Got Protests? Why the Outside World Hates Wall Street – And What to Do About It
Yes, you read that headline correctly: this is a post about current events (sort of) and what’s going on in the world today.
I don’t like to write these types of articles because the content quickly goes out of date, but these protests are hard to ignore completely.
Plus, it’s a fun break from writing about the usual topics here and I get to rant about silly anti-capitalists.
Let’s get started and learn why everyone hates Wall Street so much, where it all began, and what to do about it.
A History of Hatred
The United States has a long history of economic protests, starting with this little “Boston Tea Party” incident back in 1774.
But this is not history class, so you can read through the entire history of economic protests on your own via that link above.
Long story short, there have been many protests in the past 200 years but most of them have had more substance: massive depressions, actual people who are working rather than unemployed students shouting nonsense, and specific, legitimate demands.
As opposed to “free college education” for everyone, “one trillion dollars in ecological restoration,” and more tomfoolery.
Are Any of These Complaints Valid?
As you can see, the list of complaints / demands is borderline ridiculous and consists of points that would be either technically impossible (see the one about alternative energy) or ones that would bankrupt the country – that is, bankrupt it more than it already is.
Oh, and the points are mostly unrelated to Wall Street or the financial system – way to pick a name, guys.
The composition of the protesters (at least when it started) also makes it hard to take them seriously: if you’re not working it’s easy to lump everyone in “finance” together and denounce capitalism, the Federal Reserve, and whatever else you’ve randomly decided to hate.
And yes, you might also be in the same age range as some of these protesters but if you’re reading this site you must like capitalism – which makes you significantly smarter and more realistic than them.
Money matters and it only grows more important as you grow older.
If I were writing a tech blog, the way that the protest movement is spreading via social media would be interesting to discuss.
But the more important point on this site is not what this specific protest means or how it’s spreading, but what all the hatred for Wall Street means for you and how to deal with it.
Do Bankers Deserve the Hate?
Blaming “Wall Street” for the economic problems in the developed world is an oversimplification and ignores:
- The fact that banks have repaid TARP, with interest.
- Predatory mortgage lending practices from the failed Fannie Mae and Freddie Mac.
- Governments worldwide spending far too much on entitlement programs and not collecting nearly enough in revenue to be solvent.
- The unstoppable force of globalization and how it has transformed every market.
If you define “banker” as “someone in finance,” then yes, bankers are partially responsible for the problems since they created and sold “financial weapons of mass destruction.”
[UPDATE: After some comments below I removed this part about the separation between bankers and traders. I agree that it is a bit silly and that there is some overlap so I have not distinguished between them here.]
So financiers could be blamed for some of the mayhem, but certainly not all of it. They are guilty, but they’re not 100% responsible for everything that has happened.
Nevertheless, bankers take a lot of flak for everything partially because they brought it on themselves – by spending too lavishly, making silly statements, or otherwise not explaining “what they do” to the world at large.
For more on spending too lavishly, read all about the mayhem of holiday parties and how much firms spent in boom times; news of how much PE and HF Partners spend on mansions, exotic artwork, and other displays of wealth hasn’t helped the situation much, either.
The best example of a recent, stupid statement coming from a financier is this horrible interview with a trader who said, “We don’t really care about how they fix the economy… our job is to make money from it … I go to bed every night and I dream of a recession.”
Whoops.
If How to Win Friends and Influence People gets an update anytime soon, this interview should go in it as an example of what not to say.
Finally, finance is a poorly understood industry and most people fear what they do not understand. No one who works in the industry takes the time out to explain what they do or how it contributes to the economy and job creation.
As Yoda might say, “Lack of explanation is the path to the dark side. Lack of explanation leads to misunderstanding. And misunderstanding leads to fear. And fear leads to protests and lots of people getting pissed off at Wall Street.”
Will You Be Hated? And Can We Do Anything About It?
This brings up two new questions:
- Once you break into finance, will you be hated simply because of the industry you work in?
- Is there anything we can do about it? Should we even try to reduce the hatred for Wall Street?
The answer to the first question is “Yes, people will hate you for working in finance due to a combination of the media, lack of understanding, and jealousy over how much money you make. Better get used to it.”
Back when I first got into finance, friends who were joining big companies like Google also labeled me a “sell-out” (ironically, the ones who joined Facebook ended up making far more than me); luckily if you’re at a school where everyone does finance or consulting anyway, this will be less of an issue.
The only way to deal with this is to be low-key and/or hang out with people who won’t label you because of where you work.
It’s almost impossible to find friends who are completely nonjudgmental, though, so the real solution is to hang out only with other finance people.
Just kidding, sort of…
So What Should You Do About It?
If your friends and the general public will hate you and you can’t fix it in the short-term, could you do anything in the long-term to improve Wall Street’s reputation?
The solutions are similar to the solutions to what to do about analysts and associates secretly wanting to kill each other – or your last drunken night out when you passed out after getting bottle service:
Take One for the Team
Pay in the finance industry will decrease in the future – there’s no way around that with increased regulation and worsening economies in the developed world.
So you’ll have to either accept still-higher-than-normal-jobs-but-not-as-high-as-before pay, or go get a job at a normal company… doing… something boring.
Yes, everyone wants to get paid more but that’s not going to happen these days.
And if you do happen to get a fatty bonus, don’t be foolish and show it off so lavishly – that just inspires more hatred from everyone else as they claim that bankers get paid “too much” for doing work they don’t understand.
Sure, you can brag about it to your co-workers or debate bonus numbers with friends in the industry, but mentioning anything to other people is a horrible idea.
One time a friend met an acquaintance at a hedge fund, and that acquaintance started the conversion by mentioning how he made a lot of money and just bought a $50,000 watch.
You can bet that he didn’t win too many friends or influence too many people after that meeting…
Lower Your Standards
Another related issue is that nowadays people go into Wall Street expecting to get rich, whereas in the 1980s they went to Wall Street hoping to get rich.
I often get emails and comments asking variants of, “So, I want to make $1 million by age 25 without taking any risk and also without working more than 40 hours per week. What should I do?”
If you’re OK with possibly going to jail, you may want to consider a career in dealing crystal meth – because you certainly won’t get $1 million for less than 40 hours per week in finance.
You should lower your standards because:
- More and more pay will be in the form of deferred compensation in the future. A few relatively junior trader friends have already received 50% stock-based bonuses and/or other forms of deferred bonuses recently.
- The government can do whatever the hell it wants – just like the “millionaire’s tax,” they can cap salaries and bonuses at banks and the banks can’t exactly start an “Occupy Government” movement to protest the decision.
- History supports lower bonuses – up through the 1970s, you didn’t even make much more in finance than in other industries. Back then smart people actually wanted to go into engineering, law, and medicine since the pay difference wasn’t as high.
Be a Teacher
Finally, you need to explain how your work impacts the world at large.
So do the opposite of what that trader who “dreams of recession” did and point out how:
- People in finance can actually create jobs and boost the economy by taking companies public and raising funds for new technologies.
- Bankers do add value… by getting company founders appropriate prices when they sell, which in turn leads many of the founders to invest in new ventures and create more jobs.
- Financiers also give fund managers at places like Fidelity – AKA the people who manage retirement savings accounts for millions of people – places to invest their money.
- Banks play a critical role in the economy by allowing businesses to borrow, expand, and hire new employees, thereby creating jobs in the process.
I’m not going to suggest that financiers do good for the world in the same way that teachers or doctors do – they don’t.
But they do play a critical role in the economy and the more transparency there is around that role, the less hatred there will be.
Know When to Back Off
If you meet someone who really hates everything and everyone in finance and will listen to nothing you say, back off.
Some people are 100% set in their beliefs and will never accept the possibility that they might be wrong about something or that there are multiple interpretations.
Don’t bother trying to preach to the non-believers – either preach to the choir, or to those who are possibly interested in joining the choir one day.
Does Any of This Matter? Should You Care?
I don’t expect anything to change as a result of publishing this article – these are just a few of my own thoughts on the recent protests and all the negative news about Wall Street.
At the very least, we can hope that all the protesters disappear and go back home soon because they’re starting to make nearby parks dirty and cost the NYPD millions in overtime fees.
And if they don’t go away organically, maybe you can drop by and buy everyone bottle service to lure them away and clear the streets once again.
UPDATE: Comments are now closed on this post because they’ve gone way off-topic, and everything useful that can be said has already been said. I don’t want to spend time/money moderating comments on an off-topic post like this when the purpose of this site is to help you get into banking and learn what it’s like on the job.
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Your separation of traders versus investment bankers surely does not make any sense as a defense. They are in the same building. Your blog only adds to the murkiness of the whole finance business.
It did sound like separation, but I think he was making a point of how NOT to talk to people outside of finance. As a trader, I saw his views as market talk and how he’s looking for his opportunities. Another person outside of the industry would just think ‘EVIL PERSON!’.
It’s naive to the point of stupidity to pretend this isn’t what many people in finance do think. We’re brought up to believe money is good and that corporations have no responsibilities except to enrich shareholders. In fact, that’s what the law says, and so all the talk about social, environmental, and other responsibilities have to be couched in terms of “fiduciary responsibilities”, aka. maximizing shareholder returns.
To pretend that no, this or other traders of IBs really are trying to enrich society etc is to either lie or double-think.
Yes some people in finance do think that way, but things aren’t as black and white as you suggest.
Banks are a necessary part of the economy. Without banks, people “trying to enrich society” wouldn’t even be able to do so because it would be impossible to borrow money on a large scale.
Bankers may not be missionaries, but they’re also not evil / greedy super-villains as some suggest.
What traders do and what investment bankers do is completely different. If you need further clarification, read some of the articles or look at the podcasts we’ve done on the topic. It’s already been addressed here dozens of times.
Investment bankers do not create derivatives and sell them to people.
They help companies buy other companies, or help companies sell. Or help companies raise financing.
But bankers do not create any type of security themselves nor do they sell them to anyone.
Brian,
I think your view of the separation of traders and ‘investment bankers’ is a bit old fashioned. On a very basic level, every (senior) banker today is asked to do what they call ‘cross-sell’. Every deal is supposed to have a host of other products tied to it, and if you don’t sell them, you basically leave money on the table for someone else.
The other dynamic is that the boundaries between the two sides get blurred more and more. I have seen numerous examples of teams and departments that consciously cross into both sides in order to serve customers with a complete offering.
It’s usually at these teams where potentially toxic deals/products are invented and sold.
Yes that’s a good point and is true to an extent, but it depends on the bank and group. As I said, banks are definitely guilty but are not 100% responsible.
Update: Upon further reflection I do agree there is some overlap so I’ve changed that part above.
It’s good to have these ‘current affairs’ posts every now and then. After reading a lot of your posts before, it’s a nice change to see something other than ‘how to…’, keeps you connected to your audience.
Anyway, I feel somewhat the same about this whole ‘Occupy’ protest. It’s quite ridiculous to an extent. Nice suggestions about blending in though haha.
I’m also curious how much those “entitlements” cost versus the trillions in bailouts, corporate welfare, etc. Yeah, TARP was repaid. Now how about the trillions for everyone else that really exploded the national debt?
I really don’t want to get into a political argument here, but the liabilities of social security and medicare alone are 2-3x the size of the entire US economy, dwarfing any bailouts, tax breaks, corporate welfare, etc. etc.
http://blog.heritage.org/2010/08/05/trustees-report-social-security-and-medicare-are-unsustainable/
(And yes I know it’s not a non-partisan source but the figures come from a government report)
I’m not going to argue that these programs are “wrong” or should be cut or anything like that, my only point is that they have contributed and will contribute to further economic problems in the future. You see it in Europe right now – it’s impossible to support that much spending with the tax revenue that governments bring in.
..“So, I want to make $1 million by age 25 without taking any risk and also without working more than 40 hours per week. What should I do?”..
I find it incredible that you still get such questions.
Yes we do!
Nice article… yeah, it’s easy to “protest” but it’s difficult to actually learn about finance, the bailouts, and economics in general. Most protesters don’t know the basics of economics. But remember, if you’re unemployed and need free food, I hear the “Occupy Wall Street” movement gives free lunch!
But I don’t agree with the claim that the “TARP” program is “capitalist.” The TARP program was essentially the use of public money (created through printing by the reserve) to loan to the banks (and save the favorites). The Federal Reserve bought these “troubled assets” from banks, and put them under its provision. But preventing these assets from being reprocessed in the economy, and transferring the risk to the public sector prevented Wall Street from alleviating a lot of the damage and waste created in the Housing Bubble. Socializing the risk by bailouts, and privatizing the loss isn’t capitalism; it’s crony capitalism at best.
Yeah TARP is not “capitalist,” any form of bailout = government intervention in private markets = not capitalism.
My only point was that people complain about TARP all the time, but the banks have repaid it already. The alternative of not buying the assets from banks would have been more “capitalist” but probably would have caused more damage in the long-run.
So may I conclude that you consider yourself to be Keynesian/Monetarist? (I’m grouping them together because both schools of thought support the bailouts and are almost indistinguishable in policy advocacy).
Also, are your opinions representative of the finance community? Do most finance agree with the bailouts and the aggressive role of the federal reserve and agree with the so called “establishment” views? I just want to know, because I may have some trouble fitting in, and I fear I’m going to spend a large amount of time arguing about economics than tweaking numbers on spreadsheets.
I don’t subscribe to a particular school of economics, but I think the bailouts were necessary to avoid further bloodshed.
Most people in finance want to protect their jobs, so most would probably agree with that.
Don’t worry, you’ll have no time to argue about economics – too busy working and gossiping about co-workers… hardly any spreadsheet work.
I should probably take your own advice:
“Some people are 100% set in their beliefs and will never accept the possibility that they might be wrong about something or that there are multiple interpretations.”
But sometimes I can’t keep my mouth shut. Just because a person is against corporate greed and a corrupt government does not mean they are against capitalism.
You have only regurgitated the same b.s. I’ve heard over and over again in mainstream media. While I agree some of the protesters have given embarrassing responses, they do not represent everyone as a whole and there are plenty of videos proving otherwise.
Although, those that are not quite as intelligent as you deserve to have their frustrations heard as well, even if they are not able to express them in a thoughtful, or even realistic, manner. It should be common sense that this type of event will attract the type of people that you often expect to see, but it has also attracted a now widely varied group of people.
The thing is, even as I write this i’m thinking that what I type here should be self-explanatory. It is disheartening that it is not, yet not unexpected. You seem to be completely out of touch with the regular folks that this is about.
Your arrogance practically seeps through my screen and this is coming from someone that received her degree from the University of Michigan. While I have plenty of pride in my alma mater, your attitude is much like some of my colleagues there… a university not quite ivy league but many would agree just below it.
I probably will not come back to this site to read any responses, I just hope to get you or some of your readers to think twice about how there are those of us that would find this article totally biased and many of the “digs” unfounded.
Too long. Can you summarize?
As I said above, banks are certainly at fault and I’m not saying they’re not. My only points are that 1) It’s hard to take all of the “demands” from the protesters seriously, though some of them have a basis in truth. 2) Yes, banks are partially to blame but they should not receive 100% of the blame.
If you think I’m arrogant, I am actually completely unlike the average person in finance. I never talk about money, don’t care about status/prestige, and go out of my way to avoid telling people anything about those topics or ever attempting to brag. In fact, many people who meet me in real life often think I’m barely surviving because I am so low-key about everything.
I’m sorry if you were offended, and wish you the best of luck in the future.
There are some good points here, but this is kind of a narrow a point of view.
This ‘hate’ is not about you as a person in the job you do. It is about the fact that you and your profits are helping feed a massive entrenched system of greed, discrimination, inequality and unrest. And that you refuse to give a damn about the workers/population you exploit in other to hit that.
Agreed, but this is a narrow site. It’s for people who want to get into finance – I don’t attempt to get a broad audience or to get the world at large to read it. It’s for a very specific demographic, and it works because of the specificity. I don’t address social inequality here because it’s way off topic and because while occasionally it’s fun to go into other issues, ultimately this site exists to solve a practical problem: how to get into the industry.
And I think it’s inaccurate to say that junior-level people in finance are “feeding a massive entrenched system of greed.” Mostly they are just looking to gain experience, learn something about the markets, and earn money in the process of doing so.
What’s wrong with greed? “Greed is good.”
God.. there should be a like button on these posts…
Great post. In addition to the points above, one of the things that I think is so funny about the whole ‘movement’, is that these people in the protests (typically) have clothes, food and an education (even if it’s a liberal arts degree), making them in the top 10% of the world’s population most likely…. Another kind of hypocritical thing is that they are saying that jobs are a right, but they are getting mad at the financial sector for working. So they want jobs to be a right, but they want to decide what type of job people are entitled to have….. Sounds very Marxist to me, but then again I don’t really know a whole lot about their actual platform (I don’t even know if they do).
Yes good points… everything is relative
This is what I hate about political discourse in the United States (esp. in regards to finance/economics)- it’s so suffocatingly binary. On one side you have grassroots “anti-capitalists” that blame corporations for everything without exerting any effort to understand why they exist. On the other, you have self-entitled “masters of the universe” that inherited their positions in finance by being born into high society and have no real comprehension of what its like to be working/middle class, let alone unemployed and starving. What happened to the people in between?
I’m not sure how many people that frequent this site actually work in the industry/have past work experience in the industry, but for those that do, I’m wondering what you actually think of these protests. I must say I have very mixed feelings.
Regardless of how much “value” bankers add, the fact of the matter is that, even in lieu of the hours that they are working, the lifestyle is significantly better. I’ve notice that whenever bankers try to justify their salaries by saying that they “work harder”, they always point to others in the same social class- “we majored in economics in college and networked rather than majoring in gender studies and are therefore entitled to make the most amount of money”. “We go to a better school, therefore, we are smarter and more biologically predisposed to make the most amount of money”.
But what if you broaden the comparison? Why not compare us to individuals in the armed forces, or working-class professions. Where would you rather be- being forced to work on a mundane pitchbook, or being forced to shoot innocent civilians in Iraq? Not being being able to go home until 1 am in the middle of the night because of “facetime”, or not being able to go home at all because you are dead.
One of these days, I may be out there picketing myself.
Yes, but the world is unfair. That’s just how markets work – people get paid what they get paid based on what the market values them at. Often times it’s unfair and the market is wrong, as in the examples you pointed out.
And that’s why I think some people have the right to be pissed and protesting.
True. I guess I’m just used to getting screwed over in various ways so don’t feel the need to protest anything…
I actually disagree with the advice in this article. I think the appropriate response is to try to intellectually engage with the protesters and crush them like Iron Mike boxing a five year old girl. My dream, which I realize will never happen, is for someone in finance to debate the protesters in a televised format. I think the world needs to see someone in these protests attempt to make any kind of intellectual justification for their demands. I anticipate epic failure because the protesters are failures.
I agree, the latte-powered limousine liberals that are just there to be on TV and have no real comprehension of what’s going on ultimately distract from anything intellectually substantive. They are failures, I’ll drink to that.
With that said, I think there are very real reasons for people not in finance to be pissed. Do you think anyone will really bother to learn about what an IPO is, or what corporate valuation is, if they’re unemployed? Most college kids are too lazy to learn the three accounting statements in time for first round interviews, why would disgruntled workers take the time to “prove themselves wrong”? The bankers could win the debate and still lose it.
No point in arguing with insane people… (that is a comment not to be taken seriously – in case you’re reading this after the fact and you’re about to flip out)
I’m also going to have to respectfully disagree with the “have someone in finance” debate with the protestors. The last thing the industry needs is some 21 year old asshole from Exeter who got his analyst gig from lacrosse buddies telling a group of disgruntled and laid off 50 year old factory works why he deserves to get paid more than they do.
Yeah I can see why everyone is laying the blame on wall street for the recession though I think the whole America, the whole American value system – over-consumerism, debt (no savings) – is at fault. I believe this is the crux of the crisis. No doubt a few greedy finance/mortgage guys have caused the meltdown but if the whole American value & financial system wasn’t at fault in the first place they wouldn’t have been able to do so much
I agree with that. When I said someone in finance, I meant someone more senior & more capable of diplomacy than your typical lax bro cum analyst. My ideal candidate to represent finance would be Jamie Daimon (it’s “Un-America”).
Also, I think we may agree that there is certainly plenty to protest in the modern financial system. However, the protesters I read interviews with seem to be protesting outcomes, not processes. Just as an exercise, how many protesters “occupying” any city in the country do you think would still be there if they had been able get jobs as analysts six months ago?
And before someone complains that finance hiring is somehow biased, I acknowledge it is far from perfectly fair. However, I doubt any of the protesters would get so much as a first round at a boiler room trading shop.
I gotta say this is Brian’s most political post. Plus, it’s not too relevant in terms of helping people break into investment banking. By saying Main Street hates Wall Street, people could, on the contrary, be discouraged from joining Wall Street.
Personally, I think the best way to stop protests is to stop giving attention to them rather than sharing bottle service. :)
There are 300+ other posts that are relevant to breaking in. I don’t want to write about that all the time or I would get bored. There are more topics like that on the way, but past a certain point you can’t give unlimited advice on how to write a resume. I do maybe 2-3 current events-related articles per year, so it’s not as if the site is completely changing.
Quite a polarizing article. Enjoyed reading the comments for the most part but have to say: please move on an post a new article back on topic for this site – getting in, day in the life, etc. Don’t want to sound elitist or anything but this site does seem to work best when the article topics are things only the site’s intended demographic would be interested in.
Appreciate the sentiment, but the past 20-ish or so articles have been on those topics. Occasionally I do something off-topic or news-related, but it’s only when something significant is happening.
More material on the topics you mentioned is coming up. But, as I pointed out above, you can only say so much about certain subjects before it gets repetitive, so after a point you have to cover new areas.
“but if you’re reading this site you must like capitalism – which makes you significantly smarter and more realistic than them.”
Well i dont agree with this sentence and some of the pro-capitalist views and neither am i a socialist.The thing is capitalism and its growth has always created class conflicts which in turn has created restlesness in the society right from the renaissance period.I am strongly against naked capitalism and always think that free market economy with a responsible govt is the way to go ahead
Interestingly, no one protests about the pay of celebrities and sports professionals. How much value do they bring in? Less important to the economy than bankers, I would say.
What they’ll say is that celebrities didn’t cause the financial crisis, celebrities aren’t brokering the sale of our debt to foreign countries, celebrities didn’t advance globalization, and that celebrities don’t manipulate the discourse coming out of Washington.
But yeah, celebrities are overpaid, somewhat.
Less important to the economy than bankers, I would say
Well the entertainment industry does bring value to the economy , but in a way celebrities do not bring much value to the society.But the society will never protest against celebs, will you stop going to movies just because some actor is earning crazy money during recession times? So this celebrity argument is dubious and futile to say the least.
No to sound racist but i think americans should stop this obsession and mindless worshipping of celebs
Yes. I agree with your last statement. The world should, not just Americans.
Somewhat highly overpaid? Very highly overpaid and monopolizing the world’s movie industries.
If celebs can be so highly overpaid, why can’t bankers or financiers be highly overpaid as long as they bring in value?
I can’t believe you made that comparison- I mean, this site instantly loses credibility when that’s the best counterargument to the Wall Street hate an editor can make.
The reason why celebrities are “overpaid” is because market demand allows them to be. That’s right, the same capitalist principles that supposedly warrant the exorbitant wages paid to CEOs also explain why celebrities generate the wages that they do.
But here’s the thing- celebrities are indirectly paid for by the consumer whereas bankers are being bailed out by taxpayer money, without consent. If a sports team makes a stupid trade, they lose a good player and conceivably make less money during that season. If an investment bank makes a stupid financial product… well, we have a financial crisis and have now concluded that greatest culprits are ironically worthy of receiving the most amount of federal money.
If you don’t like Will Smith’s movies, don’t buy tickets to watch them, and he will therefore make less money (in theory). If you don’t like Peter Krause’s fancy ties and gaudy suits, well too fucking bad, because money that could have been spent financing a Iraq War vet’s college education is now subsidizing Krause’s retirement compensation.
Sonic, while you can’t believe I made that comparison, I did. And no that was not a counterargument; I was simply expressing my opinions. If you think this site loses its credibility because I expressed my opinions, then don’t visit the site. However, as Brian said, we are going off topic so this discussion will end right here.
To Sonic: no, that was not the best comparison, but to be fair someone else above brought up the issue first.
This discussion has gone WAY off topic if we’re debating celebrities vs. financiers now, so I will probably close comments shortly.
The point of this article was to give some thoughts on the topic (yes, banks are responsible but should not receive 100% of the blame, and lower pay is coming in the future). I don’t want to get into a debate over what’s fair and how much each different profession should be paid because it’s just too off-topic.
Jason, right on. I agree with you completely. I doubt the value celebs bring to the economy. In a way, the mass media/celebs can also encourage over-consumerism, ego-ism. The mass media has so much power and it can abuse its power and influence people’s thoughts & buying behavior. I believe the “mass media” encouraged over-consumerism in America which led to this melt down — everyone wants to buy stuff and no one wants to save because so and so on TV is wearing x, y, z. Why don’t the mass media reflect on its behavior instead of laying the brunt of the blame on Wall Streeters? Celebs & sports professionals bring in just as much , if not, more money than financiers, and I don’t know how much value they add to people’s lives other than providing entertainment (maybe that is value in itself) and influencing people’s thoughts & behaviors causing people to think a herd- like mentality…which is beneficial to them cause people then start buying what they endorse…and start accumulating debt etc –> the American dream…haha.
we have to agree to disagree on this one
I enjoy a bit of off-topic every now and then,even more so if it is a bit controversial…where is my tranq gun Brian?
The Wall Str hate debate isn`t a new one,it`s been around since 1929,it might be a bit more amplified today simply because more people lost a lot more money this time around (read some of the accounts and look at the first occupy Wall str photo`s taken of the NYSE).The thing is though,if you are protesting because of a loss of wealth,education,jobs etc it indicates that on some level you are a capitalist/support capitalist ideas!What other options do you have,socialism?…Good luck with that one buddy.
Developed economies have always spent too much and saved too little for decades,also,a loss of industry has massively compounded your economic woes,simple as that.To blame a minority for the consequences of the acts of the majority is an easy way to burry your head in the sand and plead ignorance and stupidity.
This is after all a world that has been shaped by the most fundamental law of nature:Survival of the fittest,so man up princess…..
Exactly. Life sucks, the world is unfair, we get screwed over all the time, but why protest things that are unchangeable?
The whole, “life is unfair, get over it” argument is really strange. Everyone knows that life sucks and the world is unfair. That doesn’t mean, however, that the world has to be unfair to the degree that it is today. Many people think the system is changeable enough to protest and that the marginal improvement in equity is worth the costs.
Cool article, I’m with you on everything but the “banks have repaid tarp with interest” thing. Every measure was taken to ensure banks were able to make risk free profits (i.e. unlimited access to the discount window, which the banks then used to buy treasuries, effectively loaning the money they borrowed from the government BACK to the government at a higher rate of interest).
It was like a cheat code for the banks while everyone else had to deal with real consequences.
That’s true and a good point – my point on TARP was more in response to people who think that banks are still drawing on taxpayer dollars. But as you pointed out, there is the “cheat code” aspect.
Wow Brian this is really a very controversial article that you should have expected before you write it. I have to say I totally agree with your opinions.
I am also a little amazed that there are so many people, on this site, have so many disagreements with you. Seems like there are still many good students of CSR subject while major in finance.
Being honest and straight is always so hard, even if you are not as straight as the cold trader who is dreaming about next recession. I think the banking guys in China may be better at this point, who never say any words about their jobs in public. However we truly need this kind of clear opinion to build a self-stable career. Ha, hope this article would not to be cited by another public site as a reverse example.
This link was heavily shared on Facebook, so it was a lot of random visitors who have never been on the site before leaving comments here. I don’t think anyone who actually wants to break into finance would agree with the protesters.
I’m sympathetic to dealing with a bad reputation that you didn’t get yourself. People working in social media are still viewed as introverted geeks with no real life social skills. I also do freelance video game journalism, and take your pick as to what people arbitrarily blame video games for in society (obesity, violence, degrading women, underachieving in school, divorce, you name it).
Great article, and I appreciate the point about being a teacher. When you’re working in any industry you’re essentially an ambassador for it. It matters more than ever to people working on Wall Street for how financiers and bankers are viewed in popular culture today.
Thanks! And yes, the blame game continues endlessly. Everyone could blame others for something, but it accomplishes little and we’re much better served by adapting and moving forward.
By the way, any future articles on banking in Singapore or moving there as a banker?
I will reflect your opinions to the M&I team
Yes I have someone in Singapore who wants to contribute but hard to lock him down to scheduling.
Hi A,
A friend of mine recently broke into the IB industry in Singapore (as a fresh grad from Australia). I would have to say that it was a lot harder for him because he was a total stranger to South East Asia and therefore did not have any networks whatsoever (no networking? gasp!), he relied purely on resume drops/cold emails/cold calls.
Based on what my friend has told me, there seems to only be 1 main advice for ‘foreigners’ looking to break into Singapore’s IB industry (for analyst-level positions):
You have to have a local address and contact number on your resume (or there is a 99.9999% chance that you won’t get shortlisted for an interview since there are hundreds/thousands of other applicants to choose from) which means that you actually have to move to Singapore before you start applying.
I know moving to Singapore before you even get an IB job offer sounds like a very very risky thing to do, but in this case, the egg happens to come before the chicken: You have to move to Singapore first before you start applying for an entry-level IB job. This is because there are hundreds of local Singaporean finance graduates who are also applying for the same entry-level position, and everything else being equal, HR will always pick someone who is in Singapore over someone who isn’t. This doesn’t apply if you’re at the VP/MD level though.
Everything else in the Singapore IB industry for analysts is the same though: 100 hour work weeks, caffeine and redbull as your best friends, having a staffer burn your weekend for fun at 5pm on Fridays, neverending pitchbooks, and all the other lovely stuff analysts get to do.
And since this is in the Occupy Wall Street article, I’m told that in Singapore, no rational person will dare pull a stunt like Occupy Wall Street. It would be considered as ‘rioting’ and the likely consequences of that are caning, jail time or both. Their rattan canes used for caning are 4 feet long and half an inch thick, and they soak it in water beforehand to make it heavier and more flexible, and the wounds inflicted are nothing to laugh about (women are exempted from caning though, talk about gender inequality!).
Thanks for your detailed input!
Brian,
I think this is a well thought out and necessary piece. Before I start, I just want to mention that I went to Wharton, work for a financial consulting firm, have a father who spent his entire 50-year career in finance, and have 2 roommates and innumerable friends who work at investment banks, so I am highly informed about what exactly people in finance do and how the industry fits into our economy.
To begin, I want to say I’m a huge supporter of capitalism. I love it, I think it’s the best system out there, and have no desire to end it. However, I am what I might call a “pure” capitalist, in that capitalism is a game of creative destruction, and only works when companies are allowed to fail. Over the past 30 years, financial firms have rigged and bought the political system to the point where they are no longer allowed to fail. And yes, you can point out that all the banks repaid TARP with interest (although that leaves out the estimated 1-3 trillion of indirect subsidies through TALF, ZIRP, etc). However, I noticed a distinct lack of TARP programs for non-financial companies, due to the fact they haven’t bought Congress over the past 30 years (with the exception of GM, Ford, Chrysler). I’m all for banks making as much money as they can, but it only works if the game isn’t rigged in their favor, as it is today. I’m not calling for the destruction of the US financial system, merely a leveling of the playing field by eliminating the TBTF government support which amounts to a huge subsidy for the financial industry.
As you probably know (having quoted financial pay back in the 70s), FIRE companies’ (Finance, Insurance and Real Estate) share of GDP in the US has risen from 7% to over 20% since 1980. I doubt even you would argue that over that time frame these firms have provided a commensurate improvement in businesses’ access to capital, the most often used defense of the social value of investment banks. Given the near-lack of improvement in this regard (see here: http://baselinescenario.com/2011/10/09/wall-street-and-silicon-valley/), and the fact that financial firms are subsidized by the government, it would not be wildly unfair to classify modern finance as a rentier industry (rent-seeking in the economic sense).
So while I do not identify with the hippies down on Wall Street, there is a very strong argument to be made that finance must be reformed to rebalance the US economy. After all, we seemed to have done just fine from 1945-1970 without the masters of the universe at GS, MS, and JPM and all of their “financial innovation”.
you made a more eloquent point than i did :)
Love that —and only works when companies are allowed to fail.
All of that is mostly true, but banks not being allowed to fail had more to do with the impact their failure would have on the economy than “buying Congress.”
Plenty of other industries spend a fortune on lobbying (see: cigarettes, pharmaceuticals, etc. etc.) as well. But with a few exceptions they are still allowed to fail.
And it is disturbing that finance now accounts for so much of the GDP – but again, there is more at play than banks simply “buying” Congress.
Part of that growth, for example, also reflects stagnation in other industries (outside of technology / start-ups) and how the US has lost its competitive advantage next to foreign rivals.
So I agree it’s disturbing and doesn’t match the value they add, but there’s more at play than simply buying into the political system.
Brian, please excuse my repeated use of “buying”, as yes I’m well aware other industries lobby just as hard as the financial industry does. However, I’m just particularly appalled by the idea of an industry getting saved by the government and then having the gall to turn around and fight every inch of regulation without even so much as a thank you. (I also think finance has the most egregious example of lobbying power in the 1999 repeal of Glass-Steagall. Citi essentially broke the law because they were so confident they could round up the votes to get it changed after the fact).
I don’t want to start what would be a neverending discussion, but there were many plausible alternatives to TARP that could have been used (see Sweden in the 1990s, or TARP with ensuing breakup of the banks).
The fact that TARP has been repaid and the banks and bankers are doing just fine now thank you, is an indication of the problem. You see, many people on Main Street are still in pain, with no foreseeable ending because the economic conditions have not improved for them. While financial institutions were “bailed out” in their moment of crisis and now its back to business as usual for them, Main Street (people who lost their house and or job) were not bailed out and its is not back to normal for them. Easy to see resentment building under these conditions.
Yes, but the unemployment rate and/or housing problems are more correlated with other issues.
The economy is never returning to “normal.” The 1099 is the new W-2. That has more to do with other trends (see the points mentioned above about globalization, the US losing its advantage globally, etc.) than anything the banks have done.
And while I sympathize with those who lost their jobs, having lost jobs myself before, I am less sympathetic to the housing situation because many people borrowed more than they could afford to pay in the first place.
Sure, mortgage lenders played into it and contributed, but ultimately people have to be responsible for their actions and understand what is and isn’t affordable… most people should not even own a house. They’ve just been brainwashed into thinking otherwise.
Brian, right on!
I agree and disagree with you. The statement i do disagree is “but if you’re reading this site you must like capitalism – which makes you significantly smarter and more realistic than them.”
I think what is capitalism has changed dramatically – the fact that private companies were given money to succeed doesn’t really jive with my understanding of capitalism.
I started a small business, i did fail. I didn’t receive any bail outs. Granted my employment of 10 people didn’t equal to influence of the banks but then so is the capitalism they practice different from what i practiced?
And while banks do add value – when you have investment banks that can sell a product to their clients while shorting that position – what does that say about the value that they add.
And when LinkIn went public, many people said it was undervalued by the investment bank so that the very few people in the know could purchase the stock that was sure to rise. Which it did and dramatically. Let’s also not forget the credit ratings firms … employed by the banks…
Investment banks are corporations, they only take care of their own investors, and even then, sometimes only the big ones. They are self serving entities. They have become so big because of connections between government and banks (how many goldman sachs peoples entered government before or after their tenure there?)
I am planning to enter into trading and computational science fields and love your site and have read many awesome articles here.
But I am not blind to the fact that the companies in finance do many self serving, harmful things. What is best for the banks might not be best for your family, your community or you. To ignore that is a bit naive. Investment banks sold bad products that quants created, who were funded by the banks.That tanked the economy when markets faultered.
They are to blame. Many protesters, I do agree, don’t understand what happened and many won’t learn anytime soon, are are mostly students with free time. However, people in the finance world shouldn’t just work with blinders on and regurgitate quotes from old movies.
Banks benefited from screwing over people during the mortgage crisis. Freddy/Fannie helped but aren’t solely responsible. One group of people got help. Another didn’t. CEOs got exit bonuses while people with perfect credit can’t get loans. I don’t think I like this type of capitalism.
This doesn’t make me a communist or smarter/dumber. I think we need to be realistic and clear about “capitalism” that we do support and that sometimes it is exploited and isn’t really a benefit to humanity, but a few individuals.
Also off topic but kinda relevent – most revolutions start when there is no prosperous middle class. lets keep that in mind when we climb our corporate ladders…
Yes, all true, but you could say the same thing about most large companies…
Perfect example is Apple. Yes everyone is sad about Steve Jobs, but he also did plenty of questionable things that made life worse for people in developing countries (http://gawker.com/5847344/what-everyone-is-too-polite-to-say-about-steve-jobs).
It’s just that people like the shiny Apple products so they overlook all of this.
Investment banks should certainly take some of the blame. But no one here is innocent, and all companies have done self-serving things to some extent.
i totally agree. But trying to hold discussion with people in finance and trying to hold discussions with protesters – yield the same results. People feel very strongly about an issue, no one wants to admit that there is a grey area in each of their positions. The thing that many higher ups on wall st have a very cozy relationship with government – as long as it benefits them, getting the hand outs(not just TARP) BUT then go on saying how great capitalism is. But that’s super hypocritical. I read a great quote “profit are privatized and losses are socialised.” I mainly have issues with hypocrisy, slightly higher taxes are class warfare, while huge tax/law loopholes are capitalism.
http://www.powerlineblog.com/archives/2011/10/down-with-evil-corporations.php
‘Nuff said
Yup, good point, but I’m sure someone will now complain since it’s from a conservative source.
Brian, I love your website and also all of your comments/articles. I couldn’t agree more with your posts above. It’s apparent (even just looking at the posts above) that most people oversimplify matters in order to shift blame from themselves to others. I completely agree that it’s tragic that so many people have lost their jobs and are struggling financially. I myself am a classic economist and consider myself a pretty staunch capitalist (a rush by the masses to discredit everything I say because my views are too “narrow” and because I am not open minded). I would have preferred it if businesses were allowed to fail and were not bailed out, I believe that would have remedied the problem a lot faster than dragging it on for years and years and yet many of those bailed out or who received stimulus money are still failing. But I digress, my point is, is that as Americans (or simply as people for that matter) we hate taking the blame and accepting responsibility for our actions. We hate admitting that we were the ones who voted for politicians who gave us social security, medicare, medicade and yet now we blame the politicians for the very things that the majority were pulling for (or in some instances where the politicians rammed something through that the majority didn’t want, obamacare). We cry foul on bankers for sub-prime mortgages and claim they are wholly responsible, what a ridiculous claim! The loan would have never been extended had not a consumer demanded that it take place, and at the end of the day they are the ones who decided to take the loan. No one forced them. Banks who were heavily involved and made unwise management decisions should have failed (thus a consequence of their bad decisions, true capitalism). We are responsible for this mess, not millionaires, not billionaires. In this whole situation, it is the protesters who are greedy. They demand more, while expecting to do the same amount of work (none whatsoever) and scream when they don’t get their way. Why does it make so much sense to people, that they, as a group, have a right to come into a banker’s personal account and take even more money from them (in many places this is called stealing) without that banker’s consent and think somehow they are in the right? It’s criminal! If people desire more money, they should spend more time studying and acquiring useful skills to make them more valuable to an employer rather than simply demand that the government steal more money (oh I’m sorry, “demand that the government enforce that people pay their fair share”)from those people who have worked their butts off to get somewhere in life. What about those who have inherited it? So what if they inherited it? What right do you have, to tell your neighbors Grandpa, that he shouldn’t leave an inheritance to his children? He made that money, it’s his money, he can do what he wants with it. “Poor people can’t get ahead!” The protesters squeal, yet I myself, am a testament that isn’t true. I just finished college, I have a great job, I don’t make tons of money ($32,000/year) but I am working and trying to network my way into getting into business school and trying to break into investment banking. I love bankers (of course the good ones). I love people who work hard and play hard. I love people who realize they are responsible for what happens in their life, not the government. Brian, I love your site, I love investment banking, and I love capitalism…not socialism/Marxism.
I’ve watched these ridiculous events unfold on television. So many of the protesters interviewed were undergraduate students…do they even know what happened it 2008? how in the world have they been directly affected if they have never even applied to a real job? Just a terrible, unfocused, and pitiful movement that is squandering millions of dollars. I can’t believe I’m gonna do this, but in the words of Aleksey Vayner, “Ignore the losers.”
Most of these protestors are ignorant and don’t understand, or choose not to understand, that most people in banking (let’s say 99% for irony purposes), do not make seven-digit salaries, own yachts or have mansions in the Hamptons.
Furthermore, I love how certain 1%ers are excluded from public criticism (Young tech millionaires, Hollywood stars, Pro Athletes). I digress….
I work in investment banking (DCM) as an analyst, and make decent money (I’m still a monkey analyst). In return, I make notable sacrifices (social life/weekends/family commitments). But most people in life want all the benefits without any of the sacrifices (see: Union employees).
Most of these protestors bitch and moan about the imbalances in life. Guess what….. LIFE ISN’T FAIR. Add that to death and taxes as items you have to deal with in life.
To the protestors under the age of 30 (Generation Y’ers): You are the most privileged generation ever and most of you have spent so much time hearing how great you are and how you will change the world that you have developed an attitude of feeling entitled to the success your parents spent 30 years working for.
Disclaimer: I am a Generation Y’er. I do not come from a family that had any ties to banking whatsoever, nor did I go to a traditional target school for I-Banks (I had to work my ass off to get to where I am now). Rant closed.
Great article here, really puts this whole occupy wall street thing into perspective. I am currently a soph at st johns university and have received an offer at barc wealth. I know this website covers only ib/pe, but I was hoping you guys could help me out here. I was told to get profiecient in excel by the MD and to contact him once the semester was over. I’m confused as to what “proficient” really means. What would proficient mean in regards to wealth management? I am looking to start right away and I do have the basics covered down but I am perplexed as to what more I should learn?Also, would vba help? How does barwealth differ from other wealth management internships such as ubs?… Sorry if I’m off topic, but it seems like a lot of you guys can help. Thanks and god bless.
Proficient meaning knowing how to use excel properly, churn out models, analyze data accurately and efficiently
If you have already rec’d an offer just learn on the job. Maybe http://breakingintowallstreet.com/biws/ would help
I don’t know if he was referring to VBA – why don’t you ask the MD?
Barcap vs UBS – I’d imagine as an European bank, UBS’ culture wld be different from Barcaps. I would focus more on the people and the team I’m working with more so than the bank itself
Maybe finance isn’t the career for me. It seems like you guys are justifying greediness and inequality. You guys are no different from the mentalities of third world nation leaders.
We are not justifying greediness and inequality. Its fine if you want to make such a comparison because I don’t like getting into debates. Yes if you think the way you think, finance or any other money making ventures isn’t the career for you.
Thanks nicole! appreciate your insights.
Go work for the government.
http://the53.tumblr.com/
Agree. Life sucks, it’s tough, you work hard, you pay taxes, and then you die. Why can’t people just accept this and get on with it…
That’s why you try to enjoy life as much as you can while you’re alive. Learn to kiteboard!
By how much do you expect the salaries to go down by. Looking at the discussion above, I know it’s silly to make decisions based on salary but nonetheless its an important factor. Do you think finance and consulting will now be comparable?
Haha, it depends on which areas in finance. I think front office roles will still pay relatively well and bonuses will still be ok though not as good as peak years. I don’t think the pay in finance (front office roles) & consulting will be comparable but I may be wrong
At the partner levels, they’re comparable but not likely at the analyst level. By the way, pay is the worst way to determine whether you should go into finance vs. consulting. Finally, finance = front office capital markets roles, in this message.
im actually in consulting looking to make a move into finance for reasons unrelated to pay. but i do want to make sure i’ll be able to pay off my hefty mba debt quickly if i make this move haha.
Good luck with that – let us know if you have other questions
Thanks Jason for your input. I guess it really depends on the industry team and your particular business so its hard to say re the pay. But yes you shouldn’t determine whether you shld enter into finance vs consulting based on pay but on what your interest and strengths lie in