Kevin Walmsley

The Rules on Buybacks Ought to Be Changed for Citigroup

On Nov 23 02:14 PM mik123 wrote:

> Once Citigroup gets through 2009, it will get
> back to earning 25 billion per year. At 10x earnings that's a 250
> billion market cap which is 12.5x the current market cap. 12.5x the
> current price takes it to $47 a share.

How much of that $25 billion came from subprime and mortgage origination, which won't be back EVER. How much of that $25 billion came from mark-to-market trading in derivatives and CDS's? How much of that $25 billion came from asset-based management, which have been chopped in half? And how are they going to get back to $25 billion, given the fact that they've laid off so many of the people who generated those false profits in the first place?

You also, of course, assume no additional losses going forward. That foreclosures stop right now, credit card debts suddenly get paid, and unemployment heads the other direction.

Well, time will tell. That's what markets are for, after all.