Counterparties: The job destroying financial recovery
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Finance is in the midst of its very own jobless recovery. The money side of things is going great: the S&P 500 is at its highest level since 2007, and banks are producing astonishing profits, both dull and less dull.
Bank employees, on the other hand, aren’t faring so well. Commerzbank today announced it’s shedding up to 6,000 jobs. UniCredit is cutting 1,000 jobs in its German unit. Lloyds has announced 1,300 job cuts this month and Barclays is jettisoning 2,000 workers.
As Bloomberg’s Michael Moore points out, Wall Street’s bulge bracket is slimming down. UBS is ridding itself of 10,000 employees and closing its fixed-income business, while RBS is getting out of the equities, advisory, and equity capital markets businesses. It’s estimated that more than 500,000 financial sector jobs have been lost in the US and UK since 2008.
Matt Yglesias writes that glee is the wrong response to this trend:
The financial sector isn’t all moustache-twirling fatcat CEOs. Lots of people work at these banks in lots of different kinds of jobs, and nobody likes to see anyone lose theirs. But at the same time these waves of layoffs… emphasize that to a perhaps larger degree than is generally recognized, the financial sector really is shrinking.
If you still have a job in finance, then, now is maybe not the time to complain about barely getting paid more than minimum wage. — Ben Walsh
On to today’s links:
Morgan Stanley sold a security its own employee called “nuclear holocaust” – Jesse Eisinger
“Nobody knows anything, every trade has two sides, some people are wrong ex post” – Matt Levine
Davos as a “positional good” – John Cassidy
“The corridors will be renamed ‘happenstance alphazones’” – FT
“The central bankers who saved the world economy are now being told they risk hurting it” – Bloomberg