Are we all just this short sighted? Do we always assume that this time will be different and not have a crash?Banks paid insane bonuses last year and are now trimming headcount drastically as deals dry up. Is that loss of talent not a greater loss than the one-time loss spent on keeping them in their job?I'm lucky to be in a group with asinine deal flow (thank you Medicare) but most of my peers have been let go in the past 2 months. I don't know how you can have the best year in decades and then not tolerate a single down period; it's simply beyond me and conveys incredibly poor capital budgeting.Take the L and know that some QofE group will make it an addback if needed
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It was a lose-lose situation for banks... they had no choice but to hire aggressively in 2021, their people were underwater and quitting in droves, banks had to turn down deals because capacity was so tight, etc. I think everyone saw a slowdown coming but no one thought it would be so soon, prolonged, and deep. 2020 was technically a "recession" but it was so short it didn't really impact IB.
How did the Roaring 20s go to the Great Depression.
I'll let someone older and wiser speak to the actual finance, but culturally, the pandemic resulted in the "Great Resignation" all over the country. It suddenly became a lot less tolerable to be treated poorly by your employer. It would stand to reason banks realized this and paid insane bonuses to retain talent. Once the well dried up, the balance of bargaining power shifted in favor of the banks.
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