Word: morgans
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Dates: during 2000-2009
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...great deleveraging of America. On Wall Street, the largest financial institutions on the planet are reducing their debt and trying to build up capital, which once upon a time was the seed corn of their business, and now must be again. Retail banks like Wachovia and investment banks like Morgan Stanley have been so burned by their own reckless use of debt that only recently - and after unprecedented government intervention - have they been willing to once again make the most basic short-term loans to one another. The gradual thawing of the overnight-lending market, which seemed to begin...
...those ratios are being unwound with a vengeance. In interviews, Wall Street executives, like John Mack, CEO of Morgan Stanley, talk of reducing their leverage to a ratio of 12 to 1 - a regulatory requirement, now that both Morgan and Goldman have turned themselves into commercial rather than investment banks - as if there were some button they could push to make it happen. But the truth is that for U.S. banks, reducing their use of debt and rebuilding their devastated balance sheets is a long and painful process. Deleveraging is part of what creates a credit crunch: institutions that have...
...will all these layoffs in the financial sector engender a wave of clinical depression? Morgan says it's too soon to tell: it depends on how long people remain unemployed. A full-blown recession lasting three or four years or longer would be cause for concern. Morgan cites increased rates of depression and suicide in British cities that relied on steel and coal manufacturing in the mid-1980s, when factories started shutting down permanently. And the suddenness of the current crash doesn't make things easier. Former Lehman Brothers employees, he says, "have some emotional catching up to do," because...
...traders, the economic downturn may come as a particularly deep shock; because most of them are young, they have never faced unemployment or recession. For their entire professional lives, their abilities have been so in demand that many have been repeatedly headhunted, giving them a sense of invulnerability. Now, Morgan says, "They're living in a world that they didn't think existed." On top of that, traders tend to be single-skilled with limited academic backgrounds, Morgan says, meaning they will need further training in order to find other jobs...
...Senior-level bankers, on the other hand, have qualities that may work in their favor, aside from a cushion of accumulated wealth. They are older and have already been through market upheaval during the Black Monday crash of 1987. Morgan says they tend to be adaptable risk-takers who are good at networking and at articulating their worth. "It's the entrepreneurs who are going to succeed," he says. "It's not going to be the people who are waiting around for the next opportunity...