Globonomics!

Consulting|Technology|International business

CITIGROUP takes over Wachovia banking operations

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The tumble continues. The Fed’s $250 billion immediate injection to buy toxic assets of troubled financial institutions, followed by the $100 billion based on President’s approval followed by another $350 billion subject to approval of Congress did not help.

Wachovia (NYSE: WB) is the latest in the casuality list with a $2 billion takeover by CITIGROUP (NYSE: C) else it was probably a few weeks away from collapse.

Let’s analyse the turnaround (if any) in the US credit crunch in coming weeks. It will be interesting to see how Paulson buys those toxic assets.

From an economic standpoint, jobless claims were at a 7-year high and it is predicted that the 4th quarter of US GDP would be negative growth – a first sign of an impending recession.

It’s to be seen if the economy heads into deep freeze or kicks back and dusts itself and motors ahead. Bernanke’s Federal policies and Treasury secretary Paulson’s policies would be put to an acid test in the coming months.

Alan Greenspan’s federal policies have been heavily criticized by not just the US majority but also people in UK and Europe for being a cheerleader for securitization and lacking proper regulatory supervision. Its almost ended up causing a systemic failure as echoed by the legendary Warren Buffett in his talk with the Congress (should the US issue the bailout plan or should it not).

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