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Big Banks Cutting Tens Of Thousands Of Jobs; Huge Implications

Companies / Banking Stocks Sep 16, 2015 - 12:48 PM GMT

By: John_Rubino

Companies

Money center banks — which over the past few decades have grown into the biggest financial entities the world has ever seen — appear to have hit a wall, and are now shedding tens of thousands of workers.


Such a sudden, widespread retrenchment can mean several things:

1) Technology is making a lot of back office staff redundant. That’s reasonable and to be expected. Automation of knowledge work will be one of the big stories of the coming decade and finance is a prime target. A quick look at the growth of crowdfunding (from zero in 2009 to an estimated $50 billion in peer-to-peer loans in 2016) tells you all you need to know about the future of conventional bank lending.

2) The profitability of core banking operations is going to crater in the coming year and these guys are trying to get out in front of it — while hoping to hide the deterioration within massive workforce reduction write-offs.

3) The availability of good jobs for European college graduates — already too low — is going to shrink further. It’s virtually impossible for a finance-dependent system to grow while major banks are shrinking, so Europe will remain stuck in neutral while its governments pile up ever-greater debts and more peripheral countries join Greece on the public dole. And the euro will, at some point, be devalued suddenly and drastically.

4) The other big banks can’t be in much better shape, since they’re all operating in the same zero-interest rate, low-growth world. In the US, where auto loans have been a singular bright spot, what happens when cars stop selling? We may be about to find out. See U.S. factory output declines on sharp drop in auto production.

5) The global recovery is a mirage. Six years in, with stock and bond prices near record levels, demand for support staff in deal-driven entities like banks should be rising. Layoffs on this scale are bottom-of-a-recession events.

Add it all up, and significant Fed tightening looks like a hard sell. The opposite is much more likely.

By John Rubino

dollarcollapse.com

Copyright 2015 © John Rubino - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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