Citi to the Rescue?

As early as Monday, the words rally and Citigroup in the same sentence would have been unthinkable, but the unthinkable did indeed happen on Tuesday. The markets posted their first sustained rally of the year after an internal memo from Citigroup CEO Vikram Pandit, in which the hobbled bank disclosed that January and February were profitable months, leaked onto trading floors. Forgive the business press for finding this revelation hard to swallow. BusinessWeek wryly observes, "Strip away the billions of toxic assets and the billions more that the feds have pumped into Citigroup, and what you have is a dandy little bank that actually makes money." The Wall Street Journal, too, is skeptical that the Citi disclosure marks a turning point for the markets. "Many market participants worried that the advance was more likely a bear-market rally that could be followed by even deeper dips," the newspaper writes.

Still, Citi is being credited with lifting Asia on Wednesday. According to Bloomberg, Asian markets soared on Wednesday, helped by the Citi surge. "The global rally spurred by Citi may indicate a retreat of excess pessimism," a Japanese investment fund manager told the newswire.

Disgraced financier Bernard Madoff is back on the front pages today. On the eve of his big day in court tomorrow, the business press is reporting that Madoff is expected to plead guilty to 11 felony charges for allegedly masterminding a decades-long Ponzi scheme. According to the WSJ, despite the expected guilty plea, tomorrow's court hearing could still turn nasty. "The charges are unlikely to cheer up the investors, some of whom are expected to mob a federal courthouse in New York Thursday to air their grievances at Mr. Madoff's arraignment. According to prosecutors, most of their money is gone," the newspaper reports. CNNMoney.com reports the guilty pleas could mean as much as a 150-year sentence for Madoff, according to his attorney, Ira Lee Sorkin. 

The prospect of putting Madoff away for life is little comfort to many of his victims, the NYT writes. "While I am glad that Madoff is pleading guilty and will serve a life sentence, I hope he is incarcerated with other rapists, not fellow scam artists that can laugh about the frauds they perpetrated,” Richard B. Shapiro, a former Los Angeles real estate developer and Madoff client, told the newspaper. In a separate article, the NYT details the menacing threats Madoff's attorney, Sorkin, has been subject to since taking the case in December. The veteran attorney has seen his fair share of death threats through the years. Still, he turned at least one threat over to the FBI, the newspaper writes.

Federal Reserve Chairman Ben Bernanke sounded a clarion call for greater governmental regulation of the financial system yesterday, the Washington Post reports. In a speech to the Council on Foreign Relations, Bernanke said Big Money (no, not The Big Money) must be regulated "as a whole, in a holistic way" to avoid a repetition of the current mess, which he termed "the worst financial crisis since the 1930s." He advocated more forthright oversight of institutions perceived as too big to fail and suggested that financial sector firms be forced "to set aside more capital so that they have it when economic conditions worsen," the Washington Post writes. "Who was overseeing the subprime lenders, for example? Who was overseeing AIG? There simply wasn't enough adequate oversight in those cases," Bernanke complained.

What will the Fed do next to try to halt the economic slide? asks the WSJ. Ahead of a scheduled policy meeting next week, the paper considers the Fed's shrinking options (having cut interest rates to zero percent) and reports that Fed officials are considering pumping "more money into the economy by expanding their lending and securities-purchase programs." Taking a lead from the Bank of England, the Fed believes that snapping up Treasury securities "could help bring down long-term interest rates by pushing up the price of government bonds and thus pushing down their yields," writes the WSJ. That could have a knock-down effect on other long-term interest rates, as they use Treasury debt as a benchmark.

First Japan reported a catastrophic drop in exports, and now China has similar dire news. The Financial Times reports that Chinese exports slumped 25.7 percent in February, the fourth successive monthly drop and one "much higher than analysts had expected." Tempering that bad news were signs that the Chinese government's "4 trillion yuan (around $585 billion) stimulus program taking effect, with capital-expenditure investment picking up in the first two months of the year," writes the WSJ. Meanwhile a rift is developing between the U.S. government and the European Union over how to combat the global recession. The FT reports that European finance ministers believe the EU is "doing enough to support world demand and [does] not need at present to adopt another fiscal stimulus plan, as Washington is urging."

And, finally, in case you needed any reminding, a dispute over the office coffee machine is rarely a pretty situation. If the coffee machine in question is a luxury Italian model costing 5,000 euros that produces consistently undrinkable cups, you may have an international incident on your hands. According to the NYT, that's what has been playing out over the past few weeks in the European Commission headquarters in Brussels, home to 21 La Cimbili espresso machines. Never mind that the Italian espresso makers are seen as something of an extravagance in these austere times; they had to be shut off because staffers consistently complained about the taste. The solution? The EU has added the job of coffee monitor, a trained professional to properly clean the machines and monitor the quality of the water. That should keep those EU diplomats from complaining, the hope goes.