anonymous said...

Dear Anon 8:48

The suddendebt guy had years of real experience in IB.

On the other hand, what u know, u learnt from textbooks and maybe the MSM.

Eh. Nevermind.


For too long, observers including stockbrokers have frustratingly been questioning why Wall Street performance should always determine the trends of other stockmarkets.


Wall Street is the financial capital of the world. I think you dun even understand what that means.

stock market performance circa 2009 is about capital flows. Japan's role is to provide the cash. yen carry trade. wall street is where the deals are.

Anonymous said...

Lucky

Why is it so hard for our elites to do the same?

PAP's power comes from the myth of invincibility/incorruptable.

What have Singaporeans done to deserve this?

They voted for it.
If not for walkovers, PAP's percentage would be even larger.

NoName

Anonymous said...

Anon 11:03 AM said: "wall street is where the deals are"

You are absolutely correct, there is only 1 stockmarket in the world.

5 As for that!

Anonymous said...

Just a stupid question is our CPF the biggest swisscash scheme in the world?? Seem our gov are pulling all the tricks in the book to stop us from withdrawing our money.......

Anonymous said...

Taishan said:

'More disasters will be for-coming if he persists to meddle in where he is patently unqualified'

If only somone would tell that to him in his face. In little red dot the old man is always right. No one, in or outside Parliament ever questions his decision. Even when he is wrong the blame is always deflected towerds circumstances or the global effect, never his judgement.

LuckySingaporean said...

anon 8:48,

China has an economy which is 65% domestic. The demand collapsed killed off the export sector. But there were about to massively stimulated the domestic economy (property, infra, etc) which they softlanded when the export sector was doing well. The chinese stock market gain 20% to become the best performing bourse in the world. You may see some divergence in the HK market which is dependent on China.

The question is how long can they keep stimulating the domestic economy.

I think the race to the bottom at the end of last year was highly correlated. The rebound looks less correlated because different economies are going to hit bottom at different times...I think there is a bull market in Venezula or something.

Anonymous said...

i remember ppl say gold fish have extremely short memory. hopefully citizens of singapore not going to evolve to gold fish when coming to drop their vote in that "mandate" box. dun tell me singapore citizens vote their "favourite" gahmen to "wank" them for "more good years".

Anonymous said...

Maybe that's the consequence that we all have to pay for overly relying on one political party to make all the decisions.

Anonymous said...

maybe next time he can blame it on his education i.e. he is not trained in economics or accounting.

Anonymous said...

Like they say, this is all fated. We are fated to be ruled by PAP and PAP is fated to rule us.

Fate also means there is very little you can do or choose.

Unless you can relocate to a better place.

Anonymous said...

well, he most prob went on 'bended knees' with our $ on a platter to give to the americans so that they will support his regime

how can he not do it? he has to, for the sake of his decendents!

Anonymous said...

Lately did he go to Brunei to beg for some scraps?

Anonymous said...

With our original amount of reserves in temasek and GIC, we should be able to easily invest in safe instruments that will yield 20billion each year. This would translate to mean $600 per mth for each citizen which is around 3m. This would also mean that many of our poor old aunties and uncles do not have to clean tables, wash toilets, bully by foreign workers and worry about medical costs.

Anonymous said...

The consumoption of USA is $9 trillion,China-less than $1 trillion,that is the difference.

To consume,you must have a middle class society,USA ws one many years ago,China is yet to be.

Finally as a communist country,the problem of wealth distribution is very difficult to solve,in fact most revolutions started fr income equality.

China goverment did hand out 100 RMB consumption voucher,how much that would generate in consumption is anyone's guess,I guess that most of these coupons went into buying rice and oil.

We are talking about a country 4.3 times the population of USA but with a GDP about 24% of USA,pl do the maths

MM lee did not do it,hence golden period,decoupling etc,but he has since switched.

Anonymous said...

Talking about the recession, it is difficult to predict whether this will deepen into a depression, but it seems more than likely.

Just by numbers alone, the present situation is far more serious than apparent on the surface, because compared to the last depression in 1937, the global GDP is now more than ten fold greater, money supply and debts much, much higher and the world population much bigger than it was in 1937 so any comparison by a fall in percentages is misleading. It the the absolute numbers that really matters.

Anonymous said...

Lucky, seriously I have intending to pump all my saving into Citi. It will never be allowed to die and because its one old man honour. The country migh sink but not the mandarin's pride. Your advise pls

Anonymous said...

Someone mentioned to this poor idiot that the kitty is dry and its all hype and that all our CPF money is gone and that why they are coming out with all the schemes to ensure that we do not collect cash. Anyone is this true?

fisherman said...

S'pore becoming a fishing village
island again?

Anonymous said...

snake and ladders la

mr jones said...

Investing "too early" means that they did not have real helicopter's vision to judge the quality of the investment due to their lack of the right knowledge.

He probably meant that they did not wait a little longer to see the direction of the stock. They invested then, with the blind belief that it will go up.

MM Lee lost the gamble, with our money.

Anonymous said...

MM Lee also lost the Casino bet:

SANDS stock is x 2 of Citigroup now.

You get two Cheese Burgers for that price in the states.

He allowed gambling vice into the island state but bad timing.
The next vice he will *invest* your CPF money is probably Geylang prostitution, maybe headed by the recently stepped-down Ho Ching, the smart investor.

Anonymous said...


Anon 11:03 AM said: "wall street is where the deals are"

You are absolutely correct, there is only 1 stockmarket in the world.

5 As for that!


if u were trying to be sarcastic ... then u really have no idea ...

Anonymous said...

They could have gotten out of those bad investments and used to money to help needy Singaporeans who are suffering the worse recession ever but they rather deny their mistakes and leave the money in those banks to rot. What have Singaporeans done to deserve this? Did we not pay them enough to act responsibly?

because they are heartless & deaf.
& they think we approve of their constant bitter medicine.
the only way to unplug their ears is to vote them out.

Alan Wong said...

With hindsight, I would say that it is very dangerous for a country's finances be left in the hands of a few persons, what more in a family who presumably takes no accountability for any mistake that they make for their investment decisions.

All I hear is excuse after excuse eg. that it is for the long term, it is due to external global factors beyond one's control.

The beauty of it is that they will continue to draw millions of salaries annually from our Govt coffers for years to come and yet not a single apology from them for the billions of losses.

Just marked my words. The PAP Govt will for sure devise many more methods of taxing we peasants to recover the losses. As I see it, the sale of JTC properties to Mapletree Investment is already one step in that direction.

And for certain, more pain will follow and it will be really sad for we Singaporeans to continue to suffer from their mistakes.

Taishan said...

And then there was Madam Ho Ching. By what stretch of imagination did she attain the CEO position. What did she bring to the table for credentials then family ties.

And as if to prove she was blatantly unsuited to the position - deciding to pursue the Maxtor investment and promptly losing 600M in the process.

Lack of accountability, lack of any personal responsibility would see her sit comfortably in the CEO and lose many more billions of hard earned Singaporean blood and sweat.

That they consider the billions lost as trivial, the reserves as their personal kitty is just nauseating.

All that is that they were simply a bunch of contumely mandarins.

ben said...

u know, myself and everyone here, including Lucky Tan, are cowards. yes we are. on this blogpost, there is much intelligent discussion on govt policies and how they affect us. but no one is galvanised to take political action, ie either form a new party or join an existing party to contest elections. no, we are are fearful of our living and too comfortable in our careers, that yes indeed, we get what we deserve to get in the form of our current government. we are fait accompli to the current situation.

don't ask me to run for office, i am a coward, just like you. so coward in fact that i do not dare to use my real name but hide behind a pseudonym for fear of being flamed by people here and of being found out by secret police.

Al said...

someone mentioned American consumption here. please remember that US is possibly the biggest debtor nation now, with its 2 biggest creditors being China and Japan. the growth of US consumption is done mostly on borrowed money.

so what if their GDP is trillions per year, what good does this do if their govt is not collecting much tax from the GDP? how can the US hope to pay off its debts??