Juggling Dynamite

A new study out of the UK this week suggests the 2008-2012 financial crisis is likely to bring an important boon to the world of innovation, manufacturing and technology.  Amen, we need it:

“SThree, which recruits professionals educated in the so-called STEM areas of science, technology, engineering and maths, said the financial services sector had contributed to a skills shortage at industrial businesses by tempting away graduates with well-remunerated employment packages. According to a survey of 402 businesses organised by the UK arm of General Electric, the US conglomerate, two-thirds of respondents are struggling to hire technicians and engineers. The UK boss of BAE Systems, Britain’s largest manufacturing employer, last month became the latest industry executive to warn of a skills shortage.

SThree’s chief executive, Russell Clements, said industrial companies had struggled to compete with the City. “The UK’s engineering skills shortfall is a function of the fact that people think it is an unattractive sector. There is a perception issue. If you said to a bright young graduate do you want to join a bank or an engineering company, the answer would have been a bank. In Germany the answer would have been the opposite.”

However, Clements said signs that the “lustre has come off” the banking industry will benefit companies in SThree’s recruitment sectors, which include engineering, energy, pharmaceuticals, biotechnology, aerospace and automotive. Within that, IT is the main specialism. “The engineering sector … will be a beneficiary of the perception that all that goes on in banking is not what it seems to be,” said Clements, referring to the crackdown on bonuses and layoffs across the financial services sector in the UK.”  See: Banking crisis could make engineering jobs more attractive.

Considering some of the big issues demanding global attention like sustainable energy, water, food, environment and health care, more bright minds working in these areas rather than non-productive financial “engineering” and “leverage” is bound to be a very good thing.

JANET TAVAKOLI, PRESIDENT, TAVAKOLI STRUCTURED FINANCE discusses JP Morgan’s 2nd quarter earnings and recent fraud admissions:

“JPMorgan (NYSE:JPM) just said what they said—is that the whole situation suggests that traders were knowingly mis-marking their books. Now that’s criminal behavior and that’s fraud. So it looks as if they’re going in the direction of prosecuting people. Now they’ve already fired people. They’re clawing back bonuses. But it looks as if it’s going even further. So the individuals involved, of course, they are responsible. Now the question is, who in upper management, including Jamie Dimon, will be held accountable and it seems to me that Jamie Dimon should be losing his job over this. This unit reported directly to Jamie Dimon. This was basically a large out of control bank within a tremendously huge bank.”

Here is a direct link.

“The economy is the main event but the LIBOR scandal will be on the under-card when Fed Chairman Ben Bernanke testifies before Congress today and tomorrow.

At issue is what the Fed, and other bank regulators, knew about manipulation of the key lending rate and whether they condoned banks giving low-ball estimates of LIBOR in order to make themselves look healthier during the crisis of 2008.

Bernanke is likely to face some inquires about this issue, but the U.S. regulator most questions are being asked about is Treasury Secretary Tim Geithner, who is set to testify about the matter before the House Financial Services committee next week.

In 2008, while President of the NY Fed, Geithner sent a memo to British regulators to raise concerns about potential manipulation of LIBOR, as has been widely reported and confirmed Friday by the NY Fed.

The question now is why Geithner didn’t do more to follow up on that memo, considering the central role LIBOR plays in the financial markets. Literally hundreds of trillions of dollars of financial instruments — including complex derivatives but also basic consumer loans are tied to LIBOR, technically the London Interbank Offered Rate.” 

Here is a direct link.