City Diaries: New Year update

As shares in Europe and the US fall sharply our city diarists reflect on the past year and their expectations for 2009 in the financial sector.

Our diaries are written by people who work in finance and have had a front row seat as their industry goes through the biggest changes in decades.

They will be giving us regular insiders' updates on the mood in the City of London and the dramatic changes in the world of finance.

Read your comments on the City Diaries

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TOM

Tom (not his real name) works in the investment industry.

As predicted, the economy has pretty much ground to a halt since Christmas and the way things look, it will stay that way for the foreseeable future. When banks laid off staff, there was much "schadenfreude" but it has all changed now that the "real economy" is also seeing job losses. I have just read somewhere that JCB have let people go and we all know about firms like Nissan closing down for longer than they would like to over Christmas. They are mirroring the "big three" in Detroit. We can now see how inextricably the banks and the "real economy" are linked, so perhaps some of those whose posts called for the abolition of banks are eating humble pie now.

The post-Christmas atmosphere is one of utter exhaustion - both mental and physical. We know that 2009 is a write-off. Any ambitions that my colleagues and I have (like millions of others) are going to have to be shelved. We are all trying to work out whether we are in any sort of shape to ride out this storm and the only thing that gives us hope is the thought that the whole country - indeed much of the world - is in the same boat.

Even Tesco is admitting that its sales have slowed, which is a measure of just how severe this downturn is. Oxford Street looks empty these days and no amount of discounts can entice shoppers. Never mind the sales, people are saving on the bare essentials. This goes far beyond the credit crunch.

In the midst of all this, the government has announced plans to offer cash to firms to take on graduates and interns - and to get 500,000 people into work. However, that applies to those who have been out of work for six months or more. Until he gives more details on just how he plans to achieve this (jobs were being cut as he spoke), it won't make a blind bit of difference.

My suspicion is that no amount of money can save jobs or create them, until the economic climate allows this. Whilst it is a noble idea to keep people in jobs, their employers will be looking to get rid of them if this downturn continues.

My advice is to keep a close eye on what markets are doing. Once we have consistently good results it takes from six months to a year for things to start improving in the "real economy" - most importantly confidence and the emergence of positive sentiment.

Read Tom's previous diary entries

JAMES

James (not his real name) works for a large UK Bank outside London.

Working in financial services at the moment is not a job for the faint-hearted. Socially, work discussion is either avoided or I find myself having to defend the indefensible.

On one hand it seems inconceivable that so many well educated and experienced men and women could have got it all so wrong, but on the other I am left wondering if our collective greed has got the better of us.

I think that it has become clear from the media reporting of the banking crisis that somewhere along the line, the financial products created by the financial services industry have become so complicated that very few, if any, properly understood what they were actually selling. The drive for ever larger profits and the bonuses that went with them focused minds so much that thought beyond the next target appeared to cease.

But here we are now, with banks in debt to the government or to Middle East and Far Eastern interests and major doubts still close to the surface as to whether this crisis will be resolved this year, next year or later.

Tension at work has been rising steadily over the last six months. We are now in year end reporting and I regularly come across managers who are so stressed that they cannot think properly. Raised voices are becoming common, a thing unheard of in the past (if you exclude the racket of the trading floors) and it is obvious that tempers are becoming much frayed.

All this leads to mistakes and more stress. I cope for the moment by reminding myself that life is good away from work, but I seriously wonder if I can stick it out for any length of time. My partner, who works for the sales force of another bank, is currently off sick. She is dreading having to go back to work and is seriously thinking of looking for some other occupation.

MARK

Mark (not his real name) works for a stockbroker outside London.

The festive period is generally a time of happiness however, most people are also in a reflective mood as they say goodbye to the previous year and hello to the New Year. Each year I support Link Romania's Shoebox Appeal and on Christmas Day find myself thinking about those with less than myself. This year was slightly different as while I was thinking of the families opening my shoebox, I was also thinking of my fallen comrades. It has been a brutal year to work in financial services and for me personally, it is the first time I have been through this type of experience.

As I write this latest blog I look for some positive news in the economy, there is none. Houses prices are set to fall by a further 10% in the coming year and mortgage lending will sink further. With the contraction of the economy speeding up, those looking for a bit of festive cheer may have to search harder than they intended. 2009 looks set to be a difficult one.

My grandfather used to have this first foot routine he and I would perform each New Year. It basically involved walking from the back door at 11.58pm, with a bag that contained whiskey and coal among other things, on New Year's Eve and knocking on the front door as Big Ben chimed on the TV. We were greeted by my grandmother and mother and we would welcome in the New Year. It supposedly brought luck but I did not do it to see in 2008. But this year, whether I believe it or not, we need all the luck we can get!

Read Mark's previous diary entries

LAURA

Laura (not her real name) works for a commercial bank in London.

First week back after Christmas, deep joy round the office with the realisation that we can no longer refer to 'next year' as being the really bad one as we are now in it.

Re-pricing to stop the losses on our balance sheet remains the order of the day, with people increasingly wondering when we are ever going to want to lend again. The lunatics (credit) are now definitely running the asylum. Colleagues are bemoaning the fact their portfolios are shrinking for the first time in years as customers (who are able to) have got their facilities moved to another bank in protest. It is with no sense of pride that we have to go to our customers and ask them to help us out by paying a higher rate - but the alternative is they are making us a loss. If I were them I would say get stuffed but then they risk just getting their facilities removed.

One of our clients has gone bust - realistically the first of many - and so a colleague faces the task of calling on their personal guarantee which will probably involve tears. You spend years trying to build a relationship with your customers, often extending to a personal one, and suddenly you find yourself having the kind of conversations you wouldn't want to have with anyone - let alone someone you like.

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