Wall Street Unoccupied With 200,000 Job Cuts

Wall Street Unoccupied With 200,000 Job Cuts
Bloomberg, 21-Nov-11
By Max Abelson and Ambereen Choudhury

John Brady, co-head of MF Global Inc.’s Chicago office, was having a vodka cocktail at the Ritz- Carlton in Naples, Florida, overlooking the Gulf of Mexico, on the day his company reported its largest-ever quarterly loss.
“Wow, the sun just set,” Brady said to his wife and two colleagues attending a conference with him, he recalled in an interview. “I hope it doesn’t set on MF Global.”

A week later, on Oct. 31, the firm led by former Goldman Sachs Group Inc. (GS) co-Chief Executive Officer Jon Corzine collapsed. Brady and 1,065 colleagues joined a wave of firings that has washed away more than 200,000 jobs in the global financial-services industry this year, eclipsing 174,000 in 2009, data compiled by Bloomberg show. BNP Paribas (BNP) SA and UniCredit SpA (UCG) announced cuts last week, and the carnage likely will worsen as Europe’s sovereign-debt crisis roils markets.

“This is something very different,” said Huw Jenkins, a former head of investment banking at UBS AG (UBSN) who’s now a London- based managing partner at Brazil’s Banco BTG Pactual SA. “This is a structural change. The industry is shrinking.”

Wall Street rebounded from the financial crisis of 2008 with the help of unprecedented government support, including loans from the U.S. Federal Reserve. Goldman Sachs posted record profit the following year, and bonuses paid to securities-firm employees in New York City rose 17 percent to $20.3 billion, according to New York State Comptroller Thomas DiNapoli.

‘Nothing There’
Now, faced with higher capital requirements, the failure of exotic financial products and diminished proprietary trading, the industry is undergoing what Steven Eckhaus, chairman of the executive-employment practice at Katten Muchin Rosenman LLP, called “a paradigm shift.” The New York attorney, whose clients have included former Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan, said he has stopped giving his “spiel” about inherent talent leading to new work.

In interviews, a dozen people who have lost jobs at firms including Societe Generale SA, Royal Bank of Scotland Group Plc (RBS) and Jefferies Group Inc. (JEF) described a grim banking landscape that also includes Occupy Wall Street protests against unemployment stuck above 9 percent and income inequality.

“These are by far my darkest days,” said Scott Schubert, 49, who was dismissed in late 2008 as a mergers-and-acquisitions banker at Jefferies, a New York-based securities firm, and has been unemployed since. “It’s harder and harder to look for a job and feel that there’s nothing there.”

HSBC, BNP Paribas
Banks, insurers and asset managers in Western Europe have been hardest hit, announcing about 105,000 dismissals this year, 66 percent more than the region’s losses in 2008 at the depths of the financial crisis, Bloomberg data show. The 50,000 job cuts in North America this year are more than twice last year’s and fewer than the 175,000 in 2008.

Almost every week since August has brought news of firings by the world’s biggest banks. HSBC Holdings Plc (HSBA), Europe’s biggest lender, announced that month it would slash 30,000 jobs by the end of 2013. In September, Bank of America Corp. (BAC), the second-largest U.S. lender, said it would cut the same number of jobs. Both banks are trimming about 10 percent of their employees. Last week, BNP Paribas, France’s largest bank, said it will cut about 1,400 jobs at its corporate and investment- banking unit, and UniCredit, Italy’s biggest, said it plans to eliminate 6,150 positions by 2015.

“It’s a once-in-a-generation challenge,” said John Purcell, founder of London-based executive search firm Purcell & Co. “Everyone who has worked in the City since 1985 will have no idea of how to cope with this level of dislocation.”

Panic Attacks
Neil Brener, a psychiatrist whose patients work in London’s City and Canary Wharf financial districts said the stress is contributing to panic attacks, binge drinking and chest pains.

“Because there are fewer jobs, people are unhappy about being stuck,” Brener said. “They don’t have options about moving, and there is a sense of feeling trapped.”

London hiring could be frozen next year, according to the Centre for Economics and Business Research Ltd. Headcount in the City and Canary Wharf may fall to 288,225 by the end of the year, 27,000 fewer than in 2010 and the lowest since at least 1998, when there were 289,666 jobs, according to the London- based research firm.

Wall Street won’t regain its lost jobs “until about 2023,” Marisa Di Natale, an economist at Moody’s Analytics in West Chester, Pennsylvania, said in an e-mail.

Second Time
That’s not encouraging for Michael Reiner, 44, who lost his job in June as a credit strategist in New York for Societe Generale (GLE), France’s second-largest bank, whose shares are down 60 percent this year. When he called his wife to tell her the news, she was home watching “The Company Men,” a film about corporate downsizing, he said.

It wasn’t the first time Reiner had lost a job on Wall Street. He worked at Bear Stearns Cos. for 14 years until the firm collapsed in March 2008 and was taken over in a fire sale by JPMorgan Chase & Co. He said he was happy to have some time off with his family and go to Little League baseball games.

When he began looking for a job, he “wanted to find a place for the next 14 years,” he said. A recruiter brought him to Paris-based Societe Generale. It didn’t last that long.

It’s harder to talk about losing a job the second time, Reiner said. “There are a lot of people I haven’t told.”

Opportunities for employment “evaporated” as the European debt crisis escalated, he said. Now he spends his time going to his daughter’s field hockey games and managing his investments. He’s planning to make maple syrup from the trees in the backyard of his home in Briarcliff Manor, New York.

‘Fruitless’ Search
For Schubert, the former Jefferies banker in his third year looking for work, the longer he’s out of a job, the harder it is for him to tell his 10-year-old son to do his homework, he said.

“It might seem outwardly to him that I’ve given up,” he said in an interview this month from his four-bedroom home in Glen Ridge, New Jersey. “I can’t come to the table and say, ‘Well, when you were five, I worked nonstop.’”

Schubert, who received a master’s degree in business administration from New York University in 1989 and was a managing director specializing in middle-market M&A deals at Jefferies, said he wasn’t surprised when he lost his job in 2008 during the financial crisis. He thought unemployment would last 12 months at most.

“The first year out was fruitless,” he said. “There wasn’t much hiring going on at all.”

By the middle of 2010, more potential employers seemed interested, and he felt “something was imminent,” he said. Nothing happened.

This year, he has become increasingly disheartened by bad news on Wall Street, and it’s more difficult to stay in touch with former colleagues as time goes by, he said.

Hurricane Irene
On the August weekend of Hurricane Irene, training to coach his son’s soccer team alongside younger fathers, being “overly competitive for a man of my age,” Schubert twisted his right knee, he said. He aggravated the injury doing yard work and worries how much his health insurance will help, he said.

While his investment choices haven’t been “too terrible,” he will consider selling his house if he doesn’t find a job. “God, I hope it’s in the next six months,” he said.

Hetal Patel, 44, a foreign-exchange trader who worked at London-based Lloyds Banking Group Plc (LLOY) for more than 20 years until last month, said he doesn’t plan to look for work until early next year, “when budgets become clearer and perhaps conditions improve.”

Shares of his former company, controlled by the British government since a bailout in 2008, have fallen 64 percent this year, and the bank has posted a pretax loss of 3.86 billion pounds ($6 billion) in the first nine months. It announced 15,000 job cuts in June.

RBS Cuts
Another lender backed by the U.K., Edinburgh-based RBS, has announced about 30,000 job cuts, including 2,000 this year, since receiving the world’s biggest government bailout in 2008. Its shares are down 50 percent in 2011, and CEO Stephen Hester said Nov. 4 the investment bank “will have to shrink further.”

Tim Leary, 29, a director in high-yield and distressed trading, lost his job there on Nov. 7. After he got the news, he called his wife to say he’d see her and their 4-month-old son for breakfast.

He drove back to Manhattan from his office in Stamford, Connecticut, and put together a resume for the first time in years. He said he plans to spend “a fair amount of time figuring out what the landscape is” before starting his search.

Falling Bonuses
“Unfortunately, the industry always seems to get it wrong and they over-hire,” said Philip Keevil, 65, a former head of investment banking at S.G. Warburg & Co. and now a partner at New York-based advisory firm Compass Advisers LLP. “They are over-optimistic and then periodically throw large numbers out.”

Morale on Wall Street and London is “probably as bad, if not worse” than it has been in decades, said Keevil.

Wall Street bonuses are expected to fall in 2011 from the $128,530 average last year, DiNapoli, the state comptroller, said in October. Even so, when Goldman Sachs set aside 24 percent less to pay employees in the first nine months than in the same period last year, the amount, $10 billion, was equal to $292,836 for each of its 34,200 workers as of Sept. 30. That’s nearly six times the median household income in the U.S., where 49.1 million live in poverty, according to Census Bureau data.

Quitting for Quito
Wyatt Laikind, 26, made three times as much in his first year out of college working at Citigroup Inc. (C) as his single mother earned when he was growing up in western Massachusetts.

“It was like winning the lottery to get that job,” said Laikind, who worked as an associate on the New York-based bank’s high-yield credit-trading desk.

He got a job on Wall Street because he “was under the impression that it was a more meritocratic environment,” and “my hard work and intelligence would be paid off,” he said.

At first, he liked the excitement, he said. Then, after financial regulations curtailed proprietary trading, the job became “less appealing.” He said he didn’t like smiling at clients while having to figure out how to profit from them.

In July, after a vacation, he called his boss to quit, he said in an interview from Quito, Ecuador, where he is now working for Equitable Origin LLC, a start-up that offers a certification system for oil exploration. His salary is less than 5 percent of what he made at Citigroup, he lives with intermittent hot water, and he was robbed at knifepoint last month, he said.

“I feel happier on a daily basis,” Laikind said.

Sagging Mattress
His tone was different in a later e-mail.

“I wasn’t brought up in luxury, so I like to think I can tough it out,” he wrote, describing the sagging mattress he slept on in jeans and a hooded sweatshirt to stay warm. “But I may have to give it up and try going back to finance soon.”

If he does, it won’t be easy.

“Until now, at many firms, a lot of investment bankers have been convinced that we are living now in a limited period where things are a bit more difficult and afterwards the old world will come back,” Kaspar Villiger, 70, chairman of Zurich- based UBS said in an interview this month. “This illusion has now vanished.”

Increased capital requirements agreed to by the Basel Committee on Banking Supervision will limit banks’ use of borrowed funds to boost profit, lower their return on equity and likely reduce executive compensation, analysts say. High leverage “was the juice in the system,” said Ilana Weinstein, CEO of New York-based search firm IDW Group LLC. “It’s gone.”

Boxer Shorts
For Brady, 42, the vanishing point at MF Global arrived after he returned to Chicago from Florida. He thought the New York-based futures brokerage would “weather the storm,” even as Moody’s Investors Service cut its rating and shares plunged, he said. He got word that another company would buy the firm while at a Talking Heads cover-band concert and celebrated with a friend by drinking Anchor Steam beer and shots of Jameson.

He woke on Oct. 31 at 4:40 a.m. and searched for deal reports on his phone while standing in his boxer shorts with an electric toothbrush in the other hand. He didn’t find any.

The acquiring firm, Interactive Brokers Group Inc., pulled out of the deal after a discrepancy in client accounts surfaced, and MF Global filed for bankruptcy later that day.

At first, Brady thought his company would survive, he said. His wife thought he was in denial. His mood changed when he was sitting in the home office adjoining his bedroom, looking at the value of his holdings.

“My Fidelity account looks like my bar tab from just a week ago,” Brady said.

All Fired
On Nov. 11, a human resources executive asked colleagues on Brady’s floor to gather by his desk, which looks out on the Willis Tower, the tallest building in the U.S. They were all fired. She told them to show receipts for large personal belongings to the plainclothes security guards by the elevators, and that checks would be sent in the mail, Brady said. Someone asked if the checks would bounce. She said she didn’t know.

Brady, who said he wasn’t aware of the size of the bets MF Global made on European sovereign debt, wrote to clients this month saying he’s looking to join a firm that believes “integrity and honesty are the single most important ingredients to success.” He said last week he is optimistic.

To contact the reporters on this story: Max Abelson in New York at mabelson@bloomberg.net; Ambereen Choudhury in London at achoudhury@bloomberg.net

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James Altucher, Wall Street's Keeper of the Pain

James Altucher, Wall Street's Keeper of the Pain
Bloomberg, 17-Nov-11
By Roben Farzad

Shaggy-haired, bespectacled James Altucher is a 43-year-old venture capitalist who puts money into tech startups such as Buddy Media—last valued at $500 million. He has also designed websites, worked as a financial columnist, and run a fund that invested in hedge funds. Along the way, he lost his savings and his marriage, and by his own admission suffered several nervous breakdowns.

Now Altucher has turned his misfortune into a source of wisdom and comfort for the despondent. He shares his insecurities and psychic traumas with 30,000 Twitter followers and on his blog, the Altucher Confidential, which he says has had 10 million page views since he launched it a year ago. His self-published book, I Was Blind But Now I See, has ranked as high as No. 2 this year in (AMZN)Amazon.com’s motivational books category, and he’s publishing a comic book about his life. “I think the role James fulfills in the post-crash world is beacon of hope,” says Joshua Brown, a financial adviser who blogs as the Reformed Broker. “I know it sounds corny, but no one has been more forthcoming about how the torn economic fabric of this country has affected him personally. The message is always centered around him still being here—that there’s life after financial near-death.”

While blogging is his passion, Altucher makes his living investing in tech startups as founder and managing partner of Formula Capital in New York. “The guy is too complicated to analyze, and I’m not a psychologist, but he knows his stuff,” says John Pappajohn, a biotech investor in Des Moines who helped found Caremark (now (CVS)CVS/Caremark ) and seeks Altucher’s insight on companies and the markets. “I don’t go to New York without asking him to breakfast.”

On a November morning, Altucher digs into pancakes at a diner near New York’s Grand Central Terminal, having just blogged from a (FDX)FedEx Office/Kinko’s. “A year ago I had a revelation,” he says. “I’ve failed time and again, hurt myself and others, woke up angry and scared at three every morning. I needed to open up and share.” In October 2010, Altucher started posting confessions on everything from business failure and sex to death and depression. Example: “I was completely lost, four years old, running around the department store looking for my parents who I was afraid had abandoned me. … I’m still wondering why they were thinking of entering the elevator without me.”

Shortly after launching his blog, Altucher learned that the top search query bringing readers to the site was “I want to die.” He realized that the Altucher Confidential had become much more than an exercise in self-exploration. “There is such a deep need out there to know you are not struggling alone,” he says. In one August post he wrote about the times he had pondered ending it all and how he managed to persevere. The essay prompted an outpouring of gratitude from grieving parents, laid-off breadwinners, and battered women. “I was just really f***ing sick of letting a man hit me,” wrote one reader. “So I left. And the fear I was living with died.”

Altucher’s path to this unlikely role dates to the mid-1990s, when the computer programmer launched a startup to build websites for media companies. In 1996 he successfully pitched (TWX)HBO on III: am, a Web series that had him wandering the streets of Manhattan late Tuesday nights to see what people were doing at that hour. “Altucher’s conversation with an Eighth Avenue transvestite prostitute brings out the desperation and loneliness of those who don’t (or can’t) fall asleep with the rest of us,” wrote a reviewer in Newsweek.

In 1998, Altucher was recruited to redesign the investor portal TheStreet.com. While working there he caught tech-stock fever and made millions speculating with the money earned from the sale of his media consultancy. He bought a big apartment in Tribeca, decorating it with expensive art. He says he played poker every day in 1998, including the night his first child was born—and took helicopters to Atlantic City to stave off boredom.

By the summer of 2000, with dot-com stocks imploding, Altucher says he was losing $1 million a month. He put his apartment up for sale. “I had two kids to feed,” he says. “I honestly thought I would kill myself—that I’d be better off dead if my family got my life insurance.” He hit bottom in 2002. “Cash was running out at the bank, expenses were going up, the house was standing still and nobody wanted to buy it, and eventually I would be unable to buy diapers and food for my children. This wasn’t just me. In the last decade this has happened to a lot of people.”

In desperation, he e-mailed money managers with his investing ideas. Jim Cramer of TheStreet.com hired him to write about stocks, and a hedge fund manager threw him some money to invest. Altucher also began writing for the Financial Times, and started his own hedge fund, as well as 10 investing websites. He sold the most successful one, Stockpickr, for $10 million in 2007; he wound down his hedge fund just before the financial crisis.

While Altucher had come back from the financial brink, he says he was an emotional wreck. By the end of 2008, his marriage was falling apart, and he found himself drinking heavily and holing up at the Hotel Chelsea. With the stock market in free fall at the beginning of 2009, TheStreet.com and the Financial Times let him go, and TV bookers stopped calling. “So once again,” he says, “I was lost.”

Altucher, now remarried, credits intensive yoga, Eastern philosophy, and introspection for rescuing him and changing his perspective. In a Nov. 8 blog post, he reflects: “How much happier would I have been if I had said in 1999, ‘You know what, I have enough cash now to live forever and pursue creative, charitable, or spiritual pursuits so I could become a better person.’”

“He’s at peace,” says Howard Lindzon, co-founder of StockTwits, and a former co-investor with Altucher on deals. “It’s all very cathartic for him.” Even so, Lindzon calls Altucher “a pain in the ass who would just disappear for months at a time. Would it have killed him to see the light back then?”

Homeownership and college education have become Altucher’s bêtes noires. He calls the mortgage industry “programming by the machine. By the banks, the corporations, the government, that wants you in hock.” Altucher, a Cornell grad, faults colleges for churning out “debt slaves” who take unhappy jobs just to service their loans. “If you could,” he says, “take half the people accepted into Harvard and tell them they can’t go to college. Then compare them in 20 years. It’s about ambition. Not the diploma.”

At his Formula Capital, Altucher says he is finding no shortage of promising opportunities in tech and media. He thinks the Dow Jones industrial average may hit 20,000 in a few years. “The economy is about to boom,” he writes. “Bernanke just printed up a trillion dollars and airlifted it onto the U.S. economy.” Even so, he does not believe individual investors have enough patience, discipline, or nerve to invest in stocks successfully. Altucher himself concedes his message is a work in progress that is rife with dissonance and contradictions. Not unlike the times.

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H. Gobind Khorana, 89, Nobel-Winning Scientist, Dies

H. Gobind Khorana, 89, Nobel-Winning Scientist, Dies
NYT, 14-Nov-2011
By DENISE GELLENE

H. Gobind Khorana, who rose from a childhood of poverty in India to become a biochemist and share in a Nobel Prize for his role in deciphering the genetic code, died on Wednesday in Concord, Mass. He was 89.

His death was announced by the Massachusetts Institute of Technology, where Dr. Khorana was a professor emeritus.

Dr. Khorana, who received his early schooling from his village teacher under a tree, advanced his education through scholarships and fellowships to become an authority on the chemical synthesis of proteins and nucleic acids, the large molecules in cells that carry genetic information.

He received the 1968 Nobel Prize in Physiology or Medicine with Robert W. Holley of Cornell University and Marshall W. Nirenberg of the National Institutes of Health. They worked independently of one another and received the award for showing how genetic information is translated into proteins, which carry out the functions of a living cell.

Their experiments looked at the nucleic acids found in RNA, a chemical in cells that translates the genetic information contained in DNA. RNA is composed of four chemical bases, adenine, cytosine, uracil and guanine, which are represented by the letters A, C, U and G. The three scientists showed that these chemical bases combine to form three-letter “words” that represent amino acids, the components from which proteins are constructed. Dr. Nirenberg discovered the first word, UUU, the code for phenylalanine.

Dr. Khorana used chemical synthesis to combine the letters into specific defined patterns, like UCUCUCUCU, from which he deduced that UCU encoded for serine and CUC encoded for leucine. His work unambiguously confirmed that the genetic code consisted of 64 distinct three-letter words. He and Dr. Nirenberg discovered that some of the words told a cell where to begin reading the code, and where to stop.

In 1972, Dr. Khorana reported a second breakthrough: the construction of the first artificial gene, using off-the-shelf chemicals. Four years later, he announced that he had gotten an artificial gene to function in a bacterial cell. The ability to synthesize DNA was central to advances in genetic engineering and the development of the biotechnology industry. “He left an amazing trail of technical achievement,” said Dr. Thomas P. Sakmar, a professor at Rockefeller University and a former student.

Dr. Khorana’s lab also turned out leaders in academia and industry. One former student was involved in the creation of Applied Biosystems, which developed equipment used to decode the human genome. Another student, Michael Smith, was a recipient of the 1993 Nobel Prize in Chemistry for devising a method of manipulating DNA.

Har Gobind Khorana was born in the village of Raipur in the Punjab region, which is now part of Pakistan. Not certain of the date, he said he was probably born on Jan. 9, 1922. He was the youngest of five children of a Hindu tax clerk for the British colonial government, who was dedicated to educating his children. His family was “practically the only literate family in the village inhabited by 100 people,” Dr. Khorana wrote.

His aptitude for science was evident from the start. He received a scholarship to study chemistry at Punjab University, although he had been too shy to attend the required admissions interview. He received his bachelor’s degree from Punjab University in 1943 and his master’s from there in 1945.

After earning a doctorate in organic chemistry from Liverpool University in England in 1948, he spent a year doing postdoctoral research at the Federal Institute of Technology in Switzerland, where he secretly took up residence in a laboratory until some financing came through.

He received a research fellowship at Cambridge University, a center for the study of proteins and nucleic acids, where James D. Watson and Francis H. C. Crick would discover the double-helix structure of DNA in 1953. Dr. Khorana was drawn to the field.

In 1952, he was recruited to the British Columbia Research Council in Vancouver to join a group working on nucleic acids. He developed a new method of synthesizing nucleotides, and achieved international recognition for synthesizing coenzyme A, which is involved in converting fats to energy.

His move to Canada coincided with his marriage to Esther Elizabeth Sibler, whom he had met in Switzerland. “Esther brought a consistent sense of purpose into my life at a time when, after six years’ absence from the country of my birth, I felt out of place everywhere and at home nowhere,” he wrote.

His wife died in 2001. Their daughter Emily Anne died in 1979. His survivors include another daughter, Julia Elizabeth, and a son, Dave Roy.

In 1960, Dr. Khorana moved to the Institute for Enzyme Research at the University of Wisconsin, where he did the work that led to his Nobel Prize. His lab included researchers from 27 countries with expertise in basic chemistry, molecular biology, enzymology and biochemistry, a multidisciplinary effort unusual for its time.

Dr. Khorana became an American citizen in 1966. He joined the M.I.T. faculty in 1970 and retired in 2007.

Among the honors Dr. Khorana received were the Lasker Award for basic medical research in 1968 and the National Medal of Science in 1987.

Dr. Khorana, an unassuming man, shied from the spotlight and did not like talking on the phone. In the weeks before he received the National Medal of Science, a stack of message slips piled up on his desk with increasingly urgent messages that the White House had called and that he should call back, Dr. Sakmar said. With the ceremony date fast approaching, a representative of the White House tracked down Dr. Khorana at a scientific meeting and told him he would be receiving the award. Dr. Khorana assured him he would attend.