Looking down from the north, the sentiment on Wall Street is hard to read. You hear anecdotal stories from people who visit Canada, or from friends who work down there, but it’s rare to get a clear picture.
Yet this week’s cover story in New York Magazine is long enough, and detailed enough, to provide solid insight. And one fact is made obvious: Bay Street’s got it good. Very good.
The piece, titled “The End of Wall Street as They Knew It,” explains just how negative everyone on Wall Street is right now. The easy money is over, and it is suddently much harder to churn out hefty profits because prop desks are closing, the banks are required to hold more capital and new leverage rules could limit borrowing to a ratio of 12:1.
Job losses are also rampant, and the piece notes that the financial industry laid off about 200,000 people in the last year.
Whenever new rules were instituted in the past, people just jumped ship to a hedge fund. However, the story points that it isn't as easy to do so anymore. Hedge fund returns aren’t nearly as stellar and there are now so many different funds that they end up betting with each other, rather than profiting off stupid mistakes made by average investors.
This, of course, has many people upset. (Cue the obligatory quote from a banker who has a hard time connecting to the average person.) “I’m not married and I take the subway and I watch what I spend very carefully. But my girlfriend likes to eat good food. It all adds up really quick. A taxi here, another taxi there. I just bought an apartment, so now I have a big old mortgage bill.”
Wall Street's allure is also fading. “'If you’re a smart Ph.D. from MIT, you’d never go to Wall Street now,' says a hedge-fund executive. 'You’d go to Silicon Valley. There’s at least a prospect for a huge gain. You’d have the potential to be the next Mark Zuckerberg. It looks like he has a lot more fun.'"