We’ve never been entirely clear about why financial institutions employ people with the title “chief economist.” It’s not as if the analysts looking at individual stocks or market segments are really influenced by these people. We’ve heard that its mostly “for marketing” purposes—the idea would be that if the bank could show it had some bright academic-type making big prognostications about the macro-economy it would project the image of omniscience, reassuring clients about its micro-analysis.
A story in the New York Post suggests another possibility—they are political players who help their institutions land deals with governments.
A Morgan Stanley economist bragged to his bosses about playing a "key role" in getting the U.S. Treasury to change a key position in its dealings with China, and paved the way for the firm to do more deals in the booming economy, a document obtained by The Post indicates.
An e-mail from Morgan Stanley's veteran chief economist, Stephen Roach, to senior executives in September 2003 boasts of Morgan Stanley's role in getting Treasury Secretary John Snow to back off the Bush administration's vow to pressure China over the value of its currency.
In the e-mail, Roach told Stephan Newhouse and Vikram Pandit, the then bosses of Morgan Stanley's international and institutional securities units, that "I helped him script rather carefully" key lines of a policy announcement in Beijing.
Roach wrote to Newhouse and Pandit that the Chinese might be very appreciative for the help Morgan Stanley provided in changing Secretary Snow's mind.
"I do believe we should make every effort to let the Chinese know that we played a decisive role in shaping the outcome on a key issue of great strategic importance for them," Roach wrote.
Morgan Stanley in Chinese Snow Job [New York Post]