Wall Street Disillusioned About the Future

 

There is doom and gloom on Wall Street, a feeling that there is no money to be made, and that it is not going to get better. Wall Street pay is expected to fall 30% this year, even more for executives. The economy is stagnant. New rules and regulations will stifle leveraged risk-taking at the big banks. Even if they did not, the big banks are now risk-averse. At JP Morgan third-quarter trading revenue is expected to drop 30% and investment banking fees by 50%. The financial bubble is still deflating.

Americans that had to fork over hundreds of billions of dollars to bail out Wall Street when its high-risk misdeeds backfired are angry.

The day after police halted a march across the Brooklyn Bridge and arrested 700, Columbia University professor and Nobel prize-winning economist Joseph Stiglitz told Occupy Wall Street protestors: “We have too many regulators stopping democracy and not enough regulations stopping Wall Street from misbehaving. We are bearing the cost of their misdeeds. There’s a system where we’ve socialized losses and privatized gains. That’s not capitalism.”

“The future is not going to be like a past we knew. There’s no exit from this morass,” said Charles Stevenson, a hedge fund president and, along with Blackstone chief Stephen Schwarzman and CIT Group chief Jon Thain, a resident of a NY coop that was picketed recently by Occupy Wall Street.

The largest global banks are cutting jobs at the fastest rate since 2008. The securities industry in New York City has lost 22,000 jobs since January 2008, and will lose another 10,000 by the end of next year, according to New York City’s Comptroller Thomas P. DiNapoli. Bank of America has announced 30,000 job cuts, HSBC another 30,000 cuts. The list goes and on and on.

For the survivors, stress levels are high. Young Ivy League finance graduates who expected riches are disillusioned and looking to move, but headhunters are telling them there is no where to go.

“They’re not going to make the kind of money they wanted,” William Hambrecht, chairman of San Francisco-based WR Hambrecht & Co., who designed the Dutch auction of Google Inc.’s 2004 initial public offering, was quoted as saying, adding: “I’m not sure people really have come to terms with the fact that what we had was a financial bubble.”