Could This Be It?

There seems to have been a subtle shift in the wind here at the bank. Go back a month, and there was naked fear in the air about imminent job cuts - in no small part fueled by stressed managers making unsubtle references to resource unavailability and performance limitations. And vicious rumour mongers like myself.

Yet there seems to have been a surprising turnaround in the last fortnight - at least here, I can't speak for other banks busy absorbing huge losses and laying off thousands. From what I can determine from various trusted sources, it seems the bank has postponed plans to lay off any more people. That in itself is significant - from top to bottom now, we have shed around about 22% of headcount which is certainly a lot.

The economy is cyclical (Gordon take note, a 10yr boom will not be followed by another one), and one effect of a particular sector going into downturn first is that the impact of this ripples outwards to the rest of the economy like a bomb exploding. I had many a bemused discussion in the last 18mths talking to very intelligent (home loving) bankers, who were coming out with ridiculous views that the London housing market was somehow "immune" from any downturn.

In this case, we in financial services have now weathered a 20 month storm since Bear Stearns' nationalisation first shook the financial world - the first significant job cuts coming from late 2007. It seems reasonable that we are therefore going to hit the bottom first too, and reach a period where things stop getting worse and headcount (and performance/earnings) stabilise. Timing is so difficult, but I am going to call us reaching that period across financial services in around 6-9mths, with us reaching the bottom of the markets in Q3 2009.

Otherwise on a work social last night, I took the opportunity to find out more details about the current talk amongst Prime Brokerage here, that we have inadvertently gotten ourselves caught up in this whole fiasco relating to yet another investment shark, Allen Stanford. Not directly of course, we would be no more likely to entrust our own funds to the financial equivalent of an East End used car salesman as we would have given a penny to Bernie Madoff.

No, the problem is that yet again Private Wealth Management have played the 'not my problem guv' card. Whereas before we had a commendable ban on any trading activity with Madoff's ponzi scheme, we seem to have let a number of our cricket-loving HNW's (high net worth individuals) go and place funds with him. As you can imagine, the internal impact has been the usual internal cover-up for now, so not much is being openly said but it is difficult to imagine we won't be openly mentioned in the press in connection to all this soon enough.

I wish I could say I was bothered, but previously market shocking stories are becoming a daily soap opera nowadays. Is it just me or is the collapse of the financial system absolutely hilarious?