Economic Ripples From Mumbai, Citigroup This week, India's financial hub was attacked, Citigroup was guaranteed billions more in bailouts and Black Friday opened the holiday shopping season.
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Economic Ripples From Mumbai, Citigroup

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Economic Ripples From Mumbai, Citigroup


As has been noted all week, Mumbai is the financial capital of India. Now to try and help place Mumbai in the world of finance, we're joined by Joe Nocera from New York. Joe, thanks very much for being with us.

Mr. JOE NOCERA (Columnist, The New York Times): Thanks for having me, Scott.

SIMON: And describe to us Mumbai's role in what's now the world financial industry.

Mr. NOCERA: Well, it's still a second-tier player. It doesn't compare with the likes of Hong Kong or Singapore, not to mention New York and London. But as is the case in China, you know, India is a rising power. And therefore Mumbai is becoming increasingly important as a financial center. You know, there are lots of important companies now in India, and there's a fairly significant stock exchange. And all the Western investment banks, Goldman and so on, have all rushed to India, as they have done in China, to try and generate business.

SIMON: Can they open for business on Monday?

Mr. NOCERA: I suspect they can. Certainly, you know, the stock exchange itself was not hit. And when you look at what they - what the terrorists attacked, you know, there were no companies particularly involved. The Taj Mahal is owned by Ratan Tata, who is the Warren Buffett of India and a very, very important figure. But, you know - I mean, he has a huge empire that will go on, you know, with or without the Taj being open.

SIMON: And will investors be frightened of doing business in India? Will they think that there's just an unstable environment no matter how many billions of potential customers?

Mr. NOCERA: Well, that is certainly a possibility. And if you put it in a context, Scott, you know, one of the reasons Mumbai has a problem sort of bursting into the first tier is that they have all these other problems, starting with infrastructure, you know, terrible roads, huge slums. Just a series of, sort of, difficulties that make it hard to, you know, get around the city and do business in the city in a way that you can in a place like New York and London.

So, you know, the thought that, OK, now we know something else - the security forces weren't very good and, you know, how safe are you? - just kind of adds to the difficulties Mumbai is going to have to do what it desperately wants to do, which is to become a first-class, world-class financial center.

SIMON: Let's turn to events in the United States this week and start with Citigroup. President Bush announced the government would guarantee the company $300 billion in addition to the $25 billion given as part of the bailout from October, the same week, of course, that President-elect Obama announced his economic team, many of whom would be considered proteges of Robert Rubin. And certainly Mr. Rubin was a respected Treasury secretary during the Clinton years. He's now a senior counselor at Citigroup. And today, this weekend, questions in The Wall Street journal and other places are being raised about whether or not he can disentangle himself from the failure of Citigroup. Is this going to make it difficult?

Mr. NOCERA: Well, for him personally it is. The Wall Street Journal did have his apologia today. The New York Times earlier this week wrote, I thought, a devastating story on page one about how Citigroup got into this problem in the first place. And one of the points it made, which has not been made elsewhere so far, is that when Mr. Rubin went from the government to Citigroup, one of the first things he did was encourage them to take more risk of exactly the kind that got them into trouble. So, you know, that seems...

SIMON: It's just the kind of voice you want in the counsels of government at this point.

Mr. NOCERA: Exactly. And you'll notice that he's not one of the people who has been chosen to be part - an explicit part of President-elect Obama's team.

SIMON: Yesterday was supposed to be Black Friday for retail businesses. Was it?

Mr. NOCERA: It certainly was black.

SIMON: But Wall Street - whatever this means - Wall Street seemed to get a bounce, didn't it?

Mr. NOCERA: Well, yeah. But, you know, the day after Thanksgiving is meaningless in terms of what the stock market does. Nobody's trading. And more importantly, Scott, you know, one day does not a Christmas season make. You know, there's always a frenzy the day after Thanksgiving. But if you look at the, you know, confidence reports and various other pieces of data about consumer expectations, it is very, very grim.

I saw one - The Conference Board has a statistic that says only 3.7 percent say they expect to buy a car in the next year. And that apparently is the lowest number since the survey has been conducted in 40 years. So that's the kind of data that tells you that I think this is going to be a difficult Christmas season.

SIMON: Joe Nocera writes the "Talking Business" column in The New York Times. He joined us from the Radio Foundation in the Upper West Side. Joe, thanks so much for being with us.

Mr. NOCERA: Thanks for having me, Scott.

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