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We’re Fast-Approaching A Tipping Point Into A Permanent Financial Decline: The Shrinkage In Wall Street Is Just Getting Started, Bill Gross Boosts Treasury Holdings, More Than Half Of Republicans Prepared To Let US Default, Western Governments May Soon Borrow In Renminbi, Economists See Slower Long-Term Growth In America’s Future


The Shrinkage In Wall Street Is Just Getting Started!

Business Insider: Last week, it was reported that Morgan Stanley would ax 1,600 jobs, or about 6 percent of the global institutional securities group, Bloomberg News reports.

The latest round of reductions are expected to begin today and continue into the coming weeks.

According to Bloomberg News, half of those cuts are expected to be here in the U.S.

The bank is also expected to eliminate about 15% of the i-banking positions in Asia, Bloomberg reports.

Meanwhile, Fox Business reports that the Dubai office’s equities division will be hit, too.

Layoffs have been hitting a bunch of the big Wall Street banks.

Last summer, Deutsche Bank said it would eliminate 1,900 jobs with 1,500 of those coming from its investment bank.

A few months later, Swiss banking giant UBS said it would cut 10,000 jobs.

Just last month, Citigroup said it would be cutting 11,000 positions globally.

Following Deutsche’s move back in July, bank analyst Meredith Whitney predicted we would see 50,000 layoffs.  Whitney recently said that we haven’t even started to see the beginning of those layoffs.

Sources: Barclays to Cut Investment Banker Pay by up to 20%

Barclays will cut investment bankers’ bonuses for 2012 in a move that will cut their total pay for the year by up to 20 percent as the British bank’s new boss seeks to tackle high costs, people familiar with the matter said. Barclays is finalizing bonuses for last year and…

Alert: Bill Gross boosts Treasury holdings

Bloomberg: Gross boosts the Pimco Total Return Fund’s Treasury holdingsto highest level since July.

Hoisington Management: Doesn’t think Treasury ratesare headed much higher either.

Learn Bonds: Why Gross especially likes 5-year Treasurys .

Lexology: How the taxpayer relief act of 2012 affects themunicipal-bond market .

Pensions & Investments: BlackRock’s Rick Reider on how monetary policy is profoundly distorting the fixed-income markets.

 

More Than Half Of Republicans Prepared To Let US Default

 

House Republicans are seriously entertaining dramatic steps, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.

 

The idea of allowing the country to default by refusing to increase the debt limit is getting more widespread and serious traction among House Republicans than people realize, though GOP leaders think shutting down the government is the much more likely outcome of the spending fights this winter.

 

“I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious,” House Republican Conference Chairwoman Cathy McMorris Rodgers of Washington state told us. “We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.”

 

Marsh on Monday: Western governments may soon borrow in renminbi

Western governments may soon borrow in renminbi-dominated bonds, which would help facilitate its use as a reserve currency and help Europe and the U.S. continue to borrow at cheap rates, writes David Marsh.

One of the most hotly discussed questions in world finance concerns the timing of the expected take-off of the Chinese renminbi as a worldwide financial transaction and reserve currency. International banks all over the world are preparing for a further wave of renminbi activity in coming years as the Chinese authorities gradually release the shackles on the international use of the currency.

Behind the scenes, differences of opinion are building up between China-domiciled banks and securities houses, which wish the Beijing authorities to act more aggressively on liberalization, and top Chinese financial officials, who take a cautious line because of worries about the possible disruptive monetary effect of extended deregulation.

One way of reconciling these opposing views would be to encourage governments in Europe, including the ESM and EFSF bailout funds set up to protect weaker euro members, to use the renminbi in sovereign borrowing on the onshore or mainland renminbi market.

This so-called Panda bond sector, which is most used by Chinese borrowers rather than foreign issuers, dwarfs the offshore Hong Kong renminbi bond market — so-called Dim Sum issues — which has attracted significant international attention.

The British Treasury has toyed with issuing Panda bonds but has turned down the idea so far.

 

Why to worry over U.S.’s struggle to grow, add jobs

The U.S. had added an average of 153,000 jobs a month for two years, and U.S. growth has jogged along at a lackluster 2% pace since the end of the Great Recession. Is it simply a new normal?

(MarketWatch) — Is this the best the United States can do?

The world’s largest economy had added an average of just 153,000 jobs a month in each of the past two years. And U.S. growth has jogged along at a lackluster 2% pace since the end of the Great Recession.

For most of the post-War era, the economy sprang back to life faster and stronger after a recession. After the 1981-82 downturn, for example, the economy added more jobs in the next two years than at any time in the modern era. Monthly job growth topped 400,000 four times.

Those days seem long gone.

The U.S. economy — once a great jobs engine — has failed to generate employment in the immediate aftermath of the last three recessions in 2007-2009, 2001 and 1990-1991. The jobs took longer to come back and not as many were created compared to prior recoveries.

Slack job creation and the stagnation in worker wages corresponds with the slowdown in growth. The U.S. expanded at an average annual rate of 3.6% from 1950 to 1999, but growth has dampened to average of less than 2% since turn of the millennium.

The tepid pace of growth and hiring since the U.S. recession officially ended in mid-2009 puzzles economists, not to mention top policymakers at the Federal Reserve. They expected somewhat faster growth and more job creation by now.

Economists argue vigorously about the causes and whether it’s just a passing phase. Yet more longtime observers of the economy are starting to wonder if the halcyon era of rapid expansion will ever return.

Some like John Silvia, chief economist of Wells Fargo, say Americans should get used to 2% annual growth and a more subdued pace of job creation.

“I think growth is harder to come by, and we need to plan on that,” the longtime economist said. “We will be pleased if we get more than that, but we should temper our expectations.”

 

Austerity Bites: Payroll-Tax Hike Seen as ‘Headwind to Growth’

Americans are beginning to feel the pinch from Washington’s decision to embrace austerity measures aimed at bringing down the nation’s budget deficit. Paychecks across the country have shrunk over the last week due to higher federal tax rates, and workers are already..
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