Banker Depressed

An article from Bloomberg that was depressing. See not all bankers are living large....


Nov. 22 (Bloomberg) -- John Brady, co-head of MF Global Inc.’s Chicago office, was having a vodka cocktail at the Ritz- Carlton in Naples, Florida, overlooking the Gulf of Mexico, on the day his company reported its largest-ever quarterly loss.
"Wow, the sun just set," Brady said to his wife and two colleagues attending a conference with him, he recalled in an interview. "I hope it doesn’t set on MF Global."
A week later, on Oct. 31, the firm led by former Goldman Sachs Group Inc. co-Chief Executive Officer Jon Corzine collapsed. Brady and 1,065 colleagues joined a wave of firings that has washed away more than 200,000 jobs in the global financial-services industry this year, eclipsing 174,000 in 2009, data compiled by Bloomberg show. BNP Paribas SA and UniCredit SpA announced cuts last week, and the carnage likely will worsen as Europe’s sovereign-debt crisis roils markets.
"This is something very different," said Huw Jenkins, a former head of investment banking at UBS AG who’s now a London- based managing partner at Brazil’s Banco BTG Pactual SA. "This is a structural change. The industry is shrinking."
Wall Street rebounded from the financial crisis of 2008 with the help of unprecedented government support, including loans from the U.S. Federal Reserve. Goldman Sachs posted record profit the following year, and bonuses paid to securities-firm employees in New York City rose 17 percent to $20.3 billion, according to New York State Comptroller Thomas DiNapoli.
‘Nothing There’
Now, faced with higher capital requirements, the failure of exotic financial products and diminished proprietary trading, the industry is undergoing what Steven Eckhaus, chairman of the executive-employment practice at Katten Muchin Rosenman LLP, called "a paradigm shift." The New York attorney, whose clients have included former Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan, said he has stopped giving his "spiel" about inherent talent leading to new work.
In interviews, a dozen people who have lost jobs at firms including Societe Generale SA, Royal Bank of Scotland Group Plc and Jefferies Group Inc. described a grim banking landscape that also includes Occupy Wall Street protests against unemployment stuck above 9 percent and income inequality.
"These are by far my darkest days," said Scott Schubert, 49, who was dismissed in late 2008 as a mergers-and-acquisitions banker at Jefferies, a New York-based securities firm, and has been unemployed since. "It’s harder and harder to look for a job and feel that there’s nothing there."
HSBC, BNP Paribas
Banks, insurers and asset managers in Western Europe have been hardest hit, announcing about 105,000 dismissals this year,
66 percent more than the region’s losses in 2008 at the depths of the financial crisis, Bloomberg data show. The 50,000 job cuts in North America this year are more than twice last year’s and fewer than the 175,000 in 2008.
Almost every week since August has brought news of firings by the world’s biggest banks. HSBC Holdings Plc, Europe’s biggest lender, announced that month it would slash 30,000 jobs by the end of 2013. In September, Bank of America Corp., the second-largest U.S. lender, said it would cut the same number of jobs. Both banks are trimming about 10 percent of their employees. Last week, BNP Paribas, France’s largest bank, said it will cut about 1,400 jobs at its corporate and investment- banking unit, and UniCredit, Italy’s biggest, said it plans to eliminate 6,150 positions by 2015.
"It’s a once-in-a-generation challenge," said John Purcell, founder of London-based executive search firm Purcell & Co. "Everyone who has worked in the City since 1985 will have no idea of how to cope with this level of dislocation."
Panic Attacks
Neil Brener, a psychiatrist whose patients work in London’s City and Canary Wharf financial districts said the stress is contributing to panic attacks, binge drinking and chest pains.
"Because there are fewer jobs, people are unhappy about being stuck," Brener said. "They don’t have options about moving, and there is a sense of feeling trapped."
London hiring could be frozen next year, according to the Centre for Economics and Business Research Ltd. Headcount in the City and Canary Wharf may fall to 288,225 by the end of the year, 27,000 fewer than in 2010 and the lowest since at least 1998, when there were 289,666 jobs, according to the London- based research firm.
Wall Street won’t regain its lost jobs "until about 2023," Marisa Di Natale, an economist at Moody’s Analytics in West Chester, Pennsylvania, said in an e-mail.
Second Time
That’s not encouraging for Michael Reiner, 44, who lost his job in June as a credit strategist in New York for Societe Generale, France’s second-largest bank, whose shares are down 60 percent this year. When he called his wife to tell her the news, she was home watching "The Company Men," a film about corporate downsizing, he said.
It wasn’t the first time Reiner had lost a job on Wall Street. He worked at Bear Stearns Cos. for 14 years until the firm collapsed in March 2008 and was taken over in a fire sale by JPMorgan Chase & Co. He said he was happy to have some time off with his family and go to Little League baseball games.
When he began looking for a job, he "wanted to find a place for the next 14 years," he said. A recruiter brought him to Paris-based Societe Generale. It didn’t last that long.
It’s harder to talk about losing a job the second time, Reiner said. "There are a lot of people I haven’t told."
Opportunities for employment "evaporated" as the European debt crisis escalated, he said. Now he spends his time going to his daughter’s field hockey games and managing his investments.
He’s planning to make maple syrup from the trees in the backyard of his home in Briarcliff Manor, New York.
‘Fruitless’ Search
For Schubert, the former Jefferies banker in his third year looking for work, the longer he’s out of a job, the harder it is for him to tell his 10-year-old son to do his homework, he said.
"It might seem outwardly to him that I’ve given up," he said in an interview this month from his four-bedroom home in Glen Ridge, New Jersey. "I can’t come to the table and say, ‘Well, when you were five, I worked nonstop.’"
Schubert, who received a master’s degree in business administration from New York University in 1989 and was a managing director specializing in middle-market M&A deals at Jefferies, said he wasn’t surprised when he lost his job in 2008 during the financial crisis. He thought unemployment would last
12 months at most.
"The first year out was fruitless," he said. "There wasn’t much hiring going on at all."
By the middle of 2010, more potential employers seemed interested, and he felt "something was imminent," he said.
Nothing happened.
This year, he has become increasingly disheartened by bad news on Wall Street, and it’s more difficult to stay in touch with former colleagues as time goes by, he said.
Hurricane Irene
On the August weekend of Hurricane Irene, training to coach his son’s soccer team alongside younger fathers, being "overly competitive for a man of my age," Schubert twisted his right knee, he said. He aggravated the injury doing yard work and worries how much his health insurance will help, he said.
While his investment choices haven’t been "too terrible,"
he will consider selling his house if he doesn’t find a job.
"God, I hope it’s in the next six months," he said.
Hetal Patel, 44, a foreign-exchange trader who worked at London-based Lloyds Banking Group Plc for more than 20 years until last month, said he doesn’t plan to look for work until early next year, "when budgets become clearer and perhaps conditions improve."
Shares of his former company, controlled by the British government since a bailout in 2008, have fallen 64 percent this year, and the bank has posted a pretax loss of 3.86 billion pounds ($6 billion) in the first nine months. It announced 15,000 job cuts in June.
RBS Cuts
Another lender backed by the U.K., Edinburgh-based RBS, has announced about 30,000 job cuts, including 2,000 this year, since receiving the world’s biggest government bailout in 2008.
Its shares are down 50 percent in 2011, and CEO Stephen Hester said Nov. 4 the investment bank "will have to shrink further."
Tim Leary, 29, a director in high-yield and distressed trading, lost his job there on Nov. 7. After he got the news, he called his wife to say he’d see her and their 4-month-old son for breakfast.
He drove back to Manhattan from his office in Stamford, Connecticut, and put together a resume for the first time in years. He said he plans to spend "a fair amount of time figuring out what the landscape is" before starting his search.
Falling Bonuses
"Unfortunately, the industry always seems to get it wrong and they over-hire," said Philip Keevil, 65, a former head of investment banking at S.G. Warburg & Co. and now a partner at New York-based advisory firm Compass Advisers LLP. "They are over-optimistic and then periodically throw large numbers out."
Morale on Wall Street and London is "probably as bad, if not worse" than it has been in decades, said Keevil.
Wall Street bonuses are expected to fall in 2011 from the $128,530 average last year, DiNapoli, the state comptroller, said in October. Even so, when Goldman Sachs set aside 24 percent less to pay employees in the first nine months than in the same period last year, the amount, $10 billion, was equal to
$292,836 for each of its 34,200 workers as of Sept. 30. That’s nearly six times the median household income in the U.S., where
49.1 million live in poverty, according to Census Bureau data.
Quitting for Quito
Wyatt Laikind, 26, made three times as much in his first year out of college working at Citigroup Inc. as his single mother earned when he was growing up in western Massachusetts.
"It was like winning the lottery to get that job," said Laikind, who worked as an associate on the New York-based bank’s high-yield credit-trading desk.
He got a job on Wall Street because he "was under the impression that it was a more meritocratic environment," and "my hard work and intelligence would be paid off," he said.
At first, he liked the excitement, he said. Then, after financial regulations curtailed proprietary trading, the job became "less appealing." He said he didn’t like smiling at clients while having to figure out how to profit from them.
In July, after a vacation, he called his boss to quit, he said in an interview from Quito, Ecuador, where he is now working for Equitable Origin LLC, a start-up that offers a certification system for oil exploration. His salary is less than 5 percent of what he made at Citigroup, he lives with intermittent hot water, and he was robbed at knifepoint last month, he said.
"I feel happier on a daily basis," Laikind said.
Sagging Mattress
His tone was different in a later e-mail.
"I wasn’t brought up in luxury, so I like to think I can tough it out," he wrote, describing the sagging mattress he slept on in jeans and a hooded sweatshirt to stay warm. "But I may have to give it up and try going back to finance soon."
If he does, it won’t be easy.
"Until now, at many firms, a lot of investment bankers have been convinced that we are living now in a limited period where things are a bit more difficult and afterwards the old world will come back," Kaspar Villiger, 70, chairman of Zurich- based UBS said in an interview this month. "This illusion has now vanished."
Increased capital requirements agreed to by the Basel Committee on Banking Supervision will limit banks’ use of borrowed funds to boost profit, lower their return on equity and likely reduce executive compensation, analysts say. High leverage "was the juice in the system," said Ilana Weinstein, CEO of New York-based search firm IDW Group LLC. "It’s gone."
Boxer Shorts
For Brady, 42, the vanishing point at MF Global arrived after he returned to Chicago from Florida. He thought the New York-based futures brokerage would "weather the storm," even as Moody’s Investors Service cut its rating and shares plunged, he said. He got word that another company would buy the firm while at a Talking Heads cover-band concert and celebrated with a friend by drinking Anchor Steam beer and shots of Jameson.
He woke on Oct. 31 at 4:40 a.m. and searched for deal reports on his phone while standing in his boxer shorts with an electric toothbrush in the other hand. He didn’t find any.
The acquiring firm, Interactive Brokers Group Inc., pulled out of the deal after a discrepancy in client accounts surfaced, and MF Global filed for bankruptcy later that day.
At first, Brady thought his company would survive, he said.
His wife thought he was in denial. His mood changed when he was sitting in the home office adjoining his bedroom, looking at the value of his holdings.
"My Fidelity account looks like my bar tab from just a week ago," Brady said.
All Fired
On Nov. 11, a human resources executive asked colleagues on Brady’s floor to gather by his desk, which looks out on the Willis Tower, the tallest building in the U.S. They were all fired. She told them to show receipts for large personal belongings to the plainclothes security guards by the elevators, and that checks would be sent in the mail, Brady said. Someone asked if the checks would bounce. She said she didn’t know.
Brady, who said he wasn’t aware of the size of the bets MF Global made on European sovereign debt, wrote to clients this month saying he’s looking to join a firm that believes "integrity and honesty are the single most important ingredients to success." He said last week he is optimistic.

My angel, the roar and losing my mojo

I have been asking myself recently why i cant write or find the spark to write. And when i am honest with myself, i realise that this lack of spark is at work, at home and i am coasting. I hate coasting.

This is effecting how i am interacting with the relationships around me. I am not functioning optimally.

At work, i can do the little but seems sufficient to perform at what is expected of me by my peers and bosses. That does not say much about my bosses that i can coast and still be seen to be performing. I expect more from myself and for the last few weeks or months, i have been drained and slow.

At home, i think i am ok but i realise that i lack patience or the energy to be proactive.

Losing my mojo can be seen at my lack of energy at home, the slow pace i function at home and in my health. Again, i have hit my highs in terms of weight and have yet to take the steps to correct my health, work and home/family matters.

I was lost and coasting.

But yesterday evening, again, my angel has showed me the way. Ilyana's swim teacher has decided to certify all her students. Ilyana had to undergo a swim test and she was very anxious the night before but Yaso told her clearly what she needed to do. And in the morning, Ilyana met with her teacher so she could give her one last lesson on what would be required. Ilyana needed details and a plan and direction on what was expected of her and then she was ready to deal with it. She learnt Planning.

At 6pm, i went to the pool and Ilyana was ready for her swim. Lines were crossed and Ilyana was to have her test at 5pm but we were informed 6pm so she had to do her test with others who were doing the Level 5 assessment while Ilyana was still at Level 4.

She started off with 2 laps (50m) of free style, then 1 lap of butterfly and then 1 lap of backstroke, 25m of dolphin. She looked so tired but she did it all. She paced herself so well. I knew she was tired as on her backstroke, she could not keep her lane and moved from lane 1 to lane 6. She did not stop. She kept on. She was Persistent.

Then there was the pajama test and we realised that we did not bring her pajamas down. We did not Plan well. We ran up to the apartment to get her pajamas but what we rushed to bring was too big and it kept falling off. She had to first wade with her hand above the water at the deep side of the pool (12 - 14ft). The poor girl had to keep one hand above the water and with the other, she held the falling pants up. Then after passing that, she had to dive and retrive a pen from the bottom of the pool. Again, the pants kept ballooning up restricting her dive. She had to retie a knot in the pants and she dove in again and again. She never gave up and finally succeeded after her 5th try. She must have been so tired. She never complained about the pajama or blamed anyone. She fought and Succeeded.

I thought that would be the end but then she had to show her turns. Freestyle and then somersault and push off from the wall. Butterfly to the wall, turn and two strokes back without coming up for air. She came to the wall but she could not make her turn. She kept on and on and in the end the tester saw her will to get it done and stopped her and started talking to her and asked her teacher to also come over and help her. All the other kids had passed and were getting their badges and certificates but Ilyana was still in the pool. It was by far the most stressful 7 minutes i have ever gone thru. But Ilyana did it. It was not as good as the other kids but she never stopped. The tester leaned down and gave her a high five and i started to breath again. She was my angel and i was so proud.

That day i learned that we have to plan, we have to be persistent and we have to fight to succeed.

But that night, i also had one more lesson but this time from my baby doll. When Ilyana and i got back to the apartment, Ilyana was so tired and needed attention. I was with Sahana and when Ilyana came out, she asked for my time and i obliged. What i did not realise was that Sahana felt cut off. Later i found Sahana in her room reading a book by herself and she had her angry and crying face on.

Her normal reaction would have been to throw a tantrum but my baby doll is growing up. She did not whine but when i entered the room, she roared at me and rushed to me. I did not know whether she was going to hug me or punch me. I held her and then she calmed and told me why she was upset. She took Action.

I realised then, Stop Whining and get in Action and ROAR like a 5yr old.

For my Angel,

you teach but you doubt

you inspire, and persevere

you succeed, never easily

You will be my direction

For my baby doll,

you Roar, you shine

you laugh, you are bright

You will make me Roar

Times are a Changing

Recently, i was asked a very interesting question - if US finances are in such a bad shape, why does USD appreciate in times of risk aversion. This to me was a very interesting question and its a question i have to deal with daily in my role as a local markets trader.

My reply to this friend and to some others are attached but the message is the same - Times are a changing.
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Your question on why USD up was the RIGHT question. No one in KL got that.

Basically, the speculative money now borrows in USD and invests in risky assets - equity, bonds in other currencies. So when there is risk aversions, these guys sell their risky assets and buy back USD to pay their USD borrowing.

Also, there are two types of risk aversion - Perception and Real (my own terms...haha).

Perception Risk Aversion (PRA) - market panics and risky assets get sold off and USD strengthens but then things move back or bounce back because of some positive moves. This is what happened from 2006 to 2008.

Real Risk Aversion (RRA) - is market panics, risky assets get sold off and USD strengthens but then an event happens (2008 was Lehman failure), and the risk aversion actually led to a funding crisis where banks did not want to lend to one another. When the banks stopped lending, importers and exporters could not get Bank lines or Letter of Credits to facilitate trade, and trade crashed. In RRA, everything breaks, Equity does a big selloff, property sells off and USD flies as capital is pulled back.

Risk Positive (RP) - From 2009, market moved back to a risk positive mode and here people borrowed USD all over again, and started selling USD to buy risky assets in other countries. Also, perception of USD changed where players now felt that USD had only one way to go - DOWN!!!. This carried thru to 2010.


Where are we now?

My view is if we try to put whats happening now into context of that 2006 - 2010 period, we are now in mid to late 2008 where we saw a lot of volatility but news of things getting worse and worse was coming out with occasional bouts of positivity until the EVENT happens. What that EVENT will be, i am not sure or it could just be a multiple of Events - France downgrade, Greece default, massive riots in China..who knows. But the strains are there.

What will happen?

In the near term (say next 3-6mths), markets will be generally negative with bouts of positivity ie you will see volatility but negative moves should be bigger than positive moves. USD should see more strength in the near term. If the Event(s) occur, you will see a big Negative move like we saw in 2008 and govts will try to prop things up as much as possible. My view is that they wont be as successful as they were before. There will be a sharp slowdown in business activity across all boards (worst hit will be financials) and then things will pick up but at slower pace to what we saw in the 2009 - 2010 recovery.

Will Malaysia be different?

My main issue with Malaysia is they lack a credible business plan or business focus. They cant compete as a low cost manufacturer as they dont have a large labour pool. They dont have a strong enough educated pool for high skill manufacturing and their services/tourist sector is growing but too slow to make a difference in the next 5 years. Malaysia's main wealth and growth is now commodities. So if i am right and we go through a sharp drop in buisness activity and then a very slow recovery - commodity prices will stabilise and maybe trend lower. In that situation, Malaysia will not benefit. But if commodity prices recover faster than expected, Malaysia will do well. So thats the call - how will oil and commodities do? That will determine how well Malaysia does. I cant say for sure what will happen on commodities but my bet is on a drop in prices by at least 30%-40% and then a stabilisation of prices.

What you should do?

Focus on growing your customer base and business growth. Coz if you get thru this next 2 years, you will be stronger than ever. This is what happend with business that started in 2007. They nearly went under in 2008 but then did extremely well 2009 - 2010 and now have adequate buffers to get thru the next down move.

Keep liquidity near. try to bring your payment terms close or get long term bank lines and borrowing in place once you reach a size to do that. Keep cash ready and invest only in your business.

Near term, USD will see higher prices but post that Event(s), USD is going to weaken considerably so if you receiving income in USD, try to push for a currency closer to your cost ie MYR or IDR. OR, whenever you receive USD only keep a small proportion in USD, keep the rest in your base currency. I would suggest not keeping more tan 20 - 30% of your cash in USD.

Of course, i could be wrong as like trading, everything is based on what you think will happen and the more info you have, the better your chances to be right. Currently i am 70% sure that the outcome will be as i say - so pretty committed to that view. Will let you know if that changes.

For now, getting liquidity and managing your cash to get thru the next two years will be key as you continue to invest in the business. Its a fine line you will have to face - spend money on the business which reduces your liquidity NOW but adds revenue later. Here, only you can make that call but my bet - go ALL IN......survive the next two years, your business is going to be growing from strength to strength.

Good luck
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what i am convinced about is that if you see the growth in the last two years, its basically been a growth about financial assets - property, equity, bonds etc. Its been very little about real growth - save maybe for Apple but thats not enough - we need new growth areas, new businesses outside of services. I think the slowdown will be good in the long run but capital has to move away from financial assets and into real business - energy efficiency, increasing productivity, alternate energy.

Its interesting times and thats what i said about 2006 - 2010 but maybe the slump in 2008 was just delayed till now and now we are actually heading to real downturn and real changes. Creation from destruction and when people look back - maybe they will look at 2006 - 2014 as one period.

I am not being pessimistic. In fact i am optimistic about the long term but in the near term, be cautious of finances, focus on your business and build multiple streams of income (if you are in business) and if you are a salaried worker, keep expenses down as i think incomes will actually go down or stabilise at these levels and not move up. My whole goal from here is to build a proper business (ie sustainable income) for this bank and am achieveing that BUT i take nothing for granted and am now keeping at least 1yr of cash as a buffer to cover expenses and maybe even 2yrs.


Upon us all a little rain must fall - Led Zeppelin

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be prepared, be productive, be relevant