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Monday, Nov 24, 2008
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Business Daily from THE HINDU group of publications Monday, Nov 24, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Stock Markets Markets - Outlook Columns - Chat Mack (an American expat working in India) stops at an ATM on his way to a restaurant with friends Bidyut (an economics professor), Divya (a journalist) and Jogin (a student). Jogin: What is going to happen to Citibank? The Citi that never sleeps has slipped. Divya: The bank might not crash. US will not let another company crash. But Citi could be broken up, bailed out or sold. It is a huge company, after all. Bidyut: Some say size is the problem. It is too huge, and poor co-ordination among the bank’s arms stopped it from capitalising on its advantages. Mack: Citi’s future looks brighter than CEO Vikram Pandit’s. To his credit, he was attributed for reviving their slogan: The Citi Never Sleeps. Divya: The situation is oozing with irony. Pandit announced job cuts but could be fired, the bank fired several but its website reportedly posted new openings. How strange. Jogin: If I was an employee, I would take the severance pay and apply again for a new position in Citi! Bidyut: Divya, if you thought that was strange, you should hear what Japan’s biggest business organisation, Keidanren, has asked employees to do: go home and procreate. The nation has been worried about its declining workforce, an offshoot of too much work. Mack: Good idea to keep people in a country in recession out of depression. Divya: What a week this has been. G20 meet, bailout talks and now these. Mack: Speaking of bailouts, Obama has announced a two-year plan to create 2.5 million jobs. Jogin: Does that mean that the slowdown will drag on for two years? Biduyt: Not necessarily, but it could take two years for the bull to emerge. Remember Obama’s warning that things will get worse before it gets better. Divya: The interesting thing is that Obama’s plan includes a boost to infrastructure too. Our government has plans to set aside Rs 50,000 crore for infrastructure projects and G20 members also this week welcomed World Bank’s move to introduce facilities for the sector. Mack: If implemented, the projects would create jobs. Jogin: More jobs would mean more spending power. That would revitalise the economy but would that help real estate, especially in India where residential units are costing so much? Divya: Some promoters have announced cost cuts and others could be forced to follow suit soon. Else inventory would be stagnant and they could face a severe cash crunch. Bidyut: Remember that the Finance Minister had asked real estate, airlines and other sectors to cut prices to increase spending? Mack: Ya, Jet did listen to the Minister, at least partially. It proposes a 5-to-25% pay cut for staff. Divya: Some good news is that more RBI rate cuts and an export revival package could materialise. Jogin: Looks like Citi is not alone on the slipping side this week. The CEOs of auto companies slipped when they flew in private planes, spending thousands of dollars, to Washington to beg for money; Australia is slipping towards recession. I wonder, who is next? Ram with input from Badri Blog at http://MarketChat.blogspot.com More Stories on : Stock Markets | Outlook | Chat
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