|
|
With Bank of America’s
recent announcement that it plans to lay off 30,000 workers, the
Great Recession has finally
spread its shadow over a sector of the economy that had seemed inured
to hard times. Investment consulting, mortgages,
mergers and acquisitions and the rest of banking’s most lucrative concessions have fallen
into a more or less
permanent funk, and so the banks
are faced with the
prospect of earning their
money the hard way – i.e., through ruthless cost-cutting, and via fees on checking accounts, credit cards and other transaction-based
services. How dull!
Embarrassing, even, since financial bigwigs who were
pulling down seven-figure
bonuses just a year ago thanks
to the Federal Reserve’s
extravagant bailout terms,
will now be fighting to earn their base pay by nickel-and-diming their customers to death. Imagine a loan officer having to concern himself with something so mundane as a local businessman’s request for
money to finance inventory.
We feel
sorry for the many bank employees who are about to lose their jobs, especially since they face such bleak prospects for re-employment. With respect to
the fate of banking’s top brass,
however, it’s going to be hard to hide our schadenfreude if a few of these
prodigious paper-shufflers
wind up living out of shopping carts. Ditto for securities traders at the big banks, for they have turned the markets into a
giant casino, exploiting opportunities that have virtually to do with the
business of making, buying
and selling real things. In recent years, stock and bond markets
have almost completely decoupled from the real economy – so much so that
they will probably have to collapse into ruin before honest
markets can re-emerge – markets that serve the real commerce of the real world. The epic fraud of financial markets reached its apotheosis with high-frequency trading, a tactic that uses computer-driven algorithms to exploit bid/offer spreads that exist for mere nanoseconds. Because these trades can move no more quickly than the speed of light, it is necessary to execute them on servers that sit on the trading floor rather than on microprocessors associated with distant satellite feeds. How long could
that game go on?
Rick Ackerman
Subscribe
to Rick’s Pick
Access
to Rick’s Picks is available via a free seven day trial subscription by clicking
here.
Information
and commentary contained herein comes from sources believed to be reliable,
but this cannot be guaranteed. Past performance should not be construed as an
indicator of future results, so let the buyer beware. There is a substantial
risk of loss in futures and option trading, and even experts can, and
sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to
individuals, nor act as an investment advisor, nor individually advocate the
purchase or sale of any security or investment. From time to time, its editor
may hold positions in issues referred to in this service, and he may alter or
augment them at any time. Investments recommended herein should be made only
after consulting with your investment advisor, and only after reviewing the
prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements
and/or profit claims from its subscribers for marketing purposes. All names
will be kept anonymous and only subscribers’ initials will be used
unless express written permission has been granted to the contrary. All Contents © 2011, Rick Ackerman. All Rights
Reserved.
|
|
