JustFixIt comment: If you haven’t seen it yet, this March 12, 2009 > Jon Stewart interview with CNBC’s Jim Cramer was funny, provocative, deadly serious and watched by millions on Wall Street and Main Street USA.
This “Stewart verses Cramer (CNBC)” interview focused on the media’s failures in coverage of the turmoil in our financial markets, including Cramer’s (CNBC’s) failure to investigate the shadow markets and role of hedge funds and other institutional gamesters who employ criminal rumor mongering and other market manipulations tactics, all of which are done right under the noses of the keystone cops SEC.
Thank you Jon Stewart! Your interview was compelling and put a white hot spotlight where it needed to be focused.
Stewart vs. Cramer (CNBC) Part 2 > MUST SEE TV
Jon Stewart: How the hell did we end up here, Mr. Cramer? What happened?
Jim Cramer: I don’t know. I don’t know. Big fan of the show. Who’s never said that?
JS: Well, many people. Let me just explain to you very quickly one thing that is somewhat misinterpreted. This was not directed at you, per say. I just want you to know that. We threw some banana cream pies at CNBC. Obviously, you got some schmutz on your jacket from it. Took exception.
JC: I think that everyone could come under criticism from it. I mean, we all should have seen it more. I mean, admittedly this is a terrible one. Everyone got it wrong. I got a lot of things wrong because I think it was kind of one in a million shot. But I don’t think anyone should be spared in this environment.
JS: So, then, if I may, why were you mad at us?
JS: Because I was under the impression that you thought we were being unfair.
JC: No, you have my friend Joe Nocera on and Joe called me and said, ‘Jim, do I need to apologize to you?’ and I said, No. We’re fair game. We’re big network. We’ve been out front. We’ve made mistakes. We have 17 hours of live TV a day to do. But I—
JS: Maybe you could cut down on that. –Audience laughs– So let me tell you why I think this has caused some attention. It’s the gap between what CNBC advertises itself as and what it is and the help that people need to discern this. Let me show you…This is the promo for your show.
–“In Cramer We Trust” promo”–
JS: Isn’t that, you know, look—we are both snake oil salesmen to a certain extent–
JC: I’m not discerning…
JS: –but we do label the show as snake oil here. Isn’t there a problem with selling snake oil and labeling it as vitamin tonic and saying that it cures impetigo etc. etc. etc. Isn’t that the difficulty here?
JC: I think that there are two kids of people. People come out and make good calls and bad calls that are financial professionals and there are people who say the only make good calls and they are liars. I try really hard to make as many good calls as I can.
JS: I think the difference is not good call/bad call. The difference is real market and unreal market. Let me show you…This is…you ran a hedge fund.
JC: Yes I did.
–December 22, 2006 video of Jim Cramer–
JC: You know a lot of times when I was short at my hedge fund and I was position short, meaning I needed it down, I would create a level of activity beforehand that could drive the futures. It doesn’t take much money.
JS: What does that mean?
JC: Okay, this was a just a hyperbolic example of what people— You had a great piece about short selling earlier.
JS: Yes, I was—
JC: I have been trying to reign in short selling, trying to expose what really happens. This is what goes on, what I’m trying to say is, I didn’t do this but I’m trying to explain to people this is the shenanigans that—
JS: Well, it sounded as if you were talking about that you had done it.
JC: Then I was inarticulate because I did– I barely traded the futures. Let me say this: I am trying to expose this stuff. Exactly what you guys do and I am trying to get the regulators to look at it.
JS: That’s very interesting because roll 2:10.
JC: I would encourage anyone who is in the hedge fund unit ‘do it’ because it is legal. It is a very quick way to make the money and very satisfying. By the way, no one else in the world would ever admit that but I do care.
Aaron Task: That’s right and you can say that here.
Unknown: Inaudible means I’m not going to say it on TV.
JC: It’s on TV now (sheepishly)
JS: I want the Jim Cramer on CNBC to protect me from that Jim Cramer.
JC: I think that way you do that is to show—Okay, the regulators watch the tape, they realize the shenanigans that go on, they can go after this. Now, they did catch Madoff, that’s a shame.
JS: Now why when you talk about the regulators, why not the financial news network? That is the whole point of this? CNBC could be an incredibly powerful tool of illumination for people that believe that there are two markets: One that has been sold to us as long term. Put your money in 401ks. Put your money in pensions and just leave it there. Don’t worry about it. It’s all doing fine. Then, there’s this other market; this real market that is occurring in the back room. Where giant piles of money are going in and out and people are trading them and it’s transactional and it’s fast. But it’s dangerous, it’s ethically dubious and it hurts that long term market. So what it feels like to us—and I’m talking purely as a layman—it feels like we are capitalizing your adventure by our pension and our hard earned money. And that it is a game that you know. That you know is going on. But that you go on television as a financial network and pretend isn’t happening.
JC: Okay. First, my first reaction is absolutely we could do better. Absolutely. There’s shenanigans and we should call them out. Everyone should. I should do a better job at it. But my second thing is, I talk about the shorts every single night. I got people in Congress who I’ve been working with trying to get the uptick rule. It’s a technical thing but it would cut down a lot of the games that you are talking about. I’m trying. I’m trying. Am I succeeding? I’m trying.
JS: But the gentleman on that video is a sober rational individual. And the gentleman on Mad Money is throwing plastic cows through his legs and shouting “Sell! Sell! Sell!” and then coming on two days later and going, “I was wrong. You should have bought like–I can’t reconcile the brilliance and knowledge that you have of the intricacies of the market with the crazy bull— you do every night. That’s English. That’s treating people like adults.
JC: How about if I try it? (contrite)
JS: Try what?
JC: Try doing that. I’ll try that.
JS: That would be great, but it’s not just you. It’s larger forces at work. It is this idea that the financial news networks are not just guilty of a sin of omission but a sin of commission. That they are in bed with them.
JC: No, we’re not in bed with them. Come on. I don’t think that’s fair. Honestly. I think that we try to report the news and I think that people—
JS: A couple of guys do. This guy Faber.
JC: He’s fabulous, Faber.
JS: And maybe two other guys (Jim Goldman and Eric Bolling … oops, Eric left CNBC)
JC: He’s fabulous and he’s done some things that have really blown the cover off a lot of stuff.
JS: But this thing was ten years in the making.
JS: And it’s not going to be fixed tomorrow. But the idea that you could have on the guys from Bear Sterns and Merrill Lynch, and guys that had leveraged 35 to 1…
JC: I know.
JS: And then blame mortgage holders. I mean, that’s insane.
JC: I never did that. –unintelligible—I’m sorry You’re absolutely right. I always wish that people would swear themselves in before they came on the show. I’ve had a lot of CEO’s lie to me on the show. It’s very painful. I don’t have subpoena power.
JS: But don’t—You’re pretending that you are a doe-eyed innocent. Watch. Roll. I mean, if I may…
JC: It’s your show for Heaven’s sake.
JS: Roll 2:12.
JC: No! Not 2:12! (in sarcastic jest)
JC: You can foment. That’s a violation of…
Aaron Task: Ferment?
JC: You can’t FOE-ment. You can’t create yourself, an impression that a stock’s down, but you do it anyway because the SEC doesn’t understand it. That’s the only sense that I would say this is illegal…
JS: Now 2:16
Aaron Task: Another stock that you’re focused on right now is Apple (AAPL)
JS: Yes, Apple is very important to spread the rumor that both Verizon and AT&T have decided that they don’t like the phone. That’s a very easy one to do. You also want to spread the rumor that it is not going to be ready for MacWorld and this is very easy because the people who write about Apple want that story and you can claim that it is credible because you spoke to someone at Apple because Apple is—doesn’t register.
Aaron Task: Apple doesn’t comment (Apple generally follows a “no comment” policy to rumors)
JC: You know.
JS: I gotta tell you. I understand that you want to make finance entertaining, but it’s not a f—ing game. When I watch that I get, I can’t tell you how angry it makes me because it says to me, “You all know.” You all know what’s going on. You can draw a straight line from those shenanigans to the stuff that was being pulled at Bear and at AIG and all this derivative market stuff that is this weird Wall Street side bet.
JC: But Jon, don’t you want guys like me that have been in it to show the shenanigans? What else can I do? I mean, last night’s show—
JS: No, no, no, no, no. I want desperately for that, but I feel like that’s not what we’re getting. What we’re getting is… Listen, you knew what the banks were doing and yet were touting it for months and months. The entire network was and so now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst.
JC: But Dick Fuld who ran Lehman Brothers, called me in when the stock was at 40 because I thought that the stock was wrong, I thought that it was the wrong place for it to be. He brings me in, lies to me, lies to me, lies to me. I’ve known him for twenty years.
JS: The CEO of a company lied to you??!! (shock and sarcastic disbelief)
JC: Shocker … stop trading (sheepish grin)
JS: But isn’t that financial reporting? What do you think is the role of CNBC?
JC: Look, I have called for star chambers—I want kangaroo courts for these guys. I have not seen any indictments. Where are the indictments? Where is the indictments for AIG? I told the Justice Department, “Here’s the way you get the indictment.”
JS: It’s very easy to get on this after the fact. The measure of the network, and the measure of mess. CNBC could act as—No one is asking them to be a regulatory agency, but can’t—but whose side are they on? It feels like they have to reconcile as their audience the Wall Street traders that are doing this for constant profit on a day-to-day for short term. These guys companies were on a Sherman’s March through their companies financed by our 401ks and all the incentives of their companies were for short term profit. And they burned the f—ing house down with our money and walked away rich as hell and you guys knew that that was going on.
JC: I have a wall of shame. Why do I have banana cream pies? Because I throw them at CEOs. Do you know how many times I have pants CEOs on my show?
JS: But this isn’t, as Carly Simon would say, this song ain’t about you.
JC: Okay. All right. You’re right. I don’t want to personalize it. I think we have reporters who try really hard. We’re not always told the truth. But most importantly, the market was going up for a long time and our real sin I think was to believe that it was going to continue to go up a lot in the face of what you just described. A lot of borrowing. A lot of shenanigans and I know I did, I’ll bring it up, I didn’t think Bear Sterns was going to evaporate overnight. I didn’t. I knew the people who ran it, I always thought they were honest. That was my mistake. I really did. I thought they were honest. Did I get taken in because I knew them from before? Maybe to some degree. The guy who came on from Wachovia (new CEO Robert Steele) was an old friend of mine who helped hire me.
JS: But honest or not, in what world is a 35 to 1 leverage position sane?
JC: The world that made you 30% year after year after year beginning from 1999 to 2007 and it became—
JS: But isn’t that part of the problem? Selling this idea that you don’t have to do anything. Anytime you sell people the idea that sit back and you’ll get 10 to 20 percent on your money, don’t you always know that that’s going to be a lie? When are we going to realize in this country that our wealth is work. That we’re workers and by selling this idea that of “Hey man, I’ll teach you how to be rich.” How is that any different than an infomercial?
JC: Well, I think that your goal should always be to try to expose the fact that there is no easy money. I wish I had found Madoff (sp?)—
JS: But there are literally shows called “Fast Money.”
JC: I think that people…There’s a market for it and you give it to them.
JS: Yeah and there’s a market for cocaine and hookers! What is the responsibility of the people who cover Wall Street? Who are you responsible to? The people with the 401ks and the pensions and the general public or the Wall Street traders, and by the way this casts an aspersion on all of Wall Street when I know that’s unfair as well. The majority of those guys are working their asses off. They’re really bright guys. I know a lot of them. They’re just trying to do the right thing and they’re getting f—ed in the ass, too.
JC: True. True. I think as a network we produce a lot of interviews where I think that we have been—there have been people who have not told the truth. Should we have been constantly pointing out the mistakes that were made? Absolutely. I truly wish we had done more. I think that we have been very tough on the previous Treasury Secretary (Hank Paulson), very tough on the previous administration how they didn’t get it, very tough on Ben Bernanke. But at the same time.
JS: But he’s the guy who wrote the rule that allowed people to over-leverage.
JC: I trash him every night. I’ve called him a liar on TV. What am I going to do? Should we all call him liars? I’m a commentator. We have—and you can take issues with the fact that I throw bulls and bears and I can still be considered serious.
I’m not Eric Sevareid. I’m not Edward R. Murrow. I’m a guy trying to do an entertainment show about business for people to watch. But it’s difficult to have a reporter to say I just came from an interview with Hank Paulson and he lied his darn fool head off. It’s difficult. I think it challenges the boundaries.
JS: Yeah. I’m under the assumption, and maybe this is purely ridiculous, but I’m under the assumption that you don’t just take their word for it at face value. That you actually then go around and try and figure it out. So, again, you now have become the face of this and that is incredibly unfortunate.
JC: I wish I had done a better job trying to figure out the 30 to 1 and whether it was going to blow up. It did. Once it did I was late it saying it was bad.
JS: So maybe we could remove the financial expert and the “In Cramer we Trust” and start getting back to fundamentals on reporting as well and I can go back to making fart noises and funny faces.
JC: I think we make that deal right here.
JS: Mad Money airs on CNBC weeknights at six.