Each weekday, we'll be scouring the financial blogosphere for the best bits of wisdom from financial insiders, analysts and economists. Check back every weekday for the latest take on the economy from the web's most astute observers.
JPMorgan Treats Its Clients Scandalously And In Bad Faith. Felix Salmon has the blog headline of the day in a post about a legal dispute between the bank and the Mexican company Empresas Cablevision, which is controlled by billionaire Carlos Slim. Here's Felix: "JP Morgan took one of its longest-standing clients in Mexico -- Grupo Televisa -- and tried to hand all of its secrets over to its biggest rival, Carlos Slim." A must read.
The Definitive Take On Goldman Sachs PR Head Lucas van Praag: The Epicurean Dealmaker one-ups The New York Observer's profile of the most colorful quote in the PR ranks. Van Praag has been widely criticized for his harsh tone, and critics have noted his disdain for journalists who he thinks get the facts wrong (check out Van Praag's attack of The New York Times in his HuffPost blog).
The PR strategy at Goldman seems to be informed by the culture of an unapologetic Wall Street trader, according the Epicurean Dealmaker. Here's more:
[Goldman] has to figure out a better way of dealing with politicians, the press, and the general public than its current like-it-or-lump-it strategy. I fear the traders running the place do not understand that, while they are the biggest and baddest players in the global financial markets, who have to apologize or explain themselves to no-one, they don't control the game. Politicians and regulators do. (And they answer, at least indirectly, to the general public.) These are the people they have to appease. Or at least not piss off. These are the people who pay attention to Goldman's public communications strategy.
Economists Want Hiring Tax Credit: UC Berkeley economist Brad Delong joins a Finance Geek's Murderers Row -- including Moody's Mark Zandi, Laura Tyson, Nobel Laureate Joseph Stiglitz and economists Alan Blinder, Mark Thoma and Tyler Cowen -- in supporting a break for companies that hire new workers. In fact, they've drafted a letter to the leaders of both parties in Congress. From the letter:
"A well-designed temporary and incremental hiring tax credit is a cost-effective way to create jobs, and could work well in the current environment. At a time when GDP is beginning to rise and demand is starting to return, private firms are likely to respond to such a tax incentive by hiring sooner and more aggressively than they otherwise would have done. Such a credit could thus help put Americans back to work more quickly than otherwise. And by targeting firms that are growing, such a tax credit supports the businesses most likely to lead the recovery of employment."
Don't Forget Fannie And Freddie: At Rortybomb, Mike Konzcal reminds us that it's not just the banks that received humongous bailouts. Fannie Mae and Freddie Mac -- which have been given blank check support by the Treasury Department -- have become dumping grounds for the banks' bad mortgage assets. Which is why Konzcal argues that any true accounting of Wall Street's losses should take Fannie and Freddie into account. "As the private sector started to dump housing and housing bonds quickly in 2007 and 2008, government officials made sure that the GSEs would be capable of absorbing these bad loans." Here's more:
"I sincerely hope a lot more of this information and analysis comes to light, especially the numbers and losses on the books. There are things that are good about the GSEs, and things that are bad, but the fact that it might have been ready to go as a garbage bag for the private sector's bad bets, a bag taxpayers have to eat out of, has been the most surprising, and terrible, thing about it in this crisis. "
10 Ways To Fix The Budget: Jeffrey Frankel, a professor at Harvard's Kennedy School of Government, came up with some very sensible suggestions in "Ten Ways to Move The Budget Back Toward A Sustainable Path" (Hat tip to Ezra Klein).