Bank Crisis: #2 Bank in the UK Losing Money, Cutting Jobs.

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Barclays, the 2nd largest bank in the United Kingdom in terms of total assets, has recently announced that it is cutting nearly 15,000 jobs this year. This is big news. Barclays is an enormous bank. It is the 10th largest bank in the world.

As the BBC reports:

Barclays is expected to announce up to 15,000 job cuts as part of its new strategy due to be announced later, according to BBC business editor Kamal Ahmed.

That is significantly above the 10,000 to 12,000 the bank has already announced it wants to cut this year…

Barclays’ chief executive, Antony Jenkins, would like to see the global workforce of the bank fall over the next six years from 140,000 to 100,000, according to our correspondent.

On top of cutting staff, Barclays is expected to announce that it will be hiving parts of the business that have not been performing well into what is known as a “bad bank”.

Here’s where things went sour:

It was not long ago when fixed income banking (selling debt products that pay a fixed amount over time) was all the rage.

Banks gorged themselves on the huge amounts of money (and profits) available as the bond market took off and mergers and acquisitions activity declined.

Well, that time has ended — and as the bond market slows banks like Barclays are feeling the pain.

Investment bank income was down 28% in the last quarter, in large part down to a 41% fall in the trading of bonds.

Overall Barclays’ first quarter pre-tax profits were down 5%.

These ain’t no token trimmings; these are major cuts:

A cut in the number of branches is also likely. At the moment Barclays has 1,600 branches, but that could fall by 400 over the next few months.

This is significant. Barclays is a huge bank. It shouldn’t be finding itself in this situation. If this is what bond investing has done to Barclays now, then just wait until rates go up as a part of an economic recovery. Ka-boom. The stagnant economy now appears to be taking it’s toll on some of the large banks.

The entire world economy is still stagnant. There is no real growth taking place. This is what I’ve been saying for almost two years now: there is no economic recovery taking place. Talking heads on the TV have been saying that we’re in an economic recovery ever since 2009. They’re all blowing smoke. The only sectors of the economy seeing significant gains are in the stock markets; the Dow hit it’s record high last December, while S&P hit it’s record high early in April. Meanwhile, Average Joe is not seeing a recovery. Wall Street is recovering, but not Main Street. This is true all over the world. We all know this in our day-to-day lives: small businesses are closing, full-time employment is still scarce, home prices are too high for average buyers, consumers in-general are saddled with huge amounts of debt, and food, fuel, and utility prices are rising.

When Barack Obama famously quipped “The private sector is doing just fine”, he meant what he said. Obama is an elitist. He has no connections to the common man. All he knows is that his banker and CEO golf buddies are doing just fine. From his viewpoint, everything is A-OK.

The Keynesian bureaucrats at the Federal Reserve claim to support the little man. They claim to be working tirelessly in the interest of Main Street; but that’s not at all what they’re actually doing. The entire system of Quantitative Easing is nothing but a subsidy to the super-wealthy at the expense of the little man. Keynesian Economists (whose school of thought dominates academia and politics) claim to have nothing but the interests of the middle class at heart. In practice, their interests are anything but. Their interests are in preserving the major banks and corporations under the auspices of “Too Big to Fail”; little people be damned. To the Keynesian economists at the Federal Reserve, everything else is at fault for the ongoing stagnation of the economy: the cold weather, the Koch Brothers, American consumers not spending enough, currency war from China, blah blah blah… everything is to blame for the failure of the economy to recover, except for their own Keynesian policies.

 

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