Layoff misery on Wall Street just getting started

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The layoff news "du jour" is that UBS will begin a round of cuts, joining a herd of European and American banks rushing to wield the axe.

This follows news that Bank of America will cut about 3,500 jobs, as part of a cost-cutting effort that will eventually claim 10,000 jobs. So far this year, the number of financial industry job slashes has risen to 18,252. That's 6 percent higher than in the comparable period in 2010, according to Challenger, Gray & Christmas.

The number of layoffs will certainly go higher. Many are waiting to see how severe the cuts will be at Goldman Sachs. As a prelude, we're seeing some stealthy cuts that do not show up in headlines. This most commonly takes the form of departing employees who are not replaced but the net effect is the same as a cut. 

All this begs a fundamental question: Is this any way to run a business? The business cycle seems to have been compressed. Not too long ago, banks were in fairly aggressive hiring mode. But then the industry double dipped, and it appears as though we've gone, since the financial crisis, from bust to boom back to bust again. Do you know anyone who was laid off twice? The cuts may be deeper this time in part because the composition of compensation has shifted in a way that emphasized more in salary at the MD level. That means the fixed costs are that much higher and will result in deeper cuts.

Morale is once again in the dumper, as people fret about their futures. Reuters offers a telling anecdote about how Credit Suisse is removing decorative pictures of employees from their buildings. The prints were adorned with motivational messages. My guess is many those employees were on the block.

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Goldman Sachs says layoffs imminent