Monday, September 29, 2008

45. Recession

45. Recession

The past few months have been the equivalent of someone taking a nine-iron and taking swings at your head. Occasionally the club hits its mark and knocks your lights out, and the other times it missed and you throw the middle finger up at the swinger…who precedes to clock you the next time. Lehman? Buh-bye. Bear? Adios. WaMu? Mooove on out. And the list goes on. If you are one of the “lucky” analysts who has kept your job in i-banking, bravo! Despite the hellish hours being spent pitching companies on the idea of IPOs in this shit market, at least you’re still bringing in the big money. And for those of you left to suffer in the worst job market in decades, at least you don’t have to spend all of your waking hours going down on your 20 and 30-something year old associates. You can never try to find your passion, that job you always wanted, rather than the job you only learned about sophomore year in college when you realized that girls dig a guy with cash.

The one thing we can all agree on is this market royally sucks. That bonus from a month ago that you decided to put in stocks because the market had bottomed out? Yeah that’s probably dropped about 20%. Not looking so hot anymore. Plenty of people will tell you, “You’re young, in 5 years when the market is back to normal you’ll be making money.” Thanks for the advice numbnuts, but if I had hid that money under my pillow like any sane person I would still have the same amount of money, and not ¾ of it.

To continue the random tangents of this blog, I’d like to point out to everyone that it doesn’t matter if you’re an i-banker, mortgage broker, gas attendant or bum on the street, everyone has to take some blame for this shitshow. When everything was going well over the past few years, we were all profiting and no one was complaining. Joe NoMoney who couldn’t afford a home suddenly had a nice 3-bedroom in Connecticut that he was able to pay the mortgage for because he could just keep refinancing as his home went up in value. Sure you can blame the bank who decided to not check Joe’s credit history or anything and just give him an adjustable rate mortgage, but at the same time Joe should’ve thought to himself that eventually he’d have to PAY the mortgage payments. You could also blame the investment banks, the Government, and everyone’s favorite couple: Fannie and Freddie. Back in 1999 they decided they’d help out the common folk and buy up this Subprime mortgages ignoring what could happen if housing prices stopped rising, because why would that ever happen…

Link to article about Fannie and Freddie in 1999:
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

Hilarious explanation of the Subprime crisis:
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1

So while most Americans blame the government for not bailing out the banks right now and have tighter regulation, I say to hell with everyone. These are the same people who during the boom times feel the government should stay out of everyone’s business and let free market principal’s rule. Well if you want the government to let the market figure itself out in the good times, then you must suffer the bad times when people get too loose in their actions and forget about moral hazard. I know it’s awful and I wish the government would come in with the quick fix, but a lot of these companies deserve to fail for giving mortgages to people with no money and who produced no documents. Every sector suffers because of the decisions of the financial sector to produce these risky mortgages that were so profitable for a time. It’s an awful thing, but if we do not want to all suffer like this we’d have to give up the free rein we’ve had for so long and give in to some government regulation. I am all for the regulation, but I just hate that once things get going well again, people will brush off the government and begin begging the government to take off the restraints and let the market roar once again with morals pushed aside.

Good luck to everyone during this tough times.

11 comments:

Anonymous said...

It's good to see your back after a long wait :) Thanks for the article, and keep it up.

V

Anonymous said...

I'm not an investment banker but I 'Stumbled Upon' this blog. And I really like it.

Anonymous said...

i read all your postings in one sitting...i love them!!!

keep them up

Anonymous said...

Can you write more of the funny stuff like you used to, like "Lying" or "Associates"? It's really funny and it helps me survive my job...

Alex said...

The ugly truth of this recession that its everybody's fault. Playing the blame game gets us nowhere. Now, obviously some are more to blame then others, i.e. the mortgage brokers that sold home buyers crappy mortgages. Both parties were at fault however the mortgage brokers may have known what they were doing was illicit. For more info and banking you should check out Investment Banks

Anonymous said...

2008, 2009, 2010..
three years and counting...you 're still in the ibanking.
Clearly the pros weighhhh better than the cons.

so lets hear about the good stuff, for a change now!

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