If it says so in The Economist... it must be true

What the credit crunch means for bonuses

“DEAR Valued Bloomberg User,” began an e-mail sent out recently by the information provider to the universe’s masters. “This is...to remind you that we can still provide complimentary access to our service should you find yourself temporarily in-between jobs.” Having the bad news broken by another firm’s computer could be a new low for an industry not known for letting people go tactfully (“Your pass stopped working today? I’m so sorry”). Happily things do not seem to be as bad as all that.

In London some jobs will probably go. The Centre for Economics and Business Research (CEBR) reckons that more than 5,000 people will be hauled in for a talk about career progression by the end of the year. For comparison, the City shed 20,000 jobs after the dotcom bubble burst and 40,000 after Black Wednesday in 1992. However, the CEBR reckons that 10,000 new jobs were created in the year to July, so any reduction would still mean a big net gain in jobs over a two-year period.

As for bonuses, one financial headhunter that specialises in finding drones rather than filling corner offices says that at least one City firm has told its managing directors (who are less senior than the title makes them sound) that a certain number of them will receive no bonus at all this year. This gloom is not widely shared: most report bonus expectations being managed rather than vaporised—provided, of course, that things get no worse.

In New York the picture is similar. Some areas that have been booming over the past year will be affected. Mergers and Acquisitions mbanking, where the pipeline of deals looks less than inspiring, leveraged loans and a few other corners of fixed income may do badly. Conversely, anyone who trades volatility, of which there has been plenty, or sells options, which should be a good business in uncertain times, will have prospered.

Even the people most at fault for the recent turmoil—the creators of the collateralised-debt obligations (CDOs) and conduits that spread subprime-mortgage debt around the financial system—may end the year with new Porsches. Headhunters on Wall Street report that some have been snapped up by hedge funds looking to extract some value from these illiquid instruments. Just as imprudent banks have been saved from their mistakes by indulgent central bankers, so CDO-makers could be rewarded for the mess that they helped to create. Vroom-vroom.