Todays economic news.

branson, I find it hard to figure out if you're taking apart my argument by being sarcastic or agreeing with me Are you seriously saying there have been no layoffs?

riverripper, I'm sure there will be a rise in applications. What I'd be most interested in finding out however would be if that rise was mainly due to more US applicants who decided to pursue an MBA because of a slowing economy, or if the rise in applications was in fact driven by applicants from abroad who could now better afford an MBA.

solaris,

no sarcasm there (for once!). I mean, yes, unemployment is rising in the US, but we're not seeing enormous amount of layoffs of skilled labor, or am I misinformed? (might be the case)

Yes, banking is hit, automotive is hit, but other than that? - especially compared to the downturn after the dot.com bust.

Initially, I thought that apps would actually decrease in a poor economic situation, because who wants to tack on 150k worth of debt in a bad economy?? Clearly, my argument doesn't consider the full picture.

Countrywide, Merrill Lynch, Citigroup are all laying off significant numbers of people...a lot of financial companies have taken huge loses on the mortgage crisis and are shedding employees. The economy has been based off of the housing market lately so its starting to catch up to more and more companies. Its just the beginning, most people get out while the gettings good. Remember its a lot better to apply when you are working than when you are unemployed.

Plus we wont start until Aug/Sept next year, who knows how many people might lose theirs jobs by then.

The whole weakening US economy is bad for applicants from everywhere. In the US people are bailing out of careers because now is a good time to take a break. A banker may think next year the bonuses will be crap or a consultant could worry that well if companies are all having huge losses next year there may be fewer contracts so I may get let go. While internationals see a weak US dollar and that 45K a year tab suddenly drops substantially...especially for Europeans and Canadians where the dollar is losing a ton of value.

Still, I dont see it. Why drop a well paying job (seriously, just because the bonus season will suck?) to enter business school, be out of the work force for 2 years, load up on debt or opportunity cost not knowing whether the economy will have recovered by 2010?

I also imagine there is a significant number of US MBAs who are not as flexible concerning the country they work in, so these people will run a even greater chance of being in trouble post-MBA. Especially since MBA salaries are going to stagnate or even fall when the economy goes down.

Branson I dont know if you are in an industry where most people get MBAs but I think you are looking at this from that perspective. Getting an MBA is a very common career step in most banking and consulting gigs. Its not "required" but very close to it. So if you know eventually you are going to need to get an MBA, now is the time to go because your career is going to come to a grinding halt due to the economy.

Grad school is a realitively save environment during a bad economy, you dont stress about losing your job and an MBA for most people actually increases their job chances. I know my job isnt at risk due to where I work but if it was then I would be screwed. As an engineer you quickly get pigeon holed and if that sector goes in the toilet then you are gonna be hard pressed to find a good job.

Even during the worst years, an MBA from a top school pretty much assures you of a good job coming out. Sure you may not get the huge signon bonus or moving costs like during the good years but coming out of a top 10 school you probably will get a 6-figure job which is enough to pay off any debt you incur. Besides you need to look at it during the long term, if things are bad when you get out and you stick through it, when things improve you will be higher up the ladder than if you waited till things got better then applied.

agree with river. An MBA from a top 15 school in the nation will put you in better shape than those without, if the economy sours. It's not a magic pill per se, but combined with your work experience and education (which is probably good for you to get into a top 15 school), it makes you more marketable than others when competing for the dwindling jobs.

An MBA with an engineering degree (or any other professional degree) should even make you more versatile, since you *could* do engineering stuff if you had to (it'll be painful, but most of us can pick it up quickly), or do business stuff if engineering jobs go down the drain (like during the dot-com bust time).

I think it's a good time to go, I just wish it didn't make some schools (ahem... Stanford... ahem...) even harder to get in than normal years.

Just say that Bank of America is in talks to buy Countrywide...that would probably mean even more cuts in those companies as they eliminate jobs that overlap.

interesting, used to have Countrywide as my mortgage loaner.

As long as BoA keeps on providing their 0% Cash Advance card

what about an MBA with a sports degree?

very good for sports management

I'll apply for the vacant Newcastle United job

Alex Ferguson may retire by the time i graduate.. Maybe i could apply to Man. Utd

You'd be the first soccer coach holding an MBA then, I'd guess. Just make sure Juergen Klinsmann doesnt snatch the job away

Hahahaha, I was playong Football Manager and dreamt about that!

By Bradley Keoun and Yalman Onaran
Jan. 11 (Bloomberg) -- Merrill Lynch & Co.'s fourth-quarter writedown, estimated by analysts to be at least $10 billion, would shrink shareholders' equity to less than 90 percent of Goldman Sachs Group Inc.'s.
Just two years ago, Merrill's shareholders' equity -- the firm's assets minus liabilities -- was on par with Goldman's, data compiled by Bloomberg show. Now, Merrill's weakened financial position compared with its more-profitable rival is forcing the world's largest brokerage to seek cash infusions from outside investors, slash bonuses and sell assets.
The fourth-quarter charges, the largest in the New York-based firm's 94-year history, would compound the $8.4 billion of writedowns from the prior quarter that led to a $2.2 billion net loss. John Thain, the former head of the New York Stock Exchange and co-president of Goldman, is faced with a capital shortage even as Goldman, the biggest U.S. securities firm, gets stronger.
``The firms continuously writing assets down keep seeing their borrowing costs increase,'' said Punk, Ziegel & Co. analyst Richard Bove. ``Those that aren't seeing the write-offs can borrow cheaper, which makes them more profitable. Going forward, the more profitable one will expand faster.''
Merrill's shareholder equity probably fell 2 percent in the fourth quarter to $37.8 billion, assuming a writedown of $10 billion for subprime home loans and mortgage-linked securities, Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York, estimated in a Jan. 10 report.
The figure includes last month's $6.2 billion investment from Singapore's Temasek Holdings Pte. and New York-based money manager Davis Selected Advisors LP.

O'Neal's Legacy

Thain told fixed-income managers last month to cut 2007 bonuses by an average of 40 percent, two people briefed on the matter said Dec. 17. Payments may fall by as much as 80 percent for traders who specialize in the mortgage bonds and collateralized debt obligations that posted the steepest losses, the people said.
Thain is seeking to repair the damage done by his predecessor, Stan O'Neal, who pushed the world's largest brokerage into home loans by buying subprime lender First Franklin Financial Corp. for $1.3 billion at the end of 2006 just before the mortgage market peaked. O'Neal was forced to step down in October, when the firm announced its third-quarter loss.
Merrill dropped almost 50 percent in New York trading during the past 12 months. The shares rose 47 cents, or 0.9 percent, to $52.50 at 9:55 a.m. in New York Stock Exchange composite trading.

Blankfein's Bonus

Merrill, whose market value was greater than Goldman's as recently as 2006, is now worth half as much. Goldman, based in New York, reported a 22 percent jump in earnings last year while profit tumbled at competitors like Morgan Stanley and Bear Stearns Cos. amid losses related to subprime mortgages.
Goldman Chief Lloyd Blankfein claimed a $67.9 million bonus, the biggest ever awarded to the CEO of a Wall Street firm, after delivering a record profit as investor aversion to mortgage-related securities prompted a contraction in global credit markets.
Merrill is a passive, minority owner of Bloomberg LP, the parent of Bloomberg News.

--Editor: Otis Bilodeau, Steve Dickson

They're talking 15 billion this morning on CNN.

guys and gals,

this financial crisis is only getting started. the subprime mortgage fallout was just the tip of the iceberg.

what we are seeing is the unraveling of the complex and ridiculous credit derivatives floating around in the system. when one side of the contract can't meet the obligations, what happens? let me rephrase. when major financial entities cannot meet the obligations (possibly due to bankruptcy) to their counterparties (read other major financial entities), how do the counterparties recoup what's owed to them? the big problem is that these contracts have been securitized and trade off the public market, meaning that there is no transparency or regulation to these derivatives. talk about virtual money in the trillions of dollars floating around the system. fasb 157, which has been delayed (hmmm.....) will force all firms to account for these once off balance sheet "assets". merril's $15 billion writedown will look like chump change.

it won't be surprising to see some major i-banks go bankrupt or get bought out by their more powerful peers over the next year or two. heck, you don't even have to be an i-bank for it happen. just look at countrywide today! and financial firms aren't the only ones involved with these derivatives. pension funds, commercial banks, state and municipal funds, etc., etc. the current debt-based orgy of a financial system is on the ropes and it's not looking good. gold at $900/oz definitely says something.

i sometimes question myself if going to b-school will be a good idea, considering what i wish to do is go into sales and trading for an i-bank!! how ironic, no?!