Bankers and economists couldn’t agree on whether the credit crunch was getting better or worse. Banks were ambivalent – they kept on cutting jobs regardless.
The end (of the crunch) is nigh optimists comprised Lloyd Blankfein, chief executive of Goldman Sachs, Alistair Darling, Chancellor of the Exchequer, and Daniel Bouton, chairman of Soc Gen.
Darling said there will obviously be a slowdown (in the general economy) but stuck to his ambitious growth projections.
Daniel Bouton said there’s no credit crunch in France and the situation is improving anyway.
The end (of the crunch) is not nigh pessimists counted John Studzinksi of Blackstone, George Soros of hedge fund notoriety, the IMF, some people at the Fed, and a consultant at Oliver Wyman.
Studzinski said the turmoil will go on until 2010.
Soros said things will get worse before they get better.
The IMF said the current US crisis is the worst since the Great Depression and there’s no end in sight.
Some people at the Fed said falling house prices and financial market turmoil “could lead to a more severe and protracted downturn in activity than currently anticipated”, according to minutes from the bank’s most recent meeting.
James Davis, a consultant at Oliver Wyman in New York, said the current crisis is the worst since the 1930s and net revenues in investment banking might fall 45% this year.
Cutting jobs regardless was theme of the week at Goldman Sachs, RBS, Deutsche and Fidelity.
Goldman Sachs cut people in its mortgage and investment banking businesses and shifted others around internally.
RBS cut around 200 people from ABN AMRO.
Deutsche cut 80 people in corporate finance.
As ever, there may be more cuts to come. Kenneth Moelis, former president of UBS AG’s investment bank, resurfaced on Bloomberg TV to say banks may need to cut 35% of their staff.
Citigroup hired a ‘noted cost cutter’ as as chief administrative officer and head of productivity for its institutional clients group.
Who’s to blame?
Not Alan Greenspan – according to Alan Greenspan. The ex-chairman of the Fed said a recession’s coming but that it’s not his fault.
Ben Bernanke said it was the ratings agencies’ fault.
The Institute of International Finance said it was the banks’ fault.
Bloomberg reported that losses from the credit crunch had reached $245bn since the start of 2007.
Central banks did – or didn’t – try a little more wand waving, depending upon their location.
The Bank of England cut the base rate to 5%.
The European Central Bank held interest rates steady at 4%.
The pound promptly plummeted to a record low against the euro.
Getting out of banking remains a possibility, as long as you’re prepared to be flexible.
The Financial Times said there’s a serious shortage of people who can clear up radioactive waste: 9,000 workers and 4,500 graduates are needed.
The Times said scrap is where the money is: rising commodity prices mean scrap merchants are becoming millionaires.