In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so occasionally, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
Paul Solman: In the wake of considerable reaction to last night's Goldman piece in what my mother derisively called "cyberspace," a brief anecdote, before all is forgotten in the wake of tonight's Goldman II. Forgive me if I've mentioned this story before, but it seems especially relevant in view of Goldman I's discussion of "front-running" one's clients.
In talking to a longtime Wall Streeter recently, off the record, the subject of "front-running" came up. He told of a top management meeting at another Wall Street firm, years ago, in which one of the firm's jefes suggested getting rid of the elaborate, and very expensive, business of trading for customers -- for small and ever-decreasing commissions. The firm's money was mostly made trading for its own account, it was pointed out, based on its insider's "feel for the market."
The proposal was taken very seriously, said my source, until someone blurted out words to the effect of these: "But we make money by front-running our customers. How can we do that if we have no more customers?" The proposal, said my source, was tabled.