Economy
Related: About this forumThe Big Unwind Hits Investment Banking
The Big Unwind Hits Investment Banking
by Wolf Richter March 24, 2016
The meme has been that central-bank-imposed low interest rates and negative interest rates are killing bank earnings, and that oil-and-gas loan loss reserves maul whats left of these earnings. But its tough for banking all around, as the global QE bonanza is bumping into real-world limits. And the Big Unwind has started.
For investment banking revenues, a key income source for systemically important banks, it has been one heck of a terrible first quarter, according to Dealogics preliminary Global IB Strategy Review. And the damage will show up in earnings reports soon.
If, in the list of fee mayhem below, you frequently stumble across phrases like plunged, plummeted, lowest since Q1 2009 when the bond market imploded during the Financial Crisis, or lowest since Q1 2001 when the dotcom and IPO bubble imploded, its because thats the kind of quarter it has been for investment banks and their lifeblood: extracting big-fat fees coming and going.
.....(snip).....
Barring a financial crisis, it is hard to imagine a worse quarter for the big banks engaged in investment banking. And yet, its just the beginning. Banks have been at the epicenter of the great credit bubble. Theyve benefited from it. Theyve sucked it dry. Theyve become bigger and fatter and paid out record bonuses for years. But now the Great Unwind has arrived. .........(more)
http://wolfstreet.com/2016/03/24/the-big-unwind-of-investment-banking/
Hydra
(14,459 posts)The "recovery" has no engine behind it. It was destined to fail almost as soon as it was put in place.
SCantiGOP
(13,855 posts)That is definition of failing as soon as it was put in place?
Hydra
(14,459 posts)Last edited Tue Mar 29, 2016, 07:25 PM - Edit history (1)
But when a process or a policy is put in place, it can be kept in place for years before it reaches its logical conclusion. ISIS didn't start the moment we illegally invaded Iraq, global warming didn't start billion dollar fires the second we found coal to burn, and Fukishima didn't melt down the day after they flipped the switch.
We were supposed to have a green jobs revolution or something else to take the place of the housing/construction bubble and the previous tech bubble. It never happened.
What's the plan, now? Everything is peachy? Pray?
edit: typo
ret5hd
(20,433 posts)Good job.
Embarrassed about the typo, but they plague me :p
beardown
(363 posts)As with all bubbles and as you noted, they take time to grow and then pop.