Wednesday, May 28, 2008

READY! AIM! ........... fire

Given the financial turmoil that Wall Street and most of it's players are in, massive layoffs amongst the heavy hitters of the financial world was to be expected. Everyone on the Street knew that they were coming and in their own way, perhaps even prepared for it. However, the layoffs in this cycle have been different than in those of crises past.

In 1987 after the stock market crash, in 1998 in the aftermath of the LTCM and Russian default crisis and in 2001 after the bursting of the dot com bubble and 9/11, there was a huge amount of bloodletting on the streets of Downtown New York. But it was done en masse, publicly and in one fell swoop. Merill Lynch laid off close to 20,000 employees in 2001, over 10,000 in the fourth quarter alone, undone by the double whammy of the bursting of the tech bubble and Sept. 11.

However, the layoffs in this cycle are markedly different. They are almost being done on the down low, the corporate equivalent of the 3 AM knock on the door. The New York Times in an article called them 'stealth layoffs' and that 'the first clue that someone is gone can be e-mail messages that are returned to senders from a former colleague’s inactivated corporate address.' People who have worked at their companies for a decade or more have been, and are being, shown the door. And in the face of all the 'different opportunities being pursued' and 'different directions being gone in' and the amount of 'time being spent with the family' all around us, almost no public acknowledgement is been made of the people leaving.

Although Wall Street has announced the elimination of about 65,000 jobs in 2008, this time the layoffs have been spread out over weeks and months. As a result of this death by a thousand cuts system of layoffs there is an atmosphere of 'fear, paranoia and anger' amongst employees as they wonder who will be next or when the bells will toll for them. The constant and ever present of losing their jobs, of not knowing in the morning if they will be unemployed by the evening and most of all, not knowing when it will stop is taking its own heavy toll. One banker interviewed by the New York Times pretty much hit the nail on the head when he said that before the layoffs there was a sense of loyalty with the bank, a sense of pride, "that they got my back." But he said that that idea of loyalty had gone from most banks.

Most Wall Street financial institutions have extensive orientation programs for new employees and one of the things stressed is how the institution takes care of its own, even talking about its 'alumni networks' and the excellent business relations it has with its former employees. When new people join the firm, they introduced with great pomp and pride at the weekly meetings but when they leave (voluntarily or otherwise), absolutely no mention is made of it. It's as if the person never even existed.

Call me naive but the realization that an organization could be so mercenary in kicking to the curb employees it felt that it didn't need anymore was kind of shocking. And how is it that most of the financial institutions on Wall Street are behaving the same way in how they deal with layoffs? Like some sort of fashion fad, everyone seems to have gotten the same idea at the same time. I wonder how that works - do CEOs of major investment banks get together and develop a common firing strategy for the year? Bizarre.

And sad.

Thursday, May 22, 2008

Still Standing... barely.

Ah, it feels good to be back - I think. Professionally, the past 10 months have been a roller-coaster ride of epic proportions, and even now, when I am all puked out, it still goes on. In the last year Wall Street and the US economy have gone through a slide that is historic in scale. When I joined The Bank last year, business was at record highs. We were on our way to having a banner year and in the grip of some serious hubris - we could do no wrong! People were lining up to buy just about any product that the Street would sell.

And then, the bottom fell out. A combination of banks and financial institutions making loans to people who didn't even come close to qualifying for them; selling loans that were little more than lipstick on pigs and selling securities that promised to turn base metal to gold has led the Street to the brink of the greatest financial disaster since the Great Depression.

About a year later, nearly 20,000 people have lost their jobs on Wall Street alone, with no signs of the bleeding stopping anytime soon; the venerable Bear Stearns has ceased to exist, foundering from it's perch on the Fortune 500 in less than a week; and fear and paranoia stalks those of us still standing. Going to work every morning not knowing if one will have a job at the end of the day makes for a whole new definition of stress.

A few years from now, if not already, histories will be written about the 'Great Credit Crunch of 2007' and learned scholars will try to explain what happened, why and who did what to whom. It will all be very well researched and footnoted and annotated and will become part of business school syllabi. But, as Rose Bukater says of surviving the shipwreck at the beginning of Titanic, "the [actual] experience of it [is] somewhat less clinical."

An experience I would never want to relive.

Wednesday, May 21, 2008

Wise Man Say... 08.01

"There are roughly three New Yorks. There is, first, the New York of the man or woman who was born there, who takes the city for granted and accepts its size, its turbulence as natural and inevitable. Second, there is the New York of the commuter--the city that is devoured by locusts each day and spat out each night.

Third, there is New York of the person who was born somewhere else and came to New York in quest of something... Commuters give the city its tidal restlessness, natives give it solidity and continuity, but the settlers give it passion."

E.B. White, 'Here is New York'*

*White, E.B. (1949), 'Here is New York', Harper & Brothers, New York, NY, pp 53-54. Reprinted: 2000, Little Bookworm, New York, NY


The other day, at my favorite bookshop in the Village, the fire alarm went off.

In the closed confines of the bookstore, the shrieking of the alarm was even louder than usual - deafening, for once, was not an exggeration. A few minutes later the fire trucks arrived, sirens wailing, to add to the cacophony. In trooped five of New York's brvaest, in full combat gear. The owner/ manager/ person in-charge of the shop told them it was a false alarm, they checked that everything was alright, switched off the alarm and went back.

No one left the building, no one panicked, no one stopped talking except to assert, with the absolute certainty that only New Yorkers have, that it was a false alarm, heck - no one even stopped browsing! The sales clerks continued to ring up sales and other than the approx. 6,000 db sound level inside the store and men in red hats and axes standing around the entrance, it was as if it was business as usual. Come to think of it, it was business as usual. Through all the brouhaha, the people in the bookstore reacted - by not reacting at all!

Only in New York, folks, only in New York!