As E.J. notes in the post below this one, Gov. Paterson says he thinks Wall Street bonuses could be down as much as 60 percent, higher than his budget office’s expected 43 percent decline.

To put this estimate in perspective: after the tech bubble bust and the 9/11 attacks, Wall Street bonuses were down 33 percent from 2000 levels in 2001 and down an additional 25 percent in 2002. In 1988, after the ’87 crash, they were down 23 percent.

Paterson’s intuition is borne out by some numbers, though. (Warning: scary.) 

According to Wednesdays’s Wall Street Journal, citing ThomsonReuters data, the bread and butter businesses of global finance had all plummeted in 2008 through the end of September, compared to last year’s levels. Global stock and bond underwriting was down 36 percent. Fees from such business were down 41 percent.

The Securities Industry and Financial Markets Assocation has some US-specific numbers, and, although they haven’t released full third-quarter figures yet, they’re already ugly.

Through August, total US-based equity and debt underwritings were down 57 percent, with debt issuances falling by 62 percent. Leading the way were issuances of mortgages not backed by any government agency, down 93 percent, followed by IPO business, down 84 percent, and issuances of all types of asset-backed debt, down 80 percent. The only business doing well on the corporate side was the issuance of preferred stock, which nearly doubled, largely due to financial companies’ expensively trying to shore up their own internal finances. On the municipal-bond side, business was up 2 percent for the first eight months of the year, but numbers for September are likely to be bad.

History isn’t comforting here. Between 2000 and 2001, overall debt and equity underwriting was actually up. And between 2001 and 2002, it declined just 4 percent before resuming its increases again. Between 1987 and 1988, overall underwriting business fell by 10 percent, and continued to fall by 18 percent and 1 percent over the following two years.

New York City and State should brace for something that exceeds the worst of both of these worlds: sharply lower business volumes that persist for several years running.

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