This is no time for complacency. The US government is now on the 12th day of its self-enforced shutdown and within the next few weeks, some big bills are coming due. If the US government defaults – even a little bit – the outcome could be disastrous for banks which would need to sell or to impose substantial haircuts on the value of their stores of Treasury bills, rendering the financial system far less stable – again.
The US Treasury has been sounding warnings for weeks, pointing out that a default could be ‘catastrophic,’ that negative spillovers could reverberate around the world and that there could be a repeat of the financial crisis of 2008 if the US government defaults. Now, senior bankers are ramping up warnings of their own. Anshu Jain, CEO of Deutsche Bank, has issued the most dire warnings. This weekend, Jain – a former bond trader – said there would be no “life beyond default,” that a default would be a, “very rapidly spreading, fatal disease,” and that it would challenge the very “underpinnings of finance.” On the 31st October, the US government needs to pay $5.9bn of interest on existing treasury bonds, with a further $31bn interest payment due mid-November. The next few weeks will be critical.
Separately, technology companies are solidifying their reputation as places that pay more than hedge funds. The Sunday Times reported that the average employee at Facebook’s UK operation made £735k last year after selling £90m of shares awarded following Facebook’s IPO.
Where the money is now: senior engineering jobs in Silicon Valley. (Reuters)
Ex-Cabinet Minister Andrew Mitchell gets job as strategic advisor at Investec, paying £60k a year for 10 days work. (The Times)
Credit Suisse says it’s found no evidence of manipulation of the FX markets and that they’d be difficult to rig anyway. (Economic Times)
If UBS’s debt capital markets capability grows weaker, potential clients might turn to rival banks for advice about mergers and acquisitions that need to be financed in the debt markets. (Financial News)
Things don’t look too good for Michael Page in EMEA. (Michael Page)
Reduced corporate relocation of bankers is depressing property prices in St. John’s Wood and Hampstead. (Financial Times)
Notes for technical interview questions in investment banks. (Wall Street Oasis)
The worst cover letter ever written. (UndercoverRec)