The price of everything

Future bright as Wall Street, City restructure

Dec. 11 (London) – City firms are looking forward to the future with confidence, despite the freezing up of the interbank lending markets, the broader credit crisis, the collapse in mortgage derivatives, the ongoing slowdown in both the residential and commercial property markets and the complete lack of confidence in the financial services sector. “We are looking forward to the future with confidence,” said one executive, requesting anonymity and speaking through a voice distortion machine, in an interview interrupted only by the intermittent shattering of glass and punctuated by brief but brutal-sounding volleys of semi-automatic gunfire. And helicopter gunships.

According to industry sources, the axe of impending job cuts will fall less heavily than in the past, primarily because everyone is in utter denial about the gravity of the situation. “The axe of impending job cuts will fall less heavily than in the past,” drawled one senior HR source at a City firm in a monotone, although the rest of his quote was drowned out by what sounded like an unearthly cleaving tool being sharpened on a supernaturally large whittling device.

A prevalent planning assumption among many senior bankers is that activity could easily return to levels of three years ago, provided that a time machine is invented that allows a lone warrior to go back in time without any clothes on and completely change the recent past – perhaps by defeating an unkillable cyborg in the process.

“It’s simply a repricing of risk,” said one banker, casually piling up heavy teak furniture against his boardroom door and lobbing milkbottles filled with kerosene and topped with scrappy rag fuses toward a relentlessly advancing horde of junior colleagues.

Industry commentators suggest that any job cuts – say in structured credit, debt new issuance, equity new issuance, high yield, private equity, loans, M&A, corporate finance, prime brokerage, capital introduction, and fixed income trading and sales – could easily be offset by opportunities in new areas, such as catering and toilet-maintenance.

A spokesman for Citigroup refused to confirm reports that 2,800 staff had recently been fired from the company’s London headquarters – by means of a gigantic howitzer. Goldman Sachs, however, acknowledged that 1,700 functionally non-relevant staff had been loaded into a proprietary employee disposal engine powered by recycled analyst gas and “repurposed”.

The Bank of England’s monetary policy committee in a recent advisory report conceded that rapidly contracting growth, a collapse in property prices, elevated personal and corporate lending rates, a slowdown in manufacturing, a pickup in inflationary inputs, a general distrust of financial firms, a collapse in consumer confidence, rising unemployment, the possible failure of major financial institutions, and the sight of four robed horsemen clad in black charging through the streets of the Square Mile were “likely to modestly affect prospects for domestic demand”. BoE Governor Mervyn King and his colleagues on the monetary policy committee admitted that on studied consideration of the economic data, they had been obliged to lower the closely followed asking price on their basket of residential properties scattered throughout the South-East.

The Fright Before Christmas

‘Twas the fright before Christmas; the merchants did grouse,

Not a damn thing was selling, not even a house;

Restocking was futile with goods still on shelves,

And the streets were now teeming with unemployed elves.

The FSA warned of a housing collapse,

An environment hitherto known just to Japs.

And Shanghai and Shenzhen encountered sharp falls

An ominous sign when east Asia appalls.

(Only Tesco was thriving – and that was before

‘Fresh and Easy’ was launched – how Wal-Mart did guffaw.)

The bankers were choking on alphabet soup

Of CDOs, SIVs; all sorts of gloop.

Bond salesmen were sweating, awake in their beds,

With visions of dole queues (and widening spreads).

In Floridian fund pools there was such a clatter

As portfolios blew up with foul fecal matter.

Their managers, much like their bonds, were distressed,

With the agents who’d rated them under arrest,

And the banks that had sold everyone down the river

Saw their equity ratios down to a sliver;

Man turned against man, and the brokers the same

Lashed out at their rivals (it was all just so lame):

Punk, Ziegel slashed Goldman Sachs, Morgan and Merrill,

And Bear Stearns and Lehman they did also imperil,

The markets a-brim with black swans and fat tails –

What happens when mania with credit prevails.

The quant funds were savaged as bell curves deflated

And CFOs had to be strongly sedated.

Will central banks save us ? The stock markets rally,

But interbank lending now feels like Death Valley.

The bulls now see good news in looming recession

But try to get upbeat about repossession.

The bank stocks are cheap now but could yet get cheaper

As retailers cower at the sight of the Reaper.

Diversification in assets should work

If lending conditions continue berserk.

Some market neutrality also appeals

For when event-driven runs out of new deals,

And if the unthinkable does now unfold

There’ll be merit in silver and still more in gold.

Amid confidence crisis and capital flight

Happy Christmas to all, and to all a good night.