Recent Blog Posts
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The Times' Rorshach Geithner Story
Apr 27 20099:04am EDT -
Sinking Animal Spirits
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Counter-cyclical Urban Policy
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Be Your Own Counterfeiter
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Being Tim Geithner
Apr 25 200912:04pm EDT -
Notes From a Press Conference Naif
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What Good is the News?
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Stressful Enough
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Not Regretting the Pound
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Introducing the New Ford Squeeze
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Non-Economic Questions of the Day
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The Stress Test Blind Alley
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Happy Hour
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Recovery Without Rebalancing
Apr 23 20096:04pm EDT -
The Shape of Your Recession
Apr 23 20095:04pm EDT
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Waiting for Wall Street's Headcount to Fall
One of the main reasons I so easily won my Wall Street bonus bet with Jesse Eisinger was that Wall Street's headcount rose so dramatically over the course of 2007. But surely that reversed course in the second half of the year, when the investment banks started suffering enormous subprime-related losses? Turns out, not so much. Here's Jon Jacobs:
Despite all the well-publicized cutbacks, the securities industry's total U.S. headcount ended 2007 at an all-time high of 850,900, according to the Labor Department. During the second half, while the sub-prime meltdown was chewing up earnings and equity, Wall Street added a net 6,500 jobs. In the cyclical downturn that ended in 2003, the industry lost a total of 91,400 jobs.
Jacobs wonders whether cash injections from sovereign wealth funds removed the immediate impetus for the world's major investment houses to retrench, or maybe postponed an inevitable day of reckoning. The answer is probably both of the above, but also that so long as the extra heads continue to make marginal profits, there's not much point in firing them. The big question is when those marginal profits will stop being made.
