Reading this Wall Street Journal story, you’d think that Wall Street had fallen on hard times:
Morgan Stanley offered a glimpse into Wall Street’s future, and the outlook has changed so much from the heady days of the past that the firm is planning to keep a close watch on BlackBerry usage.
New cost-cutting moves were the focus of a 45-minute discussion at a Deutsche Bank conference by Morgan Stanley Chief Financial Officer Ruth Porat aimed at showing how the securities firm is trying to boost profits in the next few years. Barely mentioned were revenue opportunities that dominated other recent Morgan Stanley presentations.
Morgan Stanley’s penny-pinching obsession is a sign of the struggle inside many banks and securities firms to overcome sluggish revenue growth and the looming costs of new regulatory and capital requirements. Banks including Wells Fargo & Co. and Bank of America Corp. have launched cost-cutting efforts, with BofA looking to reduce its branch count by 10%.
They’re chintzing on BlackBerries. Okay, but here’s The Wall Street Journal four months ago:
Wall Street Pay Reaches Record $135 Billion…
When it comes to paychecks, Wall Street’s law of gravity is back in full force: What goes down must come back up..
Call me when they start pinching pennies there. At least the Journal notes that in its kicker:
One of the biggest cost-savings opportunities at any investment bank didn’t come up Tuesday. Ms. Porat said not a word about cutting salaries or bonuses.
— The Wharton School’s Justin Wolfers writes at Freakonomics that by an alternative measure, the recession began in late 2006, a year earlier than official accounts, and is still ongoing.
Wolfers, who also works for the National Bureau of Economic Research, which officially calls and dates recessions, argues that income is a better measure of GDP than spending. If you use that you find that:
1. The slump began in late 2006. And indeed, we were hardly enjoying good times through early 2006.
2. It’s a big slump, and GDP per capita fell by over 7 percent.
3. We remain a long way below the previous peak.
4. It’s going to take a long while to return to where we were back in 2006. Most forecasters are expecting GDP to grow by around 3 percent, implying per-capita growth closer to two percent. At those rates, average incomes in 2013 will (finally!) be back around the levels of 2006.
He says we’re already “halfway to a lost decade.”
— Here’s the Parallel Universe Headline of the Day:
Powerful people held to account for crisis
That’s the Financial Times today. But of course “held to account” here isn’t topping a story on perp walks or anything. It’s for a book review.
I guess we’ll have to take what we can get.