The Ax is Back

The Wall St Journal writes: Deflation is everywhere on Wall Street – the meals are less lavish, the limos idling outside Wall Street North buildings on Park Ave are few and far between, and even the things bankers once took for granted – like IPO underwriting fees – are shrinking right before their eyes. It was reported last night that the firms that are bringing Facebook public, a deal they’ve been salivating for like no other, will only be paid a 1.1% underwriting fee for their efforts. It’s a huge offering and they’ll all make out just fine, but understand that the customary IPO underwriting fee is between 6% and 7%. This is deflation on a massive scale.

And the thing about deflation is that it leads to a lot of things being scrutinized – specifically headcount and compensation. If the work is worth less and the whole pie is shrinking…

2011 was a disastrous year for layoffs at the big Wall Street banks (75,000 cuts announced last November alone) and so far – despite a general and unceasing rally in the stock markets, 2012 ain’t shaping up to be much better. Revenues are going nowhere, technology is improving, the regulatory walls are closing in and the shareholders are sick and tired of being sick and tired. So heads must roll…

Wait, wait...there's more at http://blogs.wsj.com/financial-adviser/2012/03/20/the-ax-is-back/?mod=google_news_blog