I chanced upon some interesting(read:distressful) figures about the number of job cuts there have been over the years in the financial sector:
2008— 102,957 *
* Mind you these figures don’t take into account the very recent Lehman brothers bankruptcy and Merril Lynch take-over crisis. To be added to this large figure is the 25,000 Lehman brother employees across the globe and also the many Merrill Lynch employees who’ll face a sacking with sure job cuts after the acquisition by the Bank of America.
If you’re wondering what the real cause behind the spike in 2007(from 50,000 to 153,000) is,its because of the lay offs initiated and executed by most US mortgage firms.
After a lot of reading it is in my humble opinion that the Lehman Brothers demise was an inevitability. In 1998,the company was first accused of having most of its assets spread over various kind of bonds and in the debt market rather than in the stocks. It has had a history of trading in high risk bonds so much so that one of their gambles with a bond made their market price slump by over 70% over a period of just three months. They escaped then,but never learnt from their mistakes. A similar kind of a nightmare by the name of sub-prime mortgages got the better of them this time.
The repecursions of such a huge disaster will obviously have its consequences. As we noticed through the day, stock markets in Asia crumbled particularly in India where the BSE crashed by 700 points. The rupee got stronger, which will have its adverse effects on our beloved IT companies which employ the maximum number of Indians. The impact will be hugely felt here in India specially with most of the IT firms working hand in hand with a lot of these bankers. For instance Satyam which used to handle a chunk of Wall street projects faces a tough tough quarter ahead of it. They’ve decided to pack of 9% of their employees and as of today their share plunged by 9.5% to INR 368.50. Surely the big two Indian IT firms will be hit by this crisi.Though they’re not admitting it right now,their stocks speak for them.Their shares fell by 6 and 4% respectively.
To give you a fair idea of how much money has been lost by the big wigs of Wall Street just because of the subprime credit crunch(the term btw is now officially a part of the English dictionary),see below: