Wall Street: Boom To Bust – More Layoffs Coming


WS

In the good ol’ days, jobs on Wall Street were plentiful.  There was big money to be made and more than enough choices if one wanted to work in Finance.  Then came the crash of 1987.  The market plunged 508 points in one day; 22.6%, a drop unseen since the great depression at the time.  Thousands found themselves unemployed.  However, even after the crash, the market finished up for the year.  It opened on January 2, at 1897 and closed on December 31, at 1939.  But it took two years to surpass the all time high of 2722 set in August of that same year.  The 80’s and 90’s were the best years in the history of Wall Street.  Many, people became very wealthy during that time.  Things were sailing along until the attack on September 11, 2001, although the market did slowly recover.  Then came the crash of 2008 which made the crash of 1987 seem pretty insignificant.  In 2008, the financial stability of this country came as close to a total collapse as it has in our history.  Many factors were responsible but the single most important one, was the sub-prime mortgage industry.  Individuals with poor credit ratings were given access to loans they couldn’t afford.  But since home prices were on the rise, as they always had been, these careless lending practices were simply ignored.  When home prices began the downward spiral, people found themselves in a situation where their mortgages were greater than the value of their homes.  Not only didn’t they have equity in their homes, they had negative equity.  There are those who blame predatory lending practices, and others who blame the people who accepted the mortgages.  That’s for another discussion.  The collapse saw the demise of two of the most important brokerage houses in the country, Bear Stearns and Lehman Brothers.  AIG would have collapsed if not for the government bailout.  The result of the collapse was tens of thousands of jobs lost; people’s retirements lost in the ashes of the ruble.  While the market has regained much of the value it lost in 2008, Wall Street never regained the total number of jobs lost, and now, more layoffs are coming.  Citigroup recently announced it would cut 11,000 jobs or 4% of its workforce.  Morgan Stanley plans on cutting 1,600 jobs or 3% of its workforce and Bank of America has already cut 17,800 jobs since it announced back in September of 2011 that it would cut 30,000 jobs.  With banks facing tighter, more stringent regulations, this trend will continue.  It will continue until the economy begins to show real signs of strength; unemployment below 6% and growth of 3.5% or higher.  It’s simply not as easy to make fast money when you’re playing by a strict set of rules, hence, banks don’t need as many bodies.  It’s simply about the bottom line.

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