Bulls to the Slaughter

NEW YORK: Wall Street had better start painting its windows shut. Merrill Lynch, the largest brokerage in the U.S., is slashing 5 percent of its workforce -- 3,400 jobs -- after losing $164 million in the third quarter. The U.S.' biggest brokerage is the first to be hit this hard by the recently deflated Dow, but as TIME business reporter Bernard Baumohl notes, it won't be the last. "These firms have done a lot of hiring over the past 10 years," he says. "Now revenues are dropping, and their overhead has ballooned. Something's gotta give, and that's jobs."

No wonder traders were a little despondent Tuesday, sending the Dow down 80 points in mid-afternoon. The staff cutbacks are just one more sign that Wall Street doesn't expect the return of its salad days for a good long while -- and neither should we. "If this were a transient storm, financial firms would try to weather it," says Baumohl. "But no one sees a turnaround in the next few years." And it's only October. Come December, when firms like to cut fat to impress investors in the new year, there's gonna be a lot of pink slips where those juicy Christmas bonuses used to be.