http://money.cnn.com/2008/12/04/news/economy/investment.bankers.fortune/?postversion=2008120505 The tone has changed quite a bit. The job market for bankers has become so somber that even the media has stopped making fun of it. But that should not stop us! Indeed, where will all these investment bankers go? Most of them are completely useless. They cannot read or comprehend financial statements aside from grabbing little pieces of data nor are they conversant enough in financial products to head down the retail path. In the last downturn, it was something of a sport to catch a former Wall Streeter becoming a waiter or bartender. This downturn is so bad that such profiles may not surface. We will just have to wait and see.
http://www.nytimes.com/2008/12/04/health/nutrition/04fitness.html?ref=business I was wrong! But they make it sound so uplifting. Unemployed bankers are now called entrepreneurs with great plans and marketing saavy. True, true.
The credit crisis is partly to blame. But so is the sector's rampant overcapacity. The U.S. financial industry historically has roughly doubled in size during each major technological innovation â railroads in the late 1800s, autos in the 1920s and the tech boom of the 1990s, for example. As the boom years faded and financing needs fell, the size of the financial industry contracted accordingly. But when the Internet bubble burst in 2000, the sector never stopped growing. Instead, it ballooned over the past eight years to around 10 percent of the U.S. economy, puzzling economists. "There was no reason for the industry to grow as fast as it did," said Thomas Philippon, a finance professor at New York University who has studied the financial industry's growth cycles. "The fundamentals just weren't there." His models predict the financial sector will shrink to around 7 percent of gross domestic product, shedding $100 billion in annual wage costs. That would be Wall Street's first contraction in GDP terms since 1933, according to Philippon. http://www.cnbc.com//id/28099428
I could not tell you why the bust up is as bad as it is, but I can tell you that it is very bad. Kids who were thinking that they would sit out the storm after losing their jobs now realize that there is no way for them to hang on to that hope. Rent plus food alone would probably have sucked away all their savings by now. Mommy and Daddy can help out only for so long because their retirement account got hit as well. Pack the bags, load up the car, it is time to get ready for that long drive back to frozen corn fields; back to the world they left behind; back to the person they wanted to forget. No more banking for them. No more Herman Millers to sit on or Bloomberg terminals to fight over. It is time to think about grad school at the local state university and hope that the employment situation improves when they get out because there is nothing that someone like them can do back home. This is a year where the good gets canned and the rich kids hang on. In better times, they would have gotten promoted. Associate, Vice President, Associate Director... each another step up the Wall Street ladder. Never mind the dishonesty; as long as they got the money, they were not going to rock the boat. Alas, oh me oh my! It did not work out that way. The bunions and the minions have to make their way back home through grey skies and falling sleet. Turn your head babe as you cross the bridge to give New York one last look. You came to conquer, but what did you give up in the end?
You gave up nothing but your soul... and in retrospect, your anguish is only that you let it go so cheaply...
If it was just about giving up one¡¯s ¡®soul¡¯, their sense of defeat would not be so total. Who would come to Wall Street and believe that he was going to make the world a better place? You can say that they sold it cheaply, but hey, something is always better than nothing. And now they have nothing. If there was a chance to sell their souls cheaply again, I am sure all of them would do so in an instant and at a discount. These kids, born after 1975, they were brought up to believe that they deserved all the goodness the world had to offer. For most of them, this is probably the first time anything bad has happened in their charmed lives. It is not that they blame themselves, they are simply stupefied at this unfamiliar feeling of pain. How do you deal with the humiliation of having lost so completely when you have been told that you are a winner all your life?
There is a thread about former Wall Street hotshots becoming farmers. That is cruel because such a dream is really beyond the reach of most laid off Wall Street grunts. It takes significant mojo to start a farm these days if you want to make any money and then back breaking sweat equity to build it up. On top of that, you would probably need to go to college just to learn the basics. What do people who are forcibly evicted from Wall Street do? Dog walking seem to be a popular choice. It is freelance and the up market customers are comfortable with a fallen star of one of their own. Tutoring is another especially if you are a girl with blue stocking credentials. Then there is tending bar or opening up your own small business. The problem that most former Wall Street employees face is a form of subtle discrimination. Other people think that you are probably too smart and too aggressive to undertake a $60,000 a year no bonus possible assignment. Plus, you are supposed to be a mega millionaire, why would you need a job? Cramer was right about law school, it is probably the best option available for most former bankers. But I hear that lawyers are getting canned too. Dark days ahead for lots of people. Even if they did save their money, they would need to quickly downsize their lifestyle expectations or that cash will just dribble away before you know it.