Wednesday, March 19, 2008

A Bad time to Be a Banker

The US Federal Reserve moved in as a saviour to stop the downward tirade of the stock markets by cutting 0.75% of key interest rates in the wake of the all the misfortunes in the world wide markets. Things indeed seem to have bettered a bit. The stock markets world wide have bounced back significantly. But the question for the moment is "How long will the party last?"

Experts feel that these kind of Fed cuts are fine as far as they are only a stimulus package. Not if these can become the sole backbone of good times. They fear that the environment of rising inflation is not the best for such cuts. Inspite of all that partying today when the markets closed, the fear of recession still lurks!

The fear for the moment is the worst for those working for banks (large or small!) in the US and UK. The fall of Bear Searn has probably triggered the panic already!(Read :The Fall of the Bear!) Its hard to digest that a bank as established as Bear Searn could not manage to convince other banks to loan it money to bale out of its hedge fund crisis. The condition seems tense and the banking districts (mainly in London and New York) are waking to a new reality. The reality of losing jobs.

An official forecast predicts the loss of atleast 10,000 banking jobs by the end of this year in UK alone. Already several employees have got their pink slips in various banks including Citigroup , Morgan Stanley, Merrill Lynch. The dot com burst in 2001-2003 saw atleast 20,000 banking jobs lost in 2 years. Bankers feel that this recession could be worse.


Sita said...

Recession is a nightmare for all. As you had said, its better we gear up for it and be prepared.

vijayan said...

Morgan & Stanly has gone on record that they have bettered their own expected level of profit for the first quarter.

Interest soaps can at best serve a short term cause.Cutting jobs will not help the cause since it will not help the retail sector.

So don,t we now realise once again free markets have the built-in tag of uncertainty.

Get somebody to dispute this theory.