The zeitgeist changes
on January 16, 2008

The German word ‘Zeitgeist’ describes ‘the ethos or mood’ of a select group of people. And the financial zeitgeist is clearly changing.
Back in August, I marvelled at the contradictory views then being expressed:
‘We see a lot of people on the Street who are scared. We are not scared. We are not panicked. We are not rattled. Our team has been through this before.’ We are ’still dancing’, said the then Citigroup CEO, Chuck Prince.
But at the same time, more sober voices could be heard, such as that of Jochen Sanio, head of Germany’s financial regulator. He felt that subprime could become ‘the worst banking crisis since 1931’,
There now seems little doubt that Herr Sanio was right. Chuck Prince is no longer at Citi. His successor, Vikram Pandit, said yesterday that ‘there is no doubt we are in the middle of a very challenging environment’. And Citi’s results led Bloomberg to comment that ‘The fourth quarter may be the worst earnings period for the financial industry since the Great Depression’.
Citi reported a $10bn Q4 loss, and took $18bn in subprime credit writedowns. Yet CFO Gary Crittenden was very downbeat in his comments, suggesting that ‘whilst Citi was no longer making optimistic assumptions, there are always circumstances under which things could get worse. No one can say this whole thing is over’, he added.

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