January 16, 2008 | posted by Michael Baxter in Banking, credit crunch |

If 2007 was a year of extraordinary volatility, then 2008 seems to be on course to outdo it. So far this year, the Dow has fallen by over 200 points in one day no less than 7 times.

Pity us. Once upon a time, a fall of that magnitude would have made a nice juicy headline – now, it’s just more of the same. Yesterday, the Dow finished the day at 12,501; that’s 277 points down on the day, and 1,662 points down on the all-time high set last October. That means, by the way, it is 12 per cent below the record,  meaning we are in correction territory, again.

The FTSE 100 fell to 6,026; that’s 695 points down on the seven-year high set at the end of October. The index has now fallen by 10 per cent of from peak to trough, so it just falls into correction territory too.

Yesterday’s falls were due to the banks. This time, Citigroup revealed an $18.1 billion write-down, mainly related to subprime debt, and a $9.83bn loss – the worst quarterly loss in the banking giant’s history.

Even more worrying, analysts weren’t impressed with the talk given by the bank’s new CEO, Vikram Pandit. Mr Pandit said the figures were “unacceptable,” but there is a suspicion that we have still not heard the full story, and more losses by the bank are still to follow.

Meanwhile, both Citigroup and Merrill Lynch announced more fundraising and investments from sovereign funds. This time the government of Singapore Investment Corporation topped the list of investors – it is pumping in $6.8 billion into Citibank. In all Citigroup said it is now raising $14.5bn; meanwhile, Merrill Lynch, $6.6bn.

The quote of the day must go to Charles Geisst, a Wall Street historian. He told the FT, “Not since before World War I, have companies gone looking for foreign capital as much as they are now.”