Indonesia Anonymus

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Anonymus is the Latin word for anonymous, the correct English spelling. The Latin spelling, however, is traditionally used by scholars in the humanities to refer to an ancient writer whose name is not known, or to a manuscript of their work. Read more at Wikipedia.

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Thursday, April 23, 2009

Ta Da !

American banks are posting huge profit this quarter:
Citibank: $1.6 billion [1], Goldman Sachs: $1.81 billion [2], Bank of America: $4.2 billion [3].

Does it mean the economic crisis is over? Green shoots [4] and all that?

Not really. Because apparently some magic tricks are involved.

Says Paul Krugman:
"Goldman changed its definition of “quarter” (in response to a change in its legal status), so that — I kid you not — the month of December, which happened to be a bad one for the bank, disappeared from this comparison." [5]

That's a loss of $1.5 billion, effectively erased [6].

What? You've got to be kidding.

What about Citibank? With it's debt losing value in bond market, "Citigroup was allowed to book a one-time gain approximately equivalent to that decline because, in theory, it could buy back its debt at a lower cost..." [7]


Bank of America? "The bank booked a profit of $2.2 billion on the decline in value of its own debt, which is allowed because the bank could now repurchase that debt at the lower price." [8]. Isn't that pretty much the same trick as Citibank?


But you said you want profit. Don't you want profit?
So we give you profit.

Here. Ta da !

[1] Financial Times - Results boost for Citigroup and GE
[2] BusinessWeek - Goldman: The Same as It Ever Was
[3] UPI - Economic Outlook: Underneath the profits
[4] Guardian - Federal Reserve sees green shoots but shops feel the rot
[5] New York Times - Green Shoots and Glimmers
[6] International Herald Tribune, April 22, 2009, Page 20, What's next in their bag of tricks?
[7] International Herald Tribune, April 20, 2009, Page 15, Creative accounting helps Citigroup return to profit
[8] Washington Post - Bank of America's Profit Mainly Due to Recent Deals


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