Saturday, March 21, 2009

Hard Times in "The City"

Back in the 90's, a friend of mine worked in "The City," which is London's financial district. There was big money to be made and people were partying. He said in the summer everybody was half pissed by 2 o'clock in the afternoon. The Globe and Mail has a long piece on how far it has fallen.

There are no official figures, and the best anyone can come up with is a running tally done by the financial website Here Is The City. The figure is shocking: Between August, 2007, and February, 2009, 133,000 jobs were lost in investment banking, private banking and asset management. Topping the list of woe is Bank of America, the new owner of Merrill Lynch, with 29,260 jobs vaporized at the two companies.

As the downturn in the global financial services industry becomes dire, the futures of other big Canary Wharf names – Barclays, Morgan Stanley, Credit Suisse, HSBC – at Europe's premier office development remain uncertain.

London partied like no other city in Europe during the boom years, which began in the mid-1990s and was driven by the massive influx of investment capital and jobs into the investment banking, asset management, underwriting, private equity and derivatives markets. By extension, business services soared. Throw in one of the hottest real estate markets on the planet and you had a recipe for extraordinary growth.

Now, London is falling as quickly as it rose. And there is little doubt things will get worse before they get better, for London is the victim of the bursting of a rare double-bubble: real estate and financial services.

This extraordinary place has vanished.

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