More Layoffs on the Way at Citigroup

It appears Citigroup is preparing for another, much larger set of layoffs after the 17,000 cuts earlier this year. This comes after failed CEO Charles Prince resigned earlier this month, with a typically hefty exit package. The ball is in the Federal Reserve's court, with their move expected to come next month.

Citing people with knowledge of the matter, CNBC said the total number of employees affected could be as high as 45,000. Citigroup currently employs 275,000 staff, according to its website.

A Citigroup spokesman said the bank was assessing ways to cut costs.

"We are engaged in a planning process in anticipation of our new CEO and our business heads are planning ways in which we can be more efficient and cost effective to position our businesses in line with economic realities. Any reports on specific numbers are not factual," the Citigroup spokesman told AFP.

The banking giant is reeling from its exposure to the US housing slump and a related credit squeeze.

The banking behemoth is also searching for a new chief executive officer after former CEO Charles Prince stepped down on November 5 as Citigroup revealed it was facing likely investment writeoffs of between eight and 11 billion dollars.

Analysts at Goldman Sachs believe the company could be forced to absorb eventual writeoffs of up to 15 billion in the coming quarters as the housing and credit markets show no sign of improving anytime soon.

Economists Say They Expect the Fed to Cut Rates At Least a Quarter

Yesterday the Fed stated that they expect slower (artificial) economic growth for next year, of around 1.8-2.5 percent. What a bold statement to make, such as increased inflation would be. Economist Brian Bethune says that he believes because the Fed's growth outlook is actually a bit high, predicted rate cuts are a probability by early next year, and could be more than just another 0.25% cut. This is no new news, but is notable because the dollar is falling to all-time lows against other major currencies even this week, and rich celebrities and big oil states in the Middle East, including Saudi Arabia, are all dumping or thinking about dumping the U.S. Dollar, setting off a tidal wave of selling and diversifying; all happening to bail out the crooked corporate banks and irresponsible American consumers.

Bethune said despite the Fed's noncommital position, he expects the central bank to lower borrowing costs further after two reductions that brought the federal funds rate to 4.5 percent.

"The downside risks to the outlook far outweigh the upside risks," he said.

"Thus the Fed's central tendency forecast does look a little rich to us at the current conjuncture, and for that reason we are forecasting that the Fed will reduce the federal funds rate by at least an additional 25 basis points by early 2008."

Financial markets are largely pricing in a rate cut and many analysts see a reduction at the next Fed meeting in December.

"The next FOMC decision will depend on ongoing economic data. However, the minutes published today comfort us in our expectations" for a cut, said economist Marie-Pierre Ripert at Ixis Corporate and Investment Bank.

"We still believe that bad news on the macro side as well as on banks will trigger further easing in monetary policy. A 25 basis-point cut on December 11 remains the most likely scenario even though it could be a close call."

The Fed report projected core inflation expectation for 2008 to 1.70 to 1.90 percent, down from 1.75 to 2.00 percent.

Paulson Says U.S. Currency is the Chosen One

U.S. Treasury Secretary Henry Paulson certainly didn't have a problem complying with the Federal Reserve commands to print money from thin air, that they stopped keeping records of. He usually speaks only when there is something to cover up, and he's been really flapping his jaws as of late. The U.S. Dollar closed at a stunning new low of 71.11 Friday amidst the speculation that the Fed will cut interests rates again, and it sank to new lows against other major currencies as well. Paulson wants the world to buy his bluff that the worldwide economy will screech to a grinding halt if something were to happen to the U.S. Dollar's reign as the world currency. That may be, but it doesn't mean it won't happen, because in a lot of ways, it's happening already. He says that America is the biggest economy in the world, but everyone knows that there is plenty of competition right now for that spot.

Reuters

Treasury Secretary Henry Paulson on Friday defended the dollar's status as the world's reserve currency, saying the U.S. economy's strength, openness and competitiveness would "shine through" the current market turmoil.

"The dollar has been the world's reserve currency since World War II and it's been that for a reason. We are the biggest economy in the world, we are as open as any economy to investment, to trade, and we've had stable economic policies ... we've had good productivity," Paulson told reporters at an impromptu news briefing on Friday.

Paulson repeated the administration's oft-stated mantra that a strong dollar is in U.S. interests and that currency values should be set in a competitive marketplace.

He acknowledged he has heard questions about the status of the dollar as the world's preferred reserve currency. While the housing downturn and credit market turbulence are likely to have an impact on the U.S. economy, there is underlying strength, he said.

"I have no doubt that looking out over any reasonable period of time, you're going to see our strong economic fundamentals in this country shine through," he said.

Fed Still Looking to Another Rate Cut After Comments from China

It is hard to really gather what is really going on in the minds of the U.S. Treasury and Federal Reserve. They keep right on printing more and more fiat money they stopped keeping records of, and the dollar is facing an all-time high sell-off, failing against about every other currency in the world. Now the chances of ANOTHER rate cut in December are said to be increasing.

China's Cheng Siwei said that their country will soon start diversifying and favoring the stronger currencies, which means, as they've openly discussed before, releasing some or a great deal of their greenback reserves amid the recent successes of Asian currencies. Henry Paulson, U.S. Treasury Security, shrugged the statement off as usual, saying that none of the Chinese officials he talks to have mentioned it. Of course not! Is that supposed to mean that it can't happen, or that there is no cause for alarm? That is absolute bologna. They want to keep bailing out the banks and big corporations, which want to screw common citizens at every turn. It is as simple as that. They clearly have no fears of causing a collapse of the dollar, and the government wants it to happen; so like they say about China's warnings, take everything with a grain of salt. Everybody wants to dump the dollar right now to not be the last one holding, but no one exactly wants the down turn that that will cause, and that is what the careless treasury and central bank are counting on.

Reuters

U.S. short-term interest rate futures rallied on Thursday, boosting the implied chances of a Federal Reserve rate cut in December as dealers dissected testimony from Fed Chairman Ben Bernanke.

Futures show as much as an 82 percent implied chance that the Fed will trim benchmark rates by another one-quarter percentage point in December, up from 70 percent late on Wednesday.

In testimony prepared for the congressional Joint Economic Committee, Bernanke said that the U.S. economy faces risks on both the growth and inflation fronts.

AFP

"This is the clarion call for all currency reserve managers around the world that the largest holder of US dollars outside the country is seriously thinking of selling them for other currencies," said Andrew Busch at BMO Capital Markets.

Busch, pointing to the tight global credit, said "the only central bank acting to soften the credit blow is the US Federal Reserve as this country remains the epicenter for the problem. Thus, the US dollar comes under pressure and subject to a potential exogenous shock ... like a shift in reserve management."

Market expectations are rising for a further rate cut when the Fed meets on December 11 because of an expected sharp economic slowdown due to a deepening housing slump and a subsequent crisis in the high-risk subprime mortgage sector.

"The market is still quite concerned about the fallout from the subprime mortgage crisis, so a lot of people are anticipating further rate cuts by the Fed," said Daniel Chan, senior investment strategist at DBS Bank.

Fed Cuts Interest Rates Again

The Federal Reserve just recently cut interest rates by .25% to 4.5%, a quarter less than what was feared earlier this week, in order to 'bail out' the credit and housing markets. The Dollar has already fallen to more all-time lows this week due to the fears of a rate cut, gold is about to surge above 800, and oil is now at $94. Again the Fed puts irresponsible people and the big bankers and money makers ahead of common citizens and our national currency. Hello inflation.

"The pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction," the Fed said in a statement announcing its decision.

The central bank said its action was designed to help "promote moderate growth over time."

Merrill Lynch CEO Gone After Covert Attempt to Sell

Merrill Lynch has suffered big losses since housing and credit woes hit rock bottom. CEO Stan O'Neal reported a $2.2 billion loss in the third quarter, as he wrote off almost eight billion. It was just last week that O'Neal tried to sell the company off to Wachovia without first talking with his board members. They were so upset about it that they were already going over possible replacements last week, so this comes to no surprise.

O'Neal is reported to of stepped down himself, but he knew his outing was just around the corner. Since he took over the company four years ago around 30,000 people have lost their jobs, and he's never been very popular among the financial community to say the least. He is the first CEO to be outed since the housing and mortgage woes. The stock was down today because of the uncertainty of who will succeed O'Neal, and no word yet on who that will be. He is set to receive a rather large exit package, and like all the other embattled CEOs in the past that didn't do their jobs well, plenty of people won't be happy about this, especially those 30,000 that don't have their jobs. But Mr. O'Neal seems to only be thinking of himself as always, as his exit statement only mentions his opportunities and gains from being with the company.

Merrill Lynch said O'Neal "decided to retire" and its board of directors had elected Alberto Cribiore, a member of the board since 2003, as interim non-executive chairman and chair of a search committee to recruit a new chief executive.

The firm said it would look within its ranks and elsewhere for a new CEO.

"Mr. O'Neal and the board of directors both agreed that a change in leadership would best enable Merrill Lynch to move forward and focus on maintaining the strong operating performance of its businesses, which the company last week reported were performing well, apart from subprime mortgages and CDOs (collaterized debt obligations)," Merrill Lynch said in a statement.

Dollar Falls Further, Air Force Stands Down Today

On the eve of fears of a Federal Reserve rate cut possibly a whole 0.5%, the US Dollar fell to an all-time low against the Euro Thursday, the apparent date of the change being September 18. That is three days before the incredibly mysterious 9/11-like "put options" expire, which really has gotten people speculating on something really big happening within the next week, and what.

Who would really risk losing over $1 billion, unless they were very sure something would happen? There would obviously have to be an outright crash for this to make sense. There have been plenty of signs over the past week to support that case. One such sign is that of the entire US Air Force "standing down" today to go over "safety procedures" after six nuclear warheads were "mistakingly"(impossible) flown from their base without anyone supposedly knowing. The last time they did that, 9/11 happened. The CIA and Department of Homeland Security have all hinted at apparent plots against the country in the past week, leading to much more speculation. China dumping their surplus of US Dollar reserves is a definite possibility, especially after they just lost approximately $10 billion on the whole mortgage collapse fiasco. Either way, you have big bad government to thank for it. We just need to be sure to let them know who's really responsible in the wake of such an event. Martial law won't stop what's coming to them.