Citigroup and the Bush Economy
As Resident Bush continues to tell us the economy couldn't possibly, in any way, be better, and that in fact American money will henceforth fly out of our ATMs accompanied by flowers and candy, here's further evidence that he's right. The Bush economy is doing very well. Foreigners love it!
From Bloomberg
Nov. 27 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, will receive a $7.5 billion cash infusion from Abu Dhabi to replenish capital after record mortgage losses wiped out almost half its market value.
Citigroup rose 2.6 percent in New York trading today following acting Chief Executive Officer Win Bischoff's statement late yesterday that funds from the state-owned Abu Dhabi Investment Authority will help ``strengthen our capital base.''
Abu Dhabi will buy securities that convert to stock and yield 11 percent a year, almost double the interest Citigroup offers bond investors, underscoring the New York-based company's need for cash. Fourth-quarter profit will be reduced by as much as $7 billion because of losses from subprime mortgages, which led to the departure of CEO Charles O. ``Chuck'' Prince III and a 46 percent slump in its stock this year.
``Clearly, Citi has a problem with capital adequacy after the subprime crisis,'' said Giyas Gokkent, head of research at National Bank of Abu Dhabi PJSC, Abu Dhabi's biggest bank by market value. ``ADIA has seen an opportunity to get cheaply into a blue-chip stock.''
With the purchase of a 4.9 percent stake, Abu Dhabi, the largest emirate in the United Arab Emirates and its capital, would rank as Citigroup's largest shareholder ahead of Los Angeles-based Capital Group Cos. and Saudi billionaire Prince Alwaleed bin Talal, data compiled by Bloomberg show.
1 comment:
There's a very interesting argument developing among some conservative pundits that low income Americans are enjoying a rapidly increasing income. However, these Americans don't realize their income is soaring because the "liberal media" is telling them that they're worse off. The unspoken assumption is that these poor people are too stupid to realize how well they're doing.
Of course, no candidate would ever say this in public. They'd lose the vote of every voter with a below average income. I'm guessing that this argument is really aimed at wealthy Americans that don't know any poor people. This argument helps relieve them of any guilt they may have about prospering from the suffering of others and exempts them from following up on any of the obligations of the Christian faith to help those in need. (And just in time for the holidays!)
It's a shame that Citigroup has fallen into the trap of the liberal media. Fortunately, they've fallen into the arms of foreign investors who obviously don't read the New York Times.
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