What will happen to IB if another recession like 2008 one hits?
Experts say it's coming in 5-10 years and I'm talking about the IB hopefuls. I wouldn't want to drop 120k on MBA just to end up in irrelevant role and neck deep in loans
Experts don't know what they're talking about. The fact that everyone today seems to think there's going to be a recession probably makes it more likely that there won't be one.
If you're going to pursue banking, you have to accept some risk of a recession. But trying to time it just isn't going to work.
Actually it makes it more likely there would be one, according to simple macroeconomics. Low consumer sentiment means less spending, lowering GDP, etc. Downward spiral. That’s why people care so much when the Fed provides an outlook - consumers end up adjusting their savings based on future expectations. The economy is very intertwined.
Being worried about recession is not something unique to banking. Most high paying jobs on the corporate side are discretionary positions tied to growth. That's why they warrant salaries higher than the masses working in direct operations. With regards to banks, these are similar high paying positions because the expectation is you will create this non-core revenue stream.
So don't worry about recession. With regards to an actual financial crisis like in 2008, no one knows what the fall out will be. Some like to say banks are safer because of Basel III and other regulations, so that a financial crisis would be much less severe.
But I do think the financial sector will remain on shaky ground, as long as they're raping kids of their lives, charging excessive 6-8% rates on student loans. I think a framework needs to be found to either relieve the interest/debt burden (i.e., allow students to repay when they actually have money in the bank), stop charging rates so lenders can profit (definitely reduce the spread by a lot), and they need to provide more assistance/more information to resources helping students pay more out of pocket.
This should be a bi-partisan effort because everyone has this issue. When it comes to who is voting, it's the kids now with all the debt. And if they keep seeing their bank accounts rocked because they can't even touch the principal with their interest payments, they will forever blame capitalism.
What about the minority who's debt free? Will they be bailing out those who are underwater in debt similar to how it was done in 2008?
Speaking from experience: You will spend most of your time working on pitches to "prime" the pipeline when the economy picks back up. Even though deal flow will have come to a halt, you will still somehow find yourself working 80-100 hours weeks as if nothing had changed. You will watch your colleagues get laid off in one round after another until the group is right sized. If you are in the bottom 25% of your class, you will be the one who is laid off. Most people think that analysts and associates are exempt because they are cheap. But that is not true. Everyone is fair game. You will count your lucky stars everyday to have a job, compared to your friends who got laid off and are desperate to find any job so that they can pay rent. If you are lucky enough to survive, you will move on and look back on this time as a hiccup. If you are let go, this will derail you for a while but you eventually will find your way. Eventually the economy picks back up and the entire cycle starts all over again. That's what happens.
What happens to incoming or brand new analysts?
LIFO
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