The big news yesterday for Wall Street employment: hedge fund D.E. Shaw laid off 150 employees, or about 10 percent of its workforce. The gigantic fund, which oversaw $39 billion as of mid-year 2008, is down to just $21 billion this year.

Did you notice the bad math? The asset shrinkage of 47% far exceeds the mere 10% layoff of employees. Of course, that’s entirely understandable: Wall Street types are absurdly overpaid, and you can help a hedge fund’s cost structure by firing one portfolio manager a lot more than you can help, say, a car company by firing a man fitting hubcaps. It’s the “knowledge economy,” folks. Get used to it.

The survivors may laugh at the inherent leverage in their jobs, but they probably won’t be chuckling for long. I wrote two weeks ago about analyst Meredith Whitney’s projection that Wall Street will lose anywhere from 40,000 to 80,000 jobs in the next few years. [See: “Wall Streeters finally back to earning their keep.”] I called Meredith a sourpuss, but I didn’t mean anything by it beyond the fact that she has a disposition to call bullshit when her peers will not.

Anyway, she’s got company. One of my favorite market commentators, Jeremy Grantham, recently weighed in with a more fundamental argument: one in which our financial system should probably shrink by half or more.

Grantham, who writes one of the most cogent and reasonable publicly available letters to his institutional shareholders, talks of structural change. The financial services industry, he points out, accounted for just 3% of GDP in 1965. By the end of 2007, that proportion was a remarkable 7.5%. While finance is and always will be a required lubricant to the capitalist system, Grantham summons the courage to say that which Whitney and her peers cannot—that “this extra 4.5% would seem to be without material value except to the recipients.”

You heard that right. A member of the financial establishment admitting that the unrestrained growth of Wall Street and its adherent businesses really benefited no one but themselves.

Simply put: “This bloated financial system was also increasingly deregulated and run with increasing regard for profit and bonus payments at all cost….This unnecessary explosion in the size of the financial world has been a clear example of the potential for dysfunctionality in the capitalist free market system.”

Here’s the best part. Grantham then does what few in his field can bring themselves to do: he apologizes. For what? For not doing his part to help stop our finance industry from slipping into a mode of self-serving greed. “We all could have done more,” he writes. “We have tolerated a pretty nasty decline in standards. Shame on us.”

Good on you, Grantham.