Q. How bad is it for people working on Wall Street?
A. We haven’t seen anything like this in the financial services industry, particularly in investment banking but also in the capital markets area. The numbers change every day, but at the end of 2008 the number was that 240,000 had been laid off on Wall Street in an 18-month period. If you’re talented — and there are a finite number of individuals across every organization who are A-plus players — you won’t have any trouble getting a job. If you’re newer to the investment banking field, you’re going to have to look at different types of employment.
Q. Is it just people in investment banking losing jobs or is it also happening in other areas, like private equity and hedge funds?
A. It’s across the board. You haven’t seen private equity being hit as hard as investment banking or the hedge funds. I don’t think a day goes by when you don’t pick up a newspaper and see another hedge fund that’s closing. A lot of these individuals will either reinvent themselves in different areas of the hedge fund world or retire or do something completely different. Therein lies the challenge. What type of industries do you want to go into when you’re being compensated fairly heavily now?
Q. Where do those 240,000 people go?
A. There are a couple of things happening. When I say retool or reinvent yourself, some of the local investment banks in Chicago are recruiting people from New York. That just wouldn’t have happened a couple of years ago.
You’re also seeing people moving abroad. —
But it’s a supply and demand issue. The demand simply isn’t there for all 240,000.
Q. If many of these people were skilled at building complex financial instruments that are no longer in demand, how can they use those skills in other industries?
A. You see a number trying to go back to school. You see a number trying to get into different areas. If you’re intelligent, there will be opportunities. It will just take much longer than it used to. At this time, it could take six to eight to nine months.
But it’s tough because the areas that are looking to recruit and grow right now are energy, things that deal with the environment, pharmaceuticals and some parts of high tech. It’s tough to make a transformation from trading credit-default swaps one day to going to work for a health care company the next. They have to discover what they want to do when they grow up.
Q. Are business schools teaching people to become investment bankers when the world doesn’t need investment bankers any more?
A. There is truth in that. I’m on the board of the Fuqua business school at Duke University, and we were just having this conversation at a board meeting. If you look at all the analytical tools they’re teaching at the University of Chicago or at Wharton, they’re teaching people how to become a great investment banker, but not necessarily how to manage and lead.
Daily Archives: January 17, 2009
I love Greece, its people and its culture and I’ve watched in sorrow as it seemed to go downhill since the magical days I lived in Crete, back in 1972 (magical for me, not necessarily its citizens – the country was under military dictatorship at the time). I don’t as a rule, read communists papers, but this article on the causes of the December riots provides a plausible explanation, neither overwrought nor hysterical. Hey, as I like to say about my own opinions, even a stopped clock is right twice a day.
When George Bush spent $40 million on his inaugural celebration he was castigated for his profligacy at a time when we were at wars and the homeless needed cable -ready television sets. The Messiah’s party will cost $150 million, we’re still at war, the economy isn’t doing so well and now the homeless need digital conversion boxes, but that’s okay because he ain’t the ol’ Debbil’ Bush.
In 2005, Reps. Anthony Weiner, D-N.Y., and Jim McDermott, D-Wash., asked Bush to show a little less pomp and be a little more circumspect at his party.
“President Roosevelt held his 1945 inaugural at the White House, making a short speech and serving guests cold chicken salad and plain pound cake,” the two lawmakers wrote in a letter. “During World War I, President Wilson did not have any parties at his 1917 inaugural, saying that such festivities would be undignified.”
The thinking was that, with the nation at war, excessive celebration was inappropriate. Four years later, the nation is still at war. Unemployment has risen sharply. And Obama pressed Congress to release the second half of a $700 billion bailout package in hopes of rescuing a faltering banking industry.
Obama’s inauguration committee says it is mindful of the times and is not worried people will see the four days of festivities as excessive.
“That is probably not the way the country is going to be looking at it,” said committee spokeswoman Linda Douglass. “It is not a celebration of an election. It is a celebration of our common values.”
Douglass said the campaign sought to keep costs down by having the same decorations at each of the 10 balls, eliminating floral arrangements and negotiating prices on food.
Wow; if this is what they call being careful with our money, just imagine how they’ll care for the extra trillion they’re taking from us this year.
Her prediction – financial services will return to the dull old boring days when the good ones traded at 1 to 1.5 X earnings book value. No more leveraging 30X, no more out-sized salaries and, by the way,higher interest rates. My manager tells me that our office saw a large number of house viewing appointments today so maybe buyers are ahead of those pundits who think mortgage rates are going to fall lower and stay lower.
But sellers might want to consider what will happen if the financial services jobs and multi-million dollar bonuses disappear, especially if accompanied by higher mortgage costs. Nothing good.
And hedge funds? They’re not doing so well either. These guys charged 20% of the profits they earned: no profits, no 20% and no 20% until they earn back their losses, if they ever do. Citadel’s Kenneth Griffin, whose fund lost 55% this year, says he’s trying to stay open. “But he acknowledges that for several years, he will be working mostly for ‘psychic income.’ ”
Griffin will survive, but a lot of junior hedge funders will not be buying $4 million homes in Greenwich in the near future. Looks like the only ones who will will be Greenwich town employees.
Fresh from a near death experience aboard US Air’s LaGuardia/Charlotte flight, PETA president Natale Jarnstadt announced today her organization’s support for unlimited goose hunting around all metropolitan airports. “I looked out my window as we were climbing,” Jarnstadt told reporters, “and just as I was thinking ‘oh, how beautiful all God’s creatures are, great and small’, one of the fuckers got sucked into the engine right outside my window and blew the damn thing up – pow!’
“This is ridiculous,” she continued, “and frankly, so were we. These park poopers have got to go and beginning today, PETA’s gonna do something about it. We’re cashing in our endowment and buying mobile gassing vans which we’ll deploy to parks and airports as necessary. We’re not quitting until Canadian Geese are as forgotten as Passenger Pigeons. Good bye and good riddance! Humans have a right to life, God damn it, and we can’t let that right be jeopardized by flying rats.”
From Ed Fountain, who knows how to caption a picture
From the Bovina Bloviator:
Okay, I can hear you yawning, it’s just another depressing story of a naive artist screwed out of his fortune by unscrupulous entrepreneurs . Well yes, you’re right, sad as it is, the tale is a common one. There is an interesting twist to this account, however, in that one of the villains happens to be the patron saint of semi-musical white socialists of a certain age: Pete Seeger. Styne writes:
“The child of wealthy New York radicals, Seeger has always been avowedly anti-capitalist. Yet his publisher had a deal with Gallo Music: they snaffled up the rights to “Mbube” cheap and in return sub-licensed to Gallo the South African and Rhodesian rights to “Wimoweh”. And Seeger knew Solomon Linda was the composer. He says now that back in the Fifties he instructed his publishers to give his royalties from the song to Linda, and he was shocked, shocked to discover decades later that they hadn’t in fact been doing so. But it never occurred to him, as an unworldly anti-capitalist, to check his royalty statements. It was, on his part, supposedly a sin of omission. Not everyone can plead the same accidental oversight. Having persuaded Linda to sign away his copyright, the relevant parties made sure to slide some forms in front of his illiterate widow in 1982 and his daughters some years later to make sure the appropriation paperwork was kept in order. “
Does anyone have any doubt had Solomon Linda been a rich and powerful Afrikaner rather than a poor black tribesman, Seeger would have been dutifully paying royalties up the wazoo? This is all of a piece for the left: Pay no attention to my wretched deeds, just my words. The reality is in the perception so if you sing “We Shall Overcome” loud and long enough you will be perceived as a friend of the negro by the correct people, your millionaire socialist comrades. Never mind if your posturing doesn’t fool the working Joe, he’s just benighted trailor trash and certainly not worthy of the slightest concern.
Hell, until yesterday, we’d never heard of this 75 year old scamster who took off after stealing millions. But now he gets his fifteen minutes of fame. I doubt Walt Noel will begrudge the youngster he attention – after all, matters Noel will be returning to the front burner soon enough.
While we wait for Walt, here’s more on Artie.
Oh dear: shots of Peg Nadel, Artie’s 39 year old wife before and after learning that her lover/husband was a crook. Such a shame.
Outdoor “We are One Inaugural Concert” scheduled for Lincoln Memorial Sunday. Not that I wish any particular harm to that old commie, Pete Seeger, but at 97, perhaps he’d rethink his plans to perform if faced with 75 mph winds and sleet and snow. And if not well then, Pete, “so long, it’s been good to know yuh”.
Circuit City is being liquidated, at a loss of 30,000 jobs and every penny of stockholder equity. This is the idiot company that fired all its tech-savvy employees and replaced them with minimum wage workers, the better to drive customers away, so its collapse is hardly a surprise. The same genius CEO who devised the “abandon all knowledge” staffing plan rejected a private equity offer of $17 per share in the beginning of 2005. It reminds me of the spec builder who last year refused a bid of $7 million for his unsellable North Street project in January, only to be forced to sell it for $4.5 later that summer. At least his lenders recovered some of their investment – I suspect that, as this year progresses, lenders are going to look more and more like Circuit City shareholders. Ouch.
Former Enron advisor and current New York Times columnist Paul Krugman calls for criminal investigations into Bush administration’s actions over the past eight years. It is the most popular emailed article on the paper’s website and, assuming that these emails are generated by the Time’s typical reader, the left is with Krugman. Why would anyone want to tie up the country for another four years rehashing hysterical theories? Well, you start with the general low IQ of your average leftist, of course, but Krugman at least has the brains of a turnip and surely must know better. My guess is that he, and any fellow sentient beings who follow his logic, know that the Obama administration is doomed and along with it, all the economic nostrums championed by professor Krugman. So what to do? How to avoid being asked to explain this failure? Ratchet up the BDS sufferers, of course, and distract them. From now and continuing forever, it will be all Bush, all the time. Or so he must hope.
We’ve forked over $750 billion to bankers so that they can buy other banks, pay themselves nice salaries and attend conferences in sunny climes where they gloat over our stupidity and their greed.
Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.
I can hardly wait to see what the next trillion goes to.
Windmills will soon be spoiling the view from the Kennedy place as the wind farm project, positioned 15 miles offshore from the fabled champions of the environment’s fabled palatial homes, is approved. Neither Teddy nor his nephew Joe would do more than scowl at reporters but New York Senator -in – waiting Caroline opined, “it’s like, you know, not very nice of them after all the, you know, like sacrifices this family has, you know, done for our country. I’m like, really annoyed, * you know?”
Mary Joe Kopechne could not be reached for comment.
* Correction courtesy of Ed Fountain, who was there
That’s what we’ve been predicting and here’s someone else who agrees.
Get ready for investigators to uncover dozens of more possible Bernard Madoff style frauds. Politco and Morningstar Inc surveyed 1,684 hedge funds that have disclosed their quarterly results for the past 5 years. That’s twenty quarters of results. It seems that 34 of those funds have never reported a down quarter.
That kind of unwavering stability of results was a key red flag that the Madoff investment scheme was crooked. So the odds are that at least some of these funds reporting unbelmished quarterly records have been cooking the books. According to Politico, seven of the firms with unblemished results are connected to Madoff. That means there are 27 firms with results suggestive of completely independent scams.
This is probably already on TV but I don’t watch TV. Here’s a link. Great pilot, terrific response from the ferryboat crew (they arrive 3:41 seconds after the plane first hits) and, you know, the passengers were pretty remarkable keeping their cool. Well done all around, I’d say.
Several readers protested when I attributed to Churchill the quote, “It’s only when the tide goes out that you discover who’s been swimming naked”. Warren Buffet said the same thing last September and apparently that was the first time many had heard that pithy bit of wisdom so they assumed that the sage of Omaha had coined it. Not so, but I’m afraid I can’t (quickly) pin it down with exactitude. I Googled it but the data base has been corrupted by Buffet attributions and I don’t have the patience to wade through them looking for the first use. But there are, buried in the Google search results, multiple citations, all well before September 2008, giving credit to Churchill, George Bernard Shaw, George Bernard Shaw to Churchill, and even (one instance) Eldridge Cleaver.
So there you have it – pays yur money, take your chances. See you at Miacomet on Nantucket or, Retired IB’R, on Gouverneur.
From a friend of mine, 41 years old and just back from bargain-condo shopping in Florida: “I’m from New York and I’m Jewish so I’m going to end up in Florida some day – might as well buy while it’s cheap.”
Maybe. This Bloomberg article doesn’t seem very positive about the company’s prospects.
Jan. 17 (Bloomberg) — Citigroup Inc. shareholders aren’t buying Vikram Pandit’s attempt to salvage the bank by splitting it in two. Nor are they buying the stock.
Citigroup shares tumbled to a 16-year low on Jan. 16 after Pandit, the U.S. bank’s 52-year-old chief executive officer, said he would undo a decade of acquisitions by separating the bank into two units, Citicorp and Citi Holdings.
The problem: Nothing — not $45 billion of U.S. government funds, not federal guarantees on $301 billion of debt, not a pledge to dump non-core assets — can stave off the worst financial crisis since the Great Depression. Already crippled by trading losses on mortgage bonds, the bank faces credit-card losses that surged to a record in the fourth quarter.
“The losses from the investment banking businesses wiped out any margin for error that Citi might have had to be able to weather the storm of the U.S. consumer defaulting on his debts,” said James Ellman, president of San Francisco-based money manager Seacliff Capital LLC.
After initially rallying 17 percent yesterday on news of Pandit’s planned reorganization, Citigroup shares fell, closing down almost 9 percent at $3.50. At that level, it’s below the $3.77 it dropped to on Nov. 21, when the bank entered talks with officials from the U.S. Treasury Department and Federal Reserve over a second round of rescue funds.
They say Citi’s too big to let fail, but hasn’t it already done that?
Citigroup Chief Financial Officer Gary Crittenden said In an interview yesterday that the bank has had “no conversations at all about additional capital from the government.”
Yet another money manager is on the lam. Gosh, we’ve already had a D.B. Cooper type, a fugitive Russian banker, at least two Ponzi schemes uncovered by the S.E.C., one focusing on Haitian -Americans the other on Catholic priests, and the market has only just started to crash! Imagine the fun as the receding tide uncovers these frauds by the dozens. Here’s the latest crook to take to his heels – I’d say he looks too old for a life of crime but Bernie Madoff’s 70 and Walt Noel will be 79 on his next birthday, if he remembers his next birthday. Of course, looking at that former beauty queen wife of Art’s, it’s possible he’s just run away with the counter girl from Dunkin’ Donuts.
Update: Here’s another one, in Idaho! This is getting to be really fascinating.
Peg Nadel and Art Nadel
Music credits: Sunday in New York by Ralph Moore, Who It Is You Are, Savoy Records
The older emergency signaling devices (EPIRGs, or some acronym like that) that told rescuers the location of a ship or airplane in distress will no longer work with the country’s new satellites, but fewer than 15% of users have switched. Surely this is more important than continuing to receive broadcasts of “The Price is Right”, so where is the TARP money to assist these people? I demand action, now.