[MinceBalls]

Chatted to a relative of mine yesterday, he has worked for Dresdner Kleinwort Wasserstein (DrKW) for 9 years as a project manager on their IT systems. For those who don’t know, DrKW were ‘bought out’ by Commerzbank in January this year and are in many legal wranglings because they have blocked many of the previously agreed bonuses.

Since the bonus shenanigans, people have been leaving the company left right and centre for pastures new and this has become a problem for their business (they need people apparently). So the latest news is that they are now offering ‘Stabilisation payments’ (apparently, for some inexplicable reason the word bonus is no longer seen as appropriate - sic) to those who are willing to commit themselves to the business.

So the short of it is that the relative I chatted to is pretty keen on these payments: he wasn’t affected by the bonus freeze this year (got his in full) and now it seems he is going to get another in the same year – something that didn’t even happen in the heady days of 2007.

Some more anecdotes for your viewing. I know another 4 other people who work in the city and this is their current position:

• Programmer for the Bank of England (has been for 7 years and obviously has a very stable job, final salary pension scheme and so on): Just decided to pack in full-time work and go contract as been offered too many positions with large rates to not be tempted for the first time
  
• IT contractor, CITI: has been working on a 3 month rolling contract for 2 years and all of a sudden (this summer) was offered a 12 month contract for the first time (seems DrKW are not the only business anxious not to lose any more staff)
  
• IT contractor (Merril Lynch): large rates, long term contract, no change
  
• IT permanent, RBS: just been told of MASSIVE budget increases in IT expenditure for the next few years

Now call me dumb if you like and I know my data is not from a massive cross-section but does all this sound like we are in the worst recession since the 1930’s? For the first time I am chatting to close friends who have been in long-term stable employment and they are jumping ship or thinking about jumping ship for huge wage increases and contract work when I was under the impression that during recession you should be doing the very opposite (stay in the long-term job you have and ride out the storm).

What is going on? The City seems awash with cash while everyone else suffers.

Is this the start of a wage inflation cycle that will permeate out of the City and end in hyper-inflation?

Why are people not more angry about what is going on after we have bailed every one of them out (directly by bail-outs or indirectly by saving the system) and now they are rubbing our noses in the cr@p?

This sucks big time. I’d have taken complete collapse of the system (and the personal financial loss with it) if it had meant an end to this ridicules cycle and something better out the other end.

[Fishman]

MinceBalls, on 19 October 2009 - 11:54 AM, said:

[What is going on? The City seems awash with cash while everyone else suffers.

There is a header tank full of QE money.

The tap is being slowly turned and it's coming out in dribbles.

However, the tap was fitted many years and is about to fail - inevitably unable to withstand the pressure.

When this happens, expect a deluge that will render possessions worthless.

[ccc]

Your examples of the IT industry are far from representive - IMO.

Yes it is clear things are maybe not as bad as 6 months ago. However there are a LOT of people who have been sitting out of work for a very long time.

[MinceBalls]

ccc, on 19 October 2009 - 02:15 PM, said:

Your examples of the IT industry are far from representive - IMO.

I did say the data set was small but I know 5 people in the City and their tales are all similar. Things for them are looking better than ever.

On another note:

http://www.wealth-bu...ent/1055499502/

Quote

Royal Bank of Scotland has offered a £5m (€5.5m) "golden hello" package to 11 fixed income traders from Bank of America Merrill Lynch, with guaranteed first-year bonuses of nearly £500,000 each, according to a report in The Daily Telegraph, London.

I love the fact that my hard earned money is lining the pockets of the already rich. I am already indirectly funding the mortgages of the guys (friends included) who borrowed up to the hilt on IO mortgages simply because I was sensibe enough to save whilst I did OK in the last few years.

Seriously, this country is a crock of turd.

[TwoWolves]

Its significant that all these job offers are in IT. Many of the banks squeezed their budgets from 2006/2007 and are behind on projects, added to this they know that the FSA are going to be ramping-up reporting requirements… plus they now know they should have been analysing activity more closely in the first place. Many senior management had no idea of their exposures when things unravelled.

This was overdue.

[yellerkat]

TwoWolves, on 20 October 2009 - 11:53 AM, said:

Its significant that all these job offers are in IT.

Quite, companies spend money on IT in order to save money over the medium / longer term.

TwoWolves, on 20 October 2009 - 11:53 AM, said:

This was overdue.

Absolutely.

[MinceBalls]

TwoWolves, on 20 October 2009 - 11:53 AM, said:

Its significant that all these job offers are in IT. Many of the banks squeezed their budgets from 2006/2007 and are behind on projects, added to this they know that the FSA are going to be ramping-up reporting requirements… plus they now know they should have been analysing activity more closely in the first place. Many senior management had no idea of their exposures when things unravelled.

This was overdue.

yellerkat, on 20 October 2009 - 11:57 AM, said:

Quite, companies spend money on IT in order to save money over the medium / longer term.



Absolutely.

Erm, this is all very well but I am describing an uptick greater than in the boom years. So what you are saying is that during the boom times IT investment was squeezed. I don't believe this I'm afraid.

This post has been edited by MinceBalls: 20 October 2009 - 11:48 AM

[Sour Mash]

Yep, it's QE money combined with the effect of super-low base rates from the central banks but high real world lending rates.

The people close to the money spigot (institutions in the global finance world) are guzzling on the newly created cash gushing out ... the rest of us waiting to drink the trickle that works its way down to the real world are going to be sitting around for some time yet before we get to see higher wages.