Back on topic: local NY paper NYPost: Wall Street fear September 2, 2007 -- NEW York's army of fixed-income traders are preparing for a big disaster - as the mess in the credit markets threatens their highly paid jobs and Hollywood lifestyles. Thousands of layoffs - and a collapse in lavish bonuses - are predicted in the coming months unless the markets recover soon. Bill Singer, a noted securities industry lawyer, said the number of distressed calls he has fielded from trading pros and firms in the fixed-income markets - smack dab in the middle of the troubled subprime and CDO sectors - has skyrocketed fivefold in August compared to previous summer months, to about three dozen. The month of August was a rude awakening, he said. "In my 15 years in private practice, the only other time I got this volume of calls was during the market turmoil of 1999 and 2000 and briefly after 9/11," Singer, of Stark & Stark here in New York, told The Post. "The main difference now is that there is a sense that there is no future for these professionals this time around," he said. Singer said callers sometimes seek his advice on their employee rights, which covers touchy areas like big bonuses, deferred compensation and contracts. He said he also took more calls recently from some big fixed-income houses on Wall Street preparing for a potential meltdown, layoffs and a drying up of bonuses. These bond pros take home as much as $250,000 a year - but it is the lavish bonuses that turn them into rock stars. "We are going to have a tsunami in New York City when the big bonuses do not materialize next February and March," Singer said. "These young traders won't have the money to buy the pricey co-ops and condos, the Bentleys and Rolls Royces." "We could be talking about several thousand layoffs on the fixed income front by next April," said Singer. "I don't think people in New York have thought this through. Wall Street is the blood that has been poured on the soil to nurture everything the last few years - and it is drying up." http://www.nypost.com/seven/09022007/business/wall_st__fear.htm
I don't often agree w/ the NY Post, except when they point out Britney Spears is an asshole, however... Yes. What this has shaped up to is , NYC vs. everybody else. They have bribed the politicians with campaign donations, they have lobbyists and lawyers all over the country squeezing States that try to defend their citizens. There pass money around DC like tourists pass lunch after visiting Mexico. Nothing is any different, but this time, they pushed it and it's the CDO crisis that will prove the Emperor has no clothes. The whole securities industry is predictated on using other peoples' money, and squeezing every last dime from that money in fees. And NYC is the benefactor of that money flow. Now, There is no money. It is all at a standstill. Prime Brokerage is the big money maker. What good is it if the Brokers can't get money from the bank. You see GS is going to earn less because a measley 20 bb is tied up. Wait till we find out what they're hiding. This cyclical low may be worse than some others. Everybody has had enough. The knuckleheads on 6th Ave ran amuck, and they've put us all at risk. You guys probably don't remember, but after Vietnam, the market took such a dump because Johnson spent the country ( Guns AND Butter) was the slogan. into oblivian. Nixon devalued the dollar, which killed me because I was GI living on the economy in Europe. But, lo and behold around 1975, NYC couldn't even pay the interest on their bonds. If you catch s some old "Barney Miller's", you'll see it in the shows. Then, Ford had WIN buttons, and then came Carter. the 70's were miserable. From 1968 to 82, the financial industry was in shambles. What do we have now?. An expensive war with no end in sight. Inflation, but the consumer is tapped out. Or, we have no inflation, but health insurance and gas, two huge nuts for Joe SixPack, skyrocket. His biggest asset, his house is either declining in value to the tune of double digits, or, someone else is about to live in it, and the most inept bunch of Politicians since Mussolini ruled Italia!!! And you think NYC is going to go by unscathed??? By the way, you hear only rosy scenarios out of the Street. Every once in a while, Jim Rogers or maybe some independant manager speaks up, but mostly, nothing. The interesting thing is BSC says nada. And what, three weeks ago, Barron's says at these prices BSC is ripe for a takeover. Who is going to bid on that pup when they won't come clean on the damage? Now, summer's over, and there is no denying the facts. Let's see what happens over the month, the worst of all in market terms, and how it plays out. My bet is, after the carnage in fixed income jobs, the equity desks will be decimated. I mean, why wait for the inevitable? Blow them out now, and the bonus pool is divided among fewer people. And then, we'll see NYC real estate get a haircut, and the tax base of NY in property as well as income tax, and then services, and then........ that is, unless they repealed the business cycle, and nobody told me.
Blow them out now, and the bonus pool is divided among fewer people. .................or used to improve earnings/cost:income ratio, but yes that is what they will do. If they do, it is confirmation that Wall St knows this is not the small temporary problem that they, Bush , Paulson, Bernanke etc would have you believe.
Hasnt equity been getting decimated for a few years now? Nasdaq Market making= gone. Salestrading =`being replaced by algorithmic trading, and those who manage to hold onto ol customers attempt to make a .01 or 2 per share... (in other words dying a slow death) even the NYSE is becoming a graveyard with a skeleton crew from what i hear. Only thing keeping it alive is powerful lobbying and only that can hold out for so long..
Yup, Besides that, the top tier firms never got off the cost cutting track since the tech bust. Offshoring, pushing down of wages across the board, cutting back on amenities, infrastructure, etc. It never stopped, neither did layoffs. The real effect will come from all the clueless yuppies who have not yet been through financial industry downsizing. And these are the consumers that are important to NYC, as they don't really save and have a tendency to spend on entertainment, clothing, etc.
The last time there was a downturn (2001) there were 2 industries to take it on the chin hard when there was Wall Street downsizing - the restaurant industry and the sex trades (strippers, dancers, escorts). Many restaurants closed shop or changed program, which is probably why there are so few traditional French restaurants left in the city. People were no longer willing to blow hundreds of dollars on a meal. Now NYC has places charging up to 500/head for a meal. How long do you think that will last?
500/head is totally absurd. The restaurant probably paid $5 for that meal. No need to waste that kind of loot when there is a Wendy's nearby. As for the strippers, they can go work at Wendy's.
first - it's like saying "all those baseball players making 30 million / year". there are none. the most expensive places are masa (350 prix fixe) and per se (250, i think). and per se and masa won't suffer. they're overbooked forever, anyhow, and there will always be people who can afford those places, or want a special evening out, etc. the places that will get hit are the ones which aren't 'world class' and charge 1-2 steps down from world-class. the good affordable places, and the great super expensive places will continue to do well. it's those in-between which will start having more of a problem staying in business. (btw, why not similar, but lesser comments about chicago? see trotter/tru/alinea/moto/avenues for starters. supposedly way better than comparably priced places of nyc)