Outlook ‘not that gloomy’
Wednesday 2nd April 2008, 2:30PM BST.
THE Confederation of Guernsey Industry has dismissed a claim by its British counterpart that 10,000 UK finance-sector jobs will be cut in the next three months.
According to the BBC, a CBI report has predicted the UK will avoid outright recession but warned jobs are already being lost. It also described the global credit crunch, which began six months ago after banks made huge losses on investments backed by US mortgages, as the worst financial crisis since the Second World War.
But in Guernsey, CGI director Peter Budwin (pictured) remained much more optimistic about the situation. ‘I think their forecast is very pessimistic,’ he said. ‘I suspect the CBI has looked at things like Northern Rock, where there will no doubt be redundancies, but I doubt they will be at that level.’
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I think Peter Budwin is far too optimistic about this.
When there is a major financial disaster, caused by trading in little known instruments which causes hugh losses to the trading Principal, institutions obviously and correctly withdraw from the paricular market involved.
The vast number of traders currently employed in the affected sector and many others will be drasically reduced in order to cut costs, together with their back office support teams.
The figure estimated by the CBI does not seem to be exaggerated.
Once the market steadies later on in the year or early 2009, something new will attract the trading minded managements of eager profit hunting finacial companies and the whole circus will start again. Seven figure bonuses will return….
How many times have we seen it before – albeit not to this degree of danger and seriousness to the whole system.
But this is how markets behave – not for those unprepared to lose money!
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