The news on Lehman

Schiff is known as Dr. Doom. He predicts we will always be in recession. Even a broken clock is right twice a day.

Faber and Roubini are also known as Dr. Doom...

When it comes to markets, you always question the consensus...

And, I wasn't buying it...

In all fairness, I agree that doomsdayers like Roubini aren't always to be taken at full weight. But one problem over the last nine years (prob since the deregulation of 1999) is that too LITTLE credit was given to analyses predicting long-term unsustainability in the financial markets, and (imho) weak or no real leadership was there to change anything for the better. Thus, you get major, destabilizing corrections like this one.

Banking and finance jobs will be back. Give it a few years. The news media loves to compare things to historic disasters like 1987 or the Great Depression - my little sister is an example of someone who believes that crap, and she moved down to Panama about a year ago, predicting the imminent collapse of Western capitalism. Nevertheless, I'm glad I'm not a finance guy myself.

Depressing article by Fortune.

https://money.cnn.com/2008/09/15/news/co ... 2008091514

Basically, the big pay days are gone for Investment bankers. Commercial banks will take over and largely cut the exorbitant pay.

Are UBS, DB, Barclays in trouble too?

I visited Columbia and NYC this weekend. The whole city was basically going insane. Reporters were lined up outside Lehman's HQ from morning until night trying to capture any footage possible of employees willing to talk.

Every class at CBS opened with a discussion about the crisis and many students are seriously out of luck. CBS is not a cheap school to attend by any means, and they were planning on having cushy IB jobs to pay off their massive debt loads. Now, many of them will have to look at consulting, GM, etc. One guy I met had an offer from Citi, and the MD that hired him called him on Monday morning to ensure him that he will still have a job and that everything is fine at Citi. I thought that was a really nice gesture.

The last thing that I noticed that was very interesting and a little bit off topic - I took a walk on the Upper East Side at about 8:30 AM. Low 60s near the Park. There were a bunch of late 30s/early 40s guys in suits walking their sons to their private schools. I always had an image that Wall Street people were too busy to have the time to do this, and it was very interesting to see.

I am very shaken up overall. I can't see myself committing to applying CBS Early Decision. The main point of me going to that school was for the Wall Street access. If that's looking very bleak, I may as well look at schools with a stronger general management focus. We may have hit the bottom of the current credit crisis, but like soni mentioned, I truly feel that the banking landscape is about to change in a big way.

If I don't get in anywhere this year and don't go to school, I really don't know if I'll be very disappointed. Things look extremely bleak.

By the way, this is good for a laugh:

https://video.yahoo.com/watch/3510366/9745199

Buffett called Derivatives Financial weapons of mass destruction, and then wrote the longest dated option of the largest magnitude ever.

I don't quite get the level of people who are backing away from Schools because the banking career path looks fraught with danger, which is no change from the past. It should be competitive, and will just be a bit more so. I doubt you will see recruitment numbers anywhere near what you have seen them grow to in the past. That said, business school isn't there to give you a well paid job on a plate, and it seems terrifying the number of people who look at it that way.

Roubini is funny, and it is even more funny to hear the contrasting views across the Faculty. As for people calling it right years ago - there are so many people talking on the topic, someone is bound to have been right. Hardly makes them a messiah, just lucky.

The people I feel truly sorry for are friends and others who signed to start at Lehman this summer. It is a savage way to start life. Hopefully Barclays will keep them on.

Well, since a lot of people are doing an MBA to get into IB, it seems pretty normal that those people start thinking twice. As for current students, it won't be competitive, it will be bloodshed: even getting a summer internship in IB will be incredibly difficult I reckon.

Finally, no, business schools are not employment agencies: that said, who in his right mind would have a 160k debt on his back without any relative assurance to get a very well paid job? I mean, let's be honest about this whole thing: when you pay so much money, I don't think it's outrageous to expect that you will get the chance to have a well-remunerated job. That's why schools are so expensive in the first place.

You hit it on the head. Additionally, school decisions have to be made with this in mind as well. Let's say that you're looking to get into banking, but graduate into a terrible market and it no longer becomes a realistic option. You have to settle for a far less paying GM or Consultnig position. If your school options were UChicago with $150K in debt and Duke with $40K in debt, and you decided to choose UChicago, this also gets very dicey. No one expects anything to be handed to them on a silver platter - but I think that everyone tries to make rational decisions to manage the various risks that they face. This is what I am currently trying to get a grasp on.

Richard and Sal the Stockbroker. hahahaha

If you look closely enough, they don't actually kiss or anything. But they have done a lot worse on their show.

Is this the end of the term 'Bulge bracket'

should we start with 'dynamic duo'

So how many 'Bulge brackets' do we actually have left... in accounting it used to be big 8, big 6, big5, now big 4.... is that the same way for IB?? Opinion??

https://en.wikipedia.org/wiki/Bulge_bracket

I've seen the list before, but I'm not sure bulge bracket is that definitative, seems there are variations.

I would say that's the generally agreed upon list. I'm surprised they already updated it for ML and Lehman. I would argue that when Barclays completes its acquisitions of Lehmans US Ibank operations (9,000 people) they will be added to this list. I notice they already added bank of america (as a result of the ML acquisition). So, 3 banks dropped off the list but 2 were added. It's far from the end of the bulge bracket. It will still take a while for recruiting to recover, but when it does there are still plenty of bulge bracket banks that will have major presence at the top schools. 9 bulge bracket banks in fact.

While not a finance school, this has still been a big topic of conversation around Kellogg. Its played come up in some of the career forums, but I guess not being a finance school is a huge advantage. Not many people here plan to go into banking, they are actually going to bring in more boutique this year to make up the difference (Kellogg is bringing in the largest number of finance firms ever this year). They arent telling people who want to switch not to try but I think its clear that its going to be a test of your commitment.

One thing to think about at this point since the competition for the MC and GM jobs is going to drastically increase this year. Lehman and ML are two of the top hirers at a many of the top 10, taking huge numbers from schools like Chicago and Columbia...its definitely going to affect all schools but really going to hurt some more than others. So not as many folks will be as successful this year with the banking path so a lot of people will be looking else where.

Interesting note, as of this weekend Goldman hadnt released offers yet...so that might point to the news at Lehman and ML having a broader impact.

On a...er...different note: https://www.thefrisky.com/post/246-lehman-bros-are-lookin-for-love-on-craigslist/

One story we're not really talking about: thank god AIG is being saved.