Credit Crash t-minus 3 months

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml

"The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks."

http://biz.yahoo.com/ap/080630/switzerland_central_banks.html

" The global economy could face a deeper downturn than many currently expect amid rising inflation and the turmoil on financial markets, the Bank for International Settlements said at its annual meeting Monday."
 
You gotta be kidding me...if this hits, then it'll be even more ridiculous a notion to find work in financials!

This sucks...what a bad time to be going into my senior year of college.
 
Sounds plausible to me though I seem to have seen other concrete projections for a few months down the line similar to this one. One possible outcome is that the project of financial globalisation, with unregulated financial markets, will come to a shuddering halt. States will intervene in markets everywhere, and the ideological winds will change tack. To the extent that financial markets survive, they will be heavily regulated and the idea of self-regulating financial markets will become a historical curiosity. At least some quant jobs will be adversely affected by these developments.
 
Sounds plausible to me though I seem to have seen other concrete projections for a few months down the line similar to this one. One possible outcome is that the project of financial globalisation, with unregulated financial markets, will come to a shuddering halt. States will intervene in markets everywhere, and the ideological winds will change tack. To the extent that financial markets survive, they will be heavily regulated and the idea of self-regulating financial markets will become a historical curiosity. At least some quant jobs will be adversely affected by these developments.

That would be a disaster of monumental proportions. From my experience as an intern at a pensions consulting firm (Watson Wyatt Philadelphia), to exponentially increase the amount of paperwork and bureaucracy will completely hamstring the industry. Keep governments and their tree-slaughtering bureaucracies out of this. Yeesh, we're talking about all of this "going green"...can we please stop killing trees and stop burning so much electricity in recycling plants for all of the paper we're churning out?
 
Every disaster brings us a new opportunity. So let be scared those people who are leveraged now and didn't have a chance to cash out their bonuses. Our time will come - sooner or later ;)
 
I agree with Max. Any major changes in the financial industry will create as many new opportunities as it will close down others. For young, smart entrepreneurial people with a strong understanding of financial markets, math and how to leverage software there will be opportunities to pluck.
 
This is Lawrence Summers writing in the FT:

It is quite possible that we are now at the most dangerous moment since the American financial crisis began last August. Staggering increases in the prices of oil and other commodities have brought American consumer confidence to new lows and raised serious concerns about inflation, thereby limiting the capacity of monetary policy to respond to a financial sector which - judging by equity values - is at its weakest point since the crisis began. With housing values still falling and growing evidence that problems are spreading to the construction and consumer credit sectors, there is a possibility that a faltering economy damages the financial system, which weakens the economy further.

With long-term unemployment at recession levels, there is a clear case for extending the duration of unemployment insurance benefits. There is now also a case for carefully designed support for infrastructure investment, as financial strains have distorted the municipal credit markets to the point where even the highest-quality municipal borrowers are, despite their tax advantage, paying more than the federal government to borrow. There are legitimate questions about how rapidly the impact of infrastructure spending will be felt. But with construction employment in free fall, there will be a need for stimulus tied to the needs of less educated male workers for quite some time. Fiscal stimulus measures must be coupled to budget process reform that provides reassurance that, once the crisis passes, the fiscal policy discipline of the 1990s will be re-established.

These suggest tepid "New Deal" reforms are probably now being discussed by the American ruling class (on golf courses and in country clubs). These probably won't be enough. We're still not at a crisis stage of US and global capitalism. By definition, a crisis is one where the institutions and usual policies (even emergency measures) cease to have any meaningful impact whatsoever. When that crisis arrives, the ruling class will be forced to adopt another ideological framework -- if for no other reason than the fear of mass insurrection -- and the rules of the game will change. The game we're in right now -- neoliberalism, "unfettered" financial markets -- has its roots in the crisis of the mid- and late-'70s, which started with the quadrupling of oil prices, intensified industrial competition from Japan and Europe, and stray phenomena such as the bankruptcy of NYC in 1975 (the draconian response to which provided a model for subsequent neoliberal reforms all over the world).

So keep your seatbelts on, and there's no harm learning how to grow some vegetables. :)
 
I believe the global economy is transitioning from a period of expansion to one of contraction, possibly recession. The catalysts and remedies for this change can and will be debated for the forseeable future. Know for certain that in all change lies opportunity. An indivdual needs to be smart enough and nimble enough to capitalize.
 
Top