Now, I know the current “situation” isn’t good but I think the gloom might have got a smidge out of hand. It would seem that if the Fourth Estate is to be believed we are all losing our job in the next sixty seconds and everything except gold, shotgun cartridges and tinned food is going to zero.
Or answer B: it’s August and everyone except a few disgruntled hacks with a paper to get out is on holiday.
That isn’t to make light of what’s been happening. [I won’t call it a crisis as I seem to have lived through enough crises, hundred year floods and black swans to understand how degraded that particular term is…]
Yes, we have structural economic problems. The man at S&P did show “some spine” by finally telling the world that even a economic superpower has to live within its means (or at least not have a built in default mechanism which they need to politically reset every three years). So the USA isn’t AAA; wow, you do surprise me…do we really think it matters a jot?
Europe needs to bite a most unsavoury bullet (especially if you are German) and understand that in a tribe the strongest will need to defend the weakest, if they don’t want them to be picked off by the wolves, thus weakening the whole. Bring on a United States of Europe bond…short that at your peril you Soros wannabes…
On the employment front (this is a careers website after all) do we really believe that even if 50,000 people are lost to financial services in the next five years that they will never find paid employment again? The press would have you believe so, because it makes great copy, but in reality I can’t think of anyone I know who has been fired in the past five years who has been unable to find something either back in the City or (usually at their choice) outside.
The grim reality is that anyone who has survived the rigors of City-life for any period of time will make mincemeat of the average “real-world” job candidate. Jobs come and jobs go but realistically everyone who was “good” enough to get and hold down a City job in the first place will find something to do, albeit not necessarily at the same level as before.
[I’m sure there are tragic exceptions to the above, but as I say, this is my experience]
Are we really surprised to see thin liquidity and crashing markets? Is it the end of capitalism, or is it just August and most of the risk takers are on the beach catching rays?
I suspect the latter. The seasonal effects on markets are well documented (Bouman and Jacobsen 2002) and can be seen as far back as the 17th Century, so why are we surprised when markets have big moves in the summer months?
My suspicion is that things will look a lot better in a few weeks/months. Yes, we may be in a mini-recession and prices (gulp) might go down, but is it the end of the world? I doubt it.
One last prediction. People will lose jobs in 2011; 2012 will be a tough year for the global economy and thus for employees (for that read jobs and bonuses). 2013 will see another hiring boom like we saw in late 09 and 2010 as financial institutions start the whole merry-go-round all over again…just as they ever did.
The writer works in the City and has been watching business cycles and market manias for 25+ years.