Photo: "cactusbones"on Flickr.
In a desperate attempt to stabilise the world's financial markets, the US Federal Reserve is injecting an enormous 180 billion dollars into the system. A trader and a broker tell us what it's like to work in the ever-sinking financial sector.
"It’s a bit like talking to survivors of a train crash"
Alessandro Giraudo is chief economist at Tradition, the third largest interdealer broker in the world. He authored Legends and Myths in Economics (Economica, 2007).I carry out our clients' orders by accompanying them in taking their decisions. Unlike a trader, I don't take any risks with my own company. My earnings are based on commission - I make tomorrow's salary today.
I sense the stress of our clients by their aggressiveness on the phone. I know that by the end of the year, certain players on the market won't be here anymore, and will have to change job. It's a bit like talking to survivors of a train crash. The failure of Lehman has left 25,000 people stuck. It's not much considering the millions who work in the sector, but it's quite a shock for us.
The crisis is getting worse. We still have hard times ahead. The sector's "tourists" - the ones who came in when things were good, will jump ship. But the best people will stay, because in a crisis you need strong leaders. And those are the people who will make even more money than before. I know operators who have earned a lot recently. You just need to plan ahead and take safe positions - for example sell your shares and buy gold.
The crisis won't destroy the financial system, which is indispensable to the economy. It will just force people to slow down and take less risks. The central banks did the right thing, like JP Morgan in the 1907 crisis. They injected money into the economy rather than tightening the credit - which is what happened in 1929, and we all know the end of that sorry tale. The situation now is very different anyway, despite what Attali might say [French economist Jacques Attali has said that we're close to a similar crisis to that of 1929]. That was a crisis between the stock market and the industry whereas now we're facing a crisis between the financial and banking systems. The first took almost two years to affect Europe - today every accident across the Atlantic reverberates in Europe a minute later. We're in a mad race, where if someone falls, it works like a domino effect and slows everyone else down."
"The first year I earned €100,000 a year. The second €200,000"
Yann H, 26, graduated from France's EDHEC business school and worked for Goldman Sachs in London until this summer.In the short term, a crash isn't really a problem for a trader. You can make a lot of money, especially in the derivative markets, when prices drop. But everyone working in the London circuit is really worried about their job now. As banks and mergers disappear, thousands of posts go with them. Just with the voluntary liquidation of Lehman, 5000 people have found themselves jobless. You know if you lose your job you're going to have a very hard time getting one back.
I'd been working in Goldman Sachs since 2005, when everything was still fine. The first year, just after I'd graduated, I earned around €100,000 a year. The second year it went up to €200,000. The person directly above me was on a million. And the atmosphere was relaxed, people were easy with money. But this summer, it all changed. I read in the British press that even taxis, restaurants and nightclubs were complaining of falling sales, which is a direct indication of the situation in the city.
I don't think things are going to get sorted out. Actually I think they'll get even worse, and I wouldn't be surprised if Goldman Sachs and Morgan Stanley both end up finished. I'd already seen it coming and that's why I got out in the summer. Everything's dead in Europe, so I'm working on a project with a brokerage company in Hong Kong. There are still opportunities over there."