Arab stake in Citibank boosts Dow

The Washington Times ^ | 11-28-07 | Patrice Hill

[JZelle]

Abu Dhabi's purchase of a stake in Citigroup, one of the U.S. banks hit hardest by the spreading mortgage mess, spurred a strong rally on Wall Street yesterday as investors took hope that the growing wealth of Persian Gulf oil states will be used to help avert financial failures in the U.S.

Citigroup said it would immediately deploy the $7.5 billion it is getting from the largest emirate in the United Arab Emirates to beef up capital reserves that have been sorely depleted by an estimated $11 billion in losses the company has suffered in the mortgage market. In return, the Arab investment fund, seeded with an estimated $875 billion from oil sales, will get a 4.9 percent stake in the largest U.S. bank and a guaranteed return of 11 percent on its investment.

The deal, which sparked a 215-point rally in the Dow Jones Industrial Average, cut to the core of what worries Wall Street: the specter of a major bank insolvency as a result of burgeoning losses on mortgage-backed securities. With the Persian Gulf oil states now controlling a big portion of the world's wealth in the form of accumulated petrodollars, the deal showed that angel investors are on hand to ward off a disaster, analysts said.

"The investment arm of Abu Dhabi viewed the depressed level of Citi as a value investment" after the bank's stock had fallen to less than $30 a share from more than $55 a year ago, said John Rocket Spinello, bond strategist at Jefferies & Co. "It provides another indication of the global wealth fund effect that will be available to purchase depressed assets around the globe."

[steve86]

Blood money.

[HuntsvilleTxVeteran]

Has the foreign ownership of the Federal Reserve Banks reached fifty percent yet?

[ConorMacNessa]

"With the Persian Gulf oil states now controlling a big portion of the world's wealth in the form of accumulated petrodollars, the deal showed that angel investors are on hand to ward off a disaster, analysts said."

More like vultures than angels, IMO.

[samtheman]

Drill ANWR.

[cripplecreek]

Dow bless America. In Dow we trust.

Who needs national integrity when there’s a buck to be made.

[mainerforglobalwarming]

The only good thing that I can take out of all this is that at least there are folks in the Arab world that love money, that crave and desire wealth. if the almighty dollar or euro can corrupt them, then there is hope for democracies and free markets in the middle east.