Citigroup loses almost $10B in 4Q

January 15, 2008 8:46:50 PM PST
Citigroup Inc., the largest U.S. bank, announced record quarter losses because of the mortgage crisis.

Then the retail market reported worse-than-expected numbers. Those in the know, say a recession is upon us.

Last year economists said there was a one-in-three chance of America falling into a recession. Today on Wall Street, the odds are 50-50.

Here's Wall Street's definition of a recession.

"Basically, broadly defined two consecutive quarters of negative growth, so the economy is not growing, it's contracting for a six month time period," said William Urban from Bingham-Osborn and Scarborough.

It started in the financial sector, with the credit crisis. Today we are learning more about how bad it really is.

Citigroup posted a $9.83 billion dollar loss in the fourth quarter. Citigroup said 4,000 jobs will be lost.

Now the crisis is hitting the retail market.

"Everyone thought they would weather the crisis and what we are seeing now in January is that everyone was way too optimistic. Tech stocks are among the worst performing stocks in the first few weeks of this year. Retail sales in December were awful," said editor-in-chief from Market Watch David Callaway.

"The first thing I think you worry about in a recession is will I lose my job or if I am working part-time, will my hours will be cut back?" said Urban.

Also during a recession, your ability to get credit is affected.

Federal Reserve chief Ben Bernanke will testify before the House Budget Committee on Thursday. He's expected to announce a rate cut later this month.

He met yesterday with Speaker Nancy Pelosi, who is trying to put together an economic stimulus package with the White House.

The White House and Congress are talking about tax rebates as a rescue measure. It wouldn't be the first time -- the government did the same in 2001.

Three-hundred to $600 dollars in tax rebates were given. The idea is to get cash and spend it and give the economy a needed boost.

Market watchers say Bernanke and the government must focus on ways to restore the public's confidence.

"The government showing that it is starting to pay attention to this, the candidates for election starting to pay attention will do a lot toward bringing back the confidence in the market and in the banks," said Callaway.


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