Has i-banking permanently lost its sheen?

LONDON, UK — Current market conditions and mass lay-offs are making students re-think joining the ranks of investment banks. Newspapers in both the US and UK have reported this and, although the evidence seems anecdotal, it is a story that instinctively makes sense.

However, it’s not only job security leading to the hesitation of students, but the view that bankers have now been exposed as contributing so little to society. Structuring and trading complex banking products (in this case collaterised debt obligations or CDOs) reminds me of building a room full of mirrors, then disappearing with the cash. CDOs are the very reason why sub-prime defaults are linked to, and therefore have crippled, the wider global economy. Sure, structured finance bankers have lost their jobs and done little for the world, but will there really be a sustained trend away from joining i-banks?

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STANFORD, CALIFORNIA – As an international student, I keep a close eye on exchange rates. The majority of my savings and investments are denominated in Australian dollars, but the majority of my expenses flow out in U.S. dollars. Therefore, fluctuations in the AUD/USD rate affect my purchasing habits. And the fluctuations that have happened over the last three months have been nothing short of breathtaking. Breathtakingly bad.

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SYDNEY, AUSTRALIA — For one of the first articles on The Backbench, I don’t like writing about bad stuff.  Particularly when it’s about the “R” word.  The reality is, though, Australia will be incredibly lucky if we avoid a recession.  This is despite Australia facing the global financial crisis with 3 strong-looking levies: (1) a relatively strong banking system; (2) a $20bn commodity fueled budget surplus; and (3) China.  However, as the credit crunch continues to corrode the global economy, more and more pressure is being applied to these levies and their resilience is increasingly being tested.

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