Jobs lost.

You're such a douche. LOL
You really do crack me up.

dco, do you need to post bearish comments in EVERY possible thread? What else do you do during the day? Everyone on this blog, well most, sees / hears everything going on in this market and economy.

Terrible and scary would be a true run on LEH. let's hope not.

these doom and gloomers are worse than the "manhattan re will go up 30% yoy forever" crowd. Its the same euphoria but in reverse. people just refuse to see the forest for the trees. its a psychological phenomenon, really. and thank god for it because thats where all the money is made playing otherpeople's fear.

these "i'll never buy" people missed out on what may be the biggest bull r.e. market in our lifetimes and rather than kick themselves for doing so, they now at the end of it want medals for being such geniuses. Its amusing really.

I posted this question in an earlier unrelated thread, but how many of you are seeing all these cuts going on? I work by Wall St (in healthcare though) and have yet to meet a single person affected. Obviously they're going on, I'm just trying to gauge what other people are seeing. As I said before, that 175k number that gets tossed around seems quite high.

blw, i agree with you. but we work in the same sector. but i am not seeing blood in the streets. not even in the hallways.

bjw2103- You're right everything is great and no one is losing their jobs.

there are definitely job losses on the street. take a walk around your structured products area if you still have one. or leveraged finance.

No one said everything is great. We said there are sectors of finance doing well. There are job losses all over. Yet, other places are fine.

bjw2103,

let me tell you how Wall Street works: employees are paid a salary + bonus. The salary is part of the yearly budget, the bonus is a percentage of revenue (a pool to be divided amongst the bonus-eligible). You are eligible for a bonus if you are employed at the time bonuses are handed out (Jan-Mar 2009), although usually once you are told what your bonus will be (Dec 2008) you are going to get it unless you quit. So, there is no reason for Wall Street to fire anyone, even if they're not doing anything, until the fall, when the budget for 20098 is set and the bonuses for 2008 have to be allocated.

Employees are the single largest expense for Wall Street. But a firm can't realize the savings until the 2009 budget and 2008 bonuses are set.

As John Mack said back in the 90's, "everyday the firms assets walk out of the building". In the fall, those assets will walk out and not come back.

80sMan- That is the most useful information I have heard on this site. It makes total sense. That coupled with, those laid off already, not reflected in the govt unemployment numbers. Will cause the unemployment number to continue to rise as they start be become eligible for benefits. Jobs will sinjk the NYC RE market.

And then jobs will save it a few years out. The jobs have always been here and they always will be here, notwithstanding the current downturn. GS ain't gonna fill that building with mannequins.

dco - I don't get the snarkiness. I asked a question, get over it.

totallyanonymous, Wall Street is used to hiring and firing. So are the seasoned employees. It's no big deal. Wall Street will rebound with the following basic three-part strategy:

1) Tell everybody about a great way to make a lot of money
2) Tell everybody how much money is being made
3) Tell everybody there is still lots of money to be made, get in now!

Works every time. I can't wait to see what's hot for 2011

I can't wait till 2018 when dco will have missed the boat and will be blogs wailing and gnashing his teeth.

> these doom and gloomers are worse than the "manhattan re will go up 30% yoy forever" crowd.

No, they're not... not even close.

And its certainly not accurate to call it "doom and gloom" when its ACTUALLY HAPPENING. This isn't "wall will do this" or "the economy will do that". We're talking about what is actually happening right now. The only debate is on the actual numbers, is it 50k or 100k layoffs, etc.

This isn't doom and gloom, its REALITY.

dco, when I last looked, at a typical big time Wall Street shop each employee was counted as $350,000 in the annual budget (salary, office space, benefits, electricity, etc...). So if a firm lays off 250 people it saves $87,000,000 for the following year. Severance packages are taken out of some other part of the budget (one time non-recurring charges?) so they are usually generous (last years bonus plus 6 weeks salary for every year served). Unless the firm is bankrupt...

> So if a firm lays off 250 people it saves $87,000,000 for the following year.

When their losses are in the BILLIONS, that doesn't really make a dent.

> severance packages are taken out of some other part of the budget (one time non-recurring charges?)

Thats for reporting to wall street. But they still have to spend the money. And they don't really have it. Accounting tricks are to manipulate your stock price, not save you from bankruptcy.

Or should Bear would have just moved $10 trillion in losses into the holiday party P&L, and then everything would have been peachy...

And DCOs right on on the bigger point.. forget just the mass layoffs. The firms lost YEARS of profit. Their capital is severely depleted. Besides many business lines being down, some will be potentially gone forever. And the new regulation aim to curb their activities is only about to begin. This is the kind of thing that takes YEARS to get through. If Wall Street ever makes it back to the place they've been, you could be talking 10 years.

EddieWilson, Wall Street will strip itself down to bare essentials: borrowing and lending (bonds), issuing stock and advising companies. Morgan Stanley had about 50-60 employees in the late 60's. They did a lot of business. I don't think there were more than a few hundred at Morgan until the 80's.

If thats "recovery", hey, great for them, but NYC is surely fucked. Wall Street was one third of NYC income in 2007 (and thats the direct number, you're probably talking half when you factor in lawyers and everything else that is completely dependent on Wall Street).... even a minor haircut there screws the city and the RE dynamic.

it is "doom and gloom" cause you guys talk like a meteor's hitting the earth. its a crisis sure. a bad one sure. but it will get better. eventually.

Sounds like an awfully good rationalization for investment. Buy a cash flow negative "investment" with leverage so you can break even in 10 years... (meaning you actually lost a SIZABLE amount, for those of you who don't get math).

"totallyanonymous, Wall Street is used to hiring and firing. So are the seasoned employees. It's no big deal."

Your right. It's no big deal when thousands of people lose their jobs and can't afford to pay their bills. I am sure they will all do well living under an FDR overpass.

alpine292, "totallyanonymous, Wall Street is used to hiring and firing. So are the seasoned employees. It's no big deal."

What I meant to say was that this is not the end of Wall Street. I think of the movie "Wall Street" which was incredibly prescient when it comes to the Wall Street mentality: the old timer tells Charlie Sheen "You've had a good run. Enjoy it while it lasts. They never do". Many, many people who have been on Wall Street for more than 10 years have spent at least a total of 1 year unemployed. It's not a spot on your resume to have been out of work. It's like being a race car driver and having wrecked your car on the track a bunch of times. As long as you can drive, you'll find a team, sooner or later. Maybe the dead weight won't come back but skill players are always in demand.

When I worked at a large investment bank many years ago, the senior guys told me "never hold a mortgage because you may not have your job next year". I did hold a mortgage albeit a small one and only for a short period of time.

80sMan-"When I worked at a large investment bank many years ago, the senior guys told me "never hold a mortgage because you may not have your job next year".

That's great the only problem is the high maintenance still needs to be paid.

You know I have to ask you guys something. Am I the only one who thinks this crisis is not a normal downturn. It just seem to me that most people are doing a very poor job of connecting the dots. Really I'm beginning to think that most people just don't get it.

dco, I have some more inside info on Wall Street jobs, a dirty little secret that Wall St doesn't like to talk about: the vast majority of jobs added to Wall Street since 1998 have been in "risk management": front office, middle office, back office, technology and administrative jobs, all in rick management. The stated purpose of risk management is to protect banks from the problems we're seeing at Bear, Morgan, Merrill, Lehman, IndyMac, WaMu, etc... The reality is that risk management generates reports that are only used to convince the auditors from the SEC, Fed and Comptroller of the Currency that the are properly valuing assets and controlling risks. Of course, the guys who actually risk capital never use these reports. And...that's part of what got us here.

My point is that if the banks are forced to stop trading mortgage derivatives and credit derivatives, they can let go 25%-30% of their staff in a week. Since almost no-one in risk management is from New York or has any long term ties to this city, all of these MBAs and PHds and MSs and BSs and BAs will move on to the next industry in the next town (Charlotte, Austin, Boston, Portland, D.C., Europe, China, India). We could see a mass migration of skilled labor in the fall/winter.

That would be awful 80sMan. In fact, those people would have no problem movig because if they go to Charlotte, Portland. Dallas, etc., they can buy a 5,000 square foot McMansion for half the price of a 1 bedroom condo here. Some areas in the city would become an extension of Newark and Detroit.

I think this board has officially become "The Delusional Paranoid Pessimist Blog." 80sMan had some administrative back-office job 20 years ago and he thinks that makes him an inside expert on all things Wall Street.

LICComment, wow, an ad hominem attack. I'm ont sure if your on the offensive or defensive...but anway.

Most of the "cash trading" of stocks and bonds has been automated. The Capital Markets divisions (Equities and Fixed Income) only added headcount for derivatives risk management especially Credit Derivatives and CDO's and Prime Brokerage. Of of the scariest pieces of news is that Miller Anderson, the Asset Management arm of Morgan Stanley, lost money. Asset Management should never lose money. It's a fee business. I have no idea what they were doing but I get the feeling that a lot of lines were crossed that should never have been crossed. Some kind of major remedy is needed.

As far as the future of Wall Street, I'm not worried about it. It will always be here. It promises a basic human need: money.

John Succo’s Mistake (June, 1998)
The trouble started when John Succo, trading manager at Lehman Brothers’ equity derivatives volatility desk, agreed to speak at an investment conference sponsored by Grant’s Interest Rate Observer.

After discussing the pricing of risk and the correlation between equity derivatives and the underlying stock market for a while, Succo was asked a question. “I don’t think my boss is here, so I’ll address that,” he responded. “I don’t think that the people running our firm, our equity floor, have any idea of the things that we actually do, of how we...(audience laughter) I’m serious...of how we hedge, the products that we’re involved with, the amount of risk we take or the lack of risk we actually take.”

He went on to describe a 26-year-old derivatives trader at a big bank who believed that his senior management’s understanding of the risks at the institution was “probably off by a factor of 10.” “And I think that’s probably pretty accurate. I think as I said before, management, if you’re making money, kind of leaves you alone until there is a crisis situation. And I don’t think that’s a way to run a firm.”

Succo then went to some lengths to distinguish his firm from the pack. “My management is a little different. I mean, we all have the same viewpoint on what our role is. We’re here to make markets for our customers. Management understands the risk that I take, because I’ve had this conversation with them. They don’t understand the mathematical background, the calculus, the rate of change, the correlation between various assets that we have. But you know, we put out a kind of risk report every day, where they know certain numbers to look at.”

According to the newsletter, four concerned clients called senior managers at Lehman. One of the senior managers listened to a tape recording of the talk and became convinced that Succo stepped over the line and that he undermined “the integrity of the firm.”

Succo then got the ax.

“I think that in the brokerage industry, there is no constituency for the truth,” concludes Jim Grant, editor of the newsletter.

Sorry, here's the source:

http://www.derivativesstrategy.com/magazine/archive/1998/0698play.asp

In 1998 UBS lost $400,000,000 in equity derivatives. D.E. Show lost $1,000,000,000 I used to think those were big numbers

As Marc Faber has been saying over and over again...

What we've seen so far is just the "appetizer".

The "main course" is still coming and that is the implosion of the quadrillion dollar derivatives market.

We learned in the last month from the BIS that credit derivatives have reached the $1 quadrillion mark which is a jump of $500 trillion in six months.

The NYT, Journal, etc. are all saying the real estate market is not doing well. My question...Why Are People Still Paying Over The Top $ for apartments in Manhattan???

julia, they are not.

that's why we just saw the largest drop in sales transactions in a decade.

demand dropped, sellers are still stuck in "i don't believe" / "denial" mode.

once they sellers understand the reality of the situation, we shall see significant price cuts. history has shown that this takes roughly 3-4 quarters. it takes that long for the sellers to move from the "denial" phase to the "panic" phase in the boom/bust cycle in the asset class of real estate.

i meant "history has shown that this takes roughly 3-4 quarters AFTER demand drops and sales volumes plummets".

> I think this board has officially become "The Delusional Paranoid Pessimist Blog."

Peppered by the "I just sh*t my pants totally missed the market crash so I'll whine on an on and ignore the facts" crowd.

LIC isn't even TRYING to point out stats at this point.

When all the bulls have is "U ARE STOOOPID", you KNOW we've hit the crash...