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China, Citibank and Job Losses- Hope, Disappointment and Mixed Feelings

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Citibank's stock has fallen from its highs of $50+ two years ago to its present lows of $1.02.

How the mighty has fallen. I remembered working part time with a computer firm- Digital (anyone remember them), during my holidays many years ago and going into Citibank to check on their employees' computer systems. Those were the days when quite a few of the Citibank employees had a chip on the shoulder and a haughty air.

The fall of the formerly biggest banking giant in the world to one with a market value smaller than even a Singapore bank like UOB shows how massive this financial crisis afflicting the world is. It also goes to illustrate the importance of diversification. If all your retirement money is with Citibank and you work for them, good luck to you.

Will Citibank recover? I think they will and hope they do, but it will take a long time and I doubt if they can make it back to the very top again.

While Citibank is full of bad news, IHT is seeing 'A Sign of Hope for China's Economy'. It seems that its manufacturing activity index is inching up and there are signs that the massive stimulus plan that the Chinese government kick-started is beginning to see some effect.

Last November, the Chinese government spent $584.7 billion to invest in infrastructure project and rebuild the Sichuan area which was devastated by earthquake. This week, according to the IHT, there may be no need for further stimulus as the "earlier fiscial and monetary measures were already coursing through its economy".

Time magazine has an intriguing piece of article that suggests that China and US should swap their stimulus packages. Their premise is that US needs more infrastructure spending which the Chinese are doing with their stimulus package while the Chinese needs to improve their safety net for social needs like health coverage and unemployment relief.

Talking about relief, most people are relieved that the job losses in February is 'only' 651,000 in USA. However, this means that the unemployment rate is at a 25 year high of 8.1%

With the US stimulus package passed last month, it may take the US about the same time it took the Chinese to feel the effects of the stimulus- 4 months. So it may be until June that the effects of the stimulus kicks in and is felt. Also as stated, the stimulus is different for both countries so it remains to be seen whether it will work as the Obama Administration hoped it will.

More importantly, will it be in time?

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