This is a really long article but the bottom line is it suggests bank bonuses will have to continue to fall going forward due to increased regulation as banks become far less profitable than in the past.
Depressing article. Would love to hear your thoughts.
I have witnessed it first hand.
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The government is trying to legislate risk out of existance and while this period of time is depressing as hell, Wall Street will always find ways to make money and get ahead.
Please feel free to kill yourselves - I'm really hoping for a few jumpers this week...
Well the writing was always on the wall. The fact that the financial industry was responsible for 41% of corporate profits at one time or another is just ridiculous.
And to be honest, despite the complaints of all you monkey's, it is a good thing. How is prop trading beneficial to anyone, and if you stand back and take a view of the world from 30,000 feet, how does it make any sense that MIT PHD's go into finance? Even communism allocates resources more efficiently than that.
nevermind I guess
Again, it really helps to define your life in terms of other things than money. Here's my ranking of things in order of importance:
1.) That which gives meaning to the universe and my life. 2.) Family 3.) Friends 4.) Hang gliding 5.) Work/Money (in excess of meeting my basic needs, of course.)
Despite UFO's claims, the feds tried to do this in the 1930s and succeeded for about 40 years until a new crop of politicians came in and started loosening things a little in the '70s and the really unleashed the floodgates with the Depository Institutions Act in 1980 and Garn-St. Germain in 1982.
Society as a whole is a lot stronger than we are. If it wants to, it can really crush us. It's done it before, and it can do it again. So let's not get too ahead of ourselves.
The best course of action, IMHO, is to define your life and your source of meaning in a way that does not depend on money, and ideally, does not depend on success relative to others.
Back to my rusty honda, hang gliders, and relatively inexpensive but happy life.
That it's depressing to be fucked with and made a public scapegoat when the reality is that EVERYONE was responsible for the bubble? I even worked against Bush in 2004 because I saw him redlining the system and running the country into the ground
That Wall Street is just having a rough time and will come roaring back with a force that no one could have forseen? Not today, not tomorrow, and probably not for a couple of years.....but it always does.
I'm all for good risk management and prudent government action. And this is indeed the case on a large amount of Obama's initiatives. In a lot of ways, the economy just needs a rest.
However, the government and larger culture are fucking with us because they can....even those of us that are just decent people who hold down a job. I get the impression you don't have too much experience in a revenue generating capacity, but every time some idiot politician makes some bullshit law, it gets harder to make a living. It's demoralizing and it's helpful to get through through this by focusing on the truth: at some point, the idiot public will blame someone else for their problems and the heat will be off of us.
Lol at the lack of perspective from so many monkeys out there.
Economic contractions/recessions/depressions are common. The likelihood that you'll have a career without several significant ups and downs: ZERO. Finance is a volatile industry; income thus is volatile as well. Always has been; always will be.
Focus on learning, working hard, and adding value to your team. Position yourself well for the next boom time, and compensation will follow.
This.
A career will go through countless ups and downs. Just go with it and learn from it. Shit, I am not even 30 yet and have had now 5 jobs in 3 different industries (maybe 4). Flexibility and adaptability are great skills to have.
http://upload.wikimedia.org/wikipedia/commons/9/92/NYUGDPFinancialShare… http://1.bp.blogspot.com/_v3_kw7R30BI/SXaQ8QFr1jI/AAAAAAAAAE8/645hTHbyO…
Hope for the best, but economic history isn't your friend on this. And if you want, I can help you get a good deal on a rusty Honda and show you my tricks for getting cheap PBR and Yellowtail wine.
Back in the '80s, increased liquidity was a win-win game. It was market-makers competing against each other to narrow a wide spread. These days, it's a win-lose game. Market-makers in an arms race against their counterparties.
We don't need more traders or market-makers.
Ant, take a look at the graphs. They're quite depressing- at least from a monetary standpoint. The Stern study suggests wage compression for the next couple decades:
http://sternfinance.blogspot.com/2008/11/are-banker-over-paid-thomas-ph…
If money and success relative to others are the things that give life meaning, I'm pretty sure we're doomed. But thank goodness it's only money! Sure, you need to have your basic needs met, and things that make life fun cost some amount of money, but beyond that, money does not make happiness. People, activities, and figuring out where meaning comes from makes happiness.
If things don't turn out like NYU Stern and the financial graphs predict, great! Redefining your life in terms of something more important than money doesn't cost you anything. But if we're really heading for a doozy of a contraction in finance and GINIs over the next 20-30 years, diversifying your sense of self-worth and value as a human being doesn't cost you very much.
I'm not saying it's 100% fair, or that it makes a lot of sense- but what I am saying is that they have the power to do it, they've done it before, and they can do it again- probably not quite as badly as they did it in the '30s, but enough to cause a decade-long contraction and make finance look more like it did in the '50s or '60s than it did in the 25 years prior to 2008.
More than anything, the other 95% of the voters in the country want to see a change in attitude on the street. They want to see the focus return to creating net value for the economy as a whole- and retaining a percentage of that value- rather than on creating value for ourselves by any means necessary (especially separating fools from their money and externalizing risk.)
Honestly, the global unwinding of Graham-Leach-Blilely- separating investment banks from depository banking- is the fairest and easiest approach. The main thing separating the crash of '87 and the 2008 financial meltdown was Glass-Steagall. At the end of the day, the markets knew that the stock market crash could not force the banks that held their deposits and made their loans into bankruptcy.
Shrug. I build stuff that about 1 person in 10,000 is capable of building. I figure it's the same thing for you sales guys, too. We all operate at that level on the trading floor. If they shut down the industry, we'll just have to do something else. It's not a big deal- sales guys will probably get jobs in pharma or another industry that requires specialized sales and I'll probably get a job in the tech sector. We'll still be working on specialized stuff that pays enough to cover most exotic cars with a price tag that starts with 1- or a rusty honda and a compulsive investing habit.Any chance hours are crashing too? Seriously though. How long can lowered IBD wages (extrapolated even lower than currently) be sustained with the same number of hours?
M&A boutiques and some MM banks don't have the extensive S&T operations that BB's do (from which revenue is collapsing), and privately owned banks obviously don't have shareholders to answer to.
To some extent, this has already been happening. For example, through the recession, BMO hired a ton of senior bankers, as did Greenhill.
I don't know that much about the history of financial regulation. All I know is that at one point I saw people enthusiastically doing their thing here and I worked very hard just to get a foot in the door. Honestly, it's kinda depressing at this point and I'm looking forward to better days.
Every day, it seems there's more bad news from the bitter bitch in charge of the SEC (who btw appointed Mark Madoff to a FINRA role), a president who's never been paid on performance and whose personal fortune is $4MM+, and rich media figures who are just kissing the public's ass to hawk a record or movie. I think I speak for a lot of them when we turn on the TV and our honest reaction at this point is "FUCK YOU, I will get mine, with or without your support."
As much as they talk about defending the middle classe, I don't get the impression that they really 'get it' because they are in no danger of ending up on the street or losing their house. Yeah, there's a lot of rich punks that screw people on Wall Street, there's no denying that and I don't like them either. But there's also a lot of regular folks who decided to work a little harder for a little more. We can't even really go against the dems because the GOP will totally fuck us. The overwhelming majority of people I personally know are just going to work, and it's important to look for ways to be optimistic.
Our industry mismanaged the economy. Now karma dictates that the rest of the economy mismanages us.
Are you in danger of losing your house? UFO, everyone knows that the reason bankers have been so overpaid was from externalizing risk. Everyone knew that pay in the industry would be shrinking- we'd still have high-paying jobs, but fewer people would make millions. Yet we got into this industry and the money was good for a while. Now that the money is shrinking, everyone acts surprised.I get the impression that the people who shout and say "F you" are raging against the brick wall of reality. Do you really think significant numbers of people create hundreds of times the economic value the median US worker makes? 10x, sure, but hundreds? I'm all for libertarianism, but risk externalization so that people can make 100x what the mean person makes ultimately at the expense of the US Dollar looks a bit more like a political ideology that most people had hoped WWII sorted out.
When I hear these politicians, I grit my teeth for a while and think about how foolish some of the demagogues sound. Then I think about hang gliding. Or I grab a beer with my friends. Or I start coding stuff. They're not threatening those activities. Since I have money- money does not have me- I can smile and overcome it. Just like others can, too.
The profitability of the industry is gone. Compensation will be low as long as profits are gone. That this even needs to be said is hilarious.
LOL no, I'm not throwing things at the TV or living on the street, and I agree that externalizing risk is a huge problem...if not THE problem...in this business. I also agree that Wall Street fucked up. Despite all of the rhetoric, the new rules fail where it's most important: they can't prevent the banks from destroying the system again.
Personally, I'm new around here and had nothing to do with the recession. I really see this industry as a good move in the long term, even if it kind of sucks right now. I think we're only a few years away from a gradual pickup, and I'd actually prefer to NOT see a bubble any time soon.
"Despite all of the rhetoric, the new rules fail where it's most important: they can't prevent the banks from destroying the system again."
I doubt that any system can ever be made 100% foolproof. However, leverage has been reduced, how has that not made the system safer than before?
I think that the way forward is we have to focus on the win-win. When a geologist discovers an oilfield, the economy wins BIG TIME and the geologist gets to keep and enjoy maybe 1% of what that's worth to the economy. When an emergency room doctor brings someone back from a cardiac arrest, nobody argues with the fact that he earned ten grand that night. And if the industry goes back to win-win, where our clients and the economy as a whole make $5 million and we get to keep a sliver, nobody is going to argue with that either.
When it's clear that the bank's success means the economy's success- like the doctor's success means the patient's success and the oil company's success means consumers' success, we can tell the regulators to shove it. And the only way to get there is genuinely pursuing that.
What, you don't think CDOs were a win-win?
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