Sunday, June 22, 2008

Citigroup Reportedly to Cut Thousands of Jobs

It is only the latest indication that there is something seriously wrong with the economy:

Citigroup is preparing fire thousands from its worldwide investment-banking division, The Wall Street Journal reported on Sunday.

The Journal, citing people familiar with the matter, said the layoffs are part of a plan to cut about 10 percent of the staff of the 65,000-member investment-banking group.

Messages left with Citigroup spokesmen on Sunday were not immediately returned. The Journal said the fired employees could be notified as early as Monday.

The New York-basked global bank, along with much of Wall Street, is in the throes of recovering from bad investments on mortgages and leveraged loans that cut billions of dollars from its portfolio.

It was not immediately clear if the reported job cuts would be in addition to cuts announced by Citigroup in April. After reporting a $5.1 billion first-quarter loss, the bank said then it was reducing its staff by 9,000, in addition to the 4,200 job cuts the bank announced late last year.

As of the end of last year, Citigroup had about 147,000 full-time employees.

In May, Citigroup unveiled a three-year plan that included getting rid of more businesses, mortgages, real-estate operations and jobs.

The bank called for shedding between $400 billion and $500 billion of its $2.2 trillion in assets and growing revenue by 9 percent over the next few years as it tries to rebound from the huge losses tied to deterioration in the credit markets.

And Citigroup isn't the only bank being hit by the current recession. And you notice how no one is arguing whether we are in one anymore:
Increasing struggles by consumers and businesses to make payments on a variety of loans, not just mortgages, are setting off a new wave of trouble in the financial sector that is battering even institutions that had steered clear of the subprime-home-loan debacle.

Late payments on home-equity loans are at a record high, according to fresh data from the Federal Deposit Insurance Corp. The delinquency rates on loans for cars, small businesses and construction are spiking to levels not seen in a decade or more.

Unlike last year, when soaring mortgage defaults sparked a crisis of confidence in the financial system, the root of these problems is the downturn in the broader economy. Simply put, consumers and businesses are strapped for cash with job losses growing and retail sales falling, economists said.

Meet The Press Transcript: Offshore Drilling is a "Gift" to Oil Companies

Senator Joe Biden exposed the scam which is offshore oil drilling. Read entire transcript:

SEN. BIDEN: We're not trying to get Saudi to drill more, we're trying to get them to pump more of what they're drilling. They're not pumping what they could, number one. This is a gift, a gift to the oil companies by John McCain. They have now leased 41 million acres of offshore leases. They're only pumping in 10.2 million of those acres. Seventy-nine percent of all the offshore oil available off the coast of Florida, into the Gulf of Mexico, the Atlantic Coast, the Pacific Coast, lies within those acres that they now have. Why are they not pumping? Why are they not doing this? Why are they not pursuing what's estimated to be a total of 70--54 billion barrels of oil at their disposal right now if they pump? Why are these greedy fellows deciding they want to go beyond that? It's because they want to get it in before George Bush leaves the presidency. It's because they're not pumping the oil to keep the price up. They are not even drilling. So here you have 30 million leased acres they have right now that possesses 79 percent of all the offshore, and they're not drilling. And John says they need more? And it would take 10 years for it to come online.

[...]MR. WILLIAMS: You mentioned energy independence, where does that conversation come in?

SEN. GRAHAM: Well, what you do is you have a supply-demand problem. The more domestic supply, the better we are off as a nation. But to get away from fossil fuels in general is a goal of Senator McCain. One thing you do on the power side is add nuclear power. We cannot address climate change without replacing oil and coal-fired plants with nuclear power. But when it comes to domestic supply, we're talking about 50 miles off the coast of South Carolina with the consent of the legislature where the state gets half the revenue. I think in an environmentally sound way we can extract deep sea exploration oil and gas off our coast that will allow us to be more energy independent. John is for that. I am for that. And I believe the state of South Carolina will be for that.

SEN. BIDEN: We already can do that. Let's get the facts. You're entitled to your own opinion, not your own facts. Forty million acres leased offshore, number one. Number two, the first well to be dug from the time they lease, if Lindsey gives them access to more area, it'll take 10 years from the time the lease is let to the time oil comes out of the bottom of the sea in the new leases.

Oil Prices Not Problem until Bush Invaded Iraq

The facts speak for themselves. Crude Oil prices (adjusted for inflation) started to jump in 2003 and have gone up dramatically ever since. If you believe 9-11 had something to do with it, think again. Oil prices declined in both 2001 and 2002. The nonsense that somehow world demand for oil is to blame is not born out by the facts. The price in 1998 was the lowest since the end of World War II. This could be explained by the lack of conflict in the Middle East. In previous periods of oil shocks (1974 and 1979) it involved political turmoil or a major war in the region.

U.S. Politicians Acquiesce to an Israeli Attack on Iran

Silence is acquiescence. It is why Israel will go after Iran. If you say nothing to discourage aggression from the Jewish state they will feel no need to hold back. But towing the line by the U.S. vis-a-vis Israel is more important than subsequent skyrocketing oil prices or World War III:

U.S. presidential candidate Barack Obama said that Israel is justified in providing for its security amid the "extraordinary threat" posed to it by Iran.

He spoke after The New York Times quoted unnamed U.S. officials as saying that Israel had carried out a large military exercise this month that appeared to be a rehearsal for a potential bombing attack on Iran's nuclear facilities.

U.S. politicians are remaining silent on any potential attack but not the UN:
A military strike on Iran would turn the Middle East "into a ball of fire," said Mohamed ElBaradei, the head of the United Nations' nuclear watchdog agency.

[...] "In my opinion, any military strike -- as I mentioned -- is the worst thing that can happen now," said ElBaradei, head of the International Atomic Energy Agency.

"It will make the Middle East turn into a ball of fire. It is a lot worse than having sanctions. A military strike will lead Iran, even if it plans today to manufacture a nuclear weapon, to establish a crash course to speed the process to have the weapon with the blessing of all Iranians, even those living in the West."

And it isn't just U.S. politicians that genuflect before Israel. Even the French now pander. Sarkozy is unpopular just like Bush. He could provoke a backlash within France from a relatively large Muslim population that has been politically vocal:
French President Nicolas Sarkozy flies to Israel on Sunday for a three-day visit aimed at reinforcing his image as an ally of the Jewish state and reversing a trend of difficult trips there by French leaders.

There is a potential problem for an Israeli military action. They lack the military resources to destroy Iran's nuclear program. This is why they hoped the U.S. would do it. Bush would like to but it would mean his impeachment. Is crazy enough:
Israel has spent years training for a possible bombing run against Iranian nuclear sites, but its air force may be too small to finish the job alone, officials and independent experts said yesterday.

Officials, who declined to be identified given the censorship around Israel's strategic capabilities, said the air force would be unlikely to deliver more than a one-time blow to the Iranian nuclear program, which international experts believe may require as many as 1,000 strikes to be destroyed.