The confrontation between John Stewart and Jim Cramer last week illustrated just how upside down and surreal the U. S. media has become. The Stewart versus Cramer dust-up actually started when Rick Santelli of CNBC made an on the air rant blasting the Obama administration’s proposal to help homeowners facing foreclosure. Santelli said in his tirade “the government is promoting bad behavior,” and referred to homeowners facing foreclosure as “losers.”
In response Stewart ran a montage of clips showcasing consistently wrong CNBC financial predictions over the past year. The “experts” at CNBC urged viewers to buy the stocks of Bear Sterns, Lehman Brothers, Merrill Lynch, and AIG, in the months before these companies imploded. A particularly embarrassing clip showed Jim Cramer on CNBC recommending Bear Stearns as a buy just weeks before the company went under.
Stewart’s point is that if the “experts” dispensing advice are so completely wrong about the future, how are average homebuyers suppose to know the future? After all, many of the “loser” homeowners went broke taking advice from “experts” like Santelli and his ilk in the financial services industry.
The feud reached a climax last Thursday night when Cramer appeared as a guest on Stewart’s show. Stewart conducted a pointed interrogation interspersed with previously unaired video clips from December 2006 of Cramer explaining to someone how to make money from short positions by spreading rumors about companies. Referring to the video, Stewart said: “I want the Jim Cramer on CNBC to protect me from that Jim Cramer.”
Cramer defended himself by claiming that the CEOs of the companies he recommended lied to him. When Stewart suggested that he not take at face value what CEOs say Cramer responded with a bizarre defense. He said: “I’m not Eric Sevareid. I’m not Edward R. Morrow. I’m a guy trying to do an entertainment show about business for people to watch.”
At this point in the interview I realized what has gone so wrong in the media. The irony of this exchange is breath taking.
John Stewart bills himself as a comedian and works for a network called Comedy Central. His show—The Daily Show—is presented as a spoof of network news broadcast. Jim Cramer bills himself as a financial news reporter and works for a news network CNBC. His show—Mad Money—is promoted as serious financial analysis and investment advice.
But, when Cramer shows up as guest on Stewart’s comedy show, he is bombarded with tough, pointed, serious, questions about the soundness and ethics of the advice he dispenses. Cramer defends himself by asserting that he needs to entertain an audience that would tune out if his talk became too technical.
So a comedian is asking relevant questions while a news reporter pleads that he doesn’t ask questions because he needs to entertain. Has the world gone completely upside down? If I want real news reporting I need to watch “fake” news on the comedy channel. The “real” news people are too busy entertaining to do actual investigative reporting.
The over arching point that Stewart stressed throughout the 15-minute interview with Cramer, is that the financial reporters at CNBC are not fulfilling their responsibilities as journalists. The role of a free press is to investigate and question those in authority, not simply serve as a mouthpiece.
Much has been made of the failure of the regulatory agencies such as the SEC in the current financial meltdown. But where was the press while all of this was happening? Bernie Madoff ran a $50 billion Ponzi scheme for more than a decade while a financial analyst sent warning letters to the SEC that were ignored. No one at CNBC bothered to investigate and ask questions.
No reporter investigated or questioned AIG issuing more credit default swaps than it could ever possibly payout on. Bear Sterns, Lehman Brothers, and Merrill Lynch all used massive amounts of leverage, in some cases more than 30 to 1, to artificially inflate their investment returns—a reckless strategy that again no reporter questioned. Instead stocks in these investment firms were touted as good buys.
While all of this was happening the reporters at CNBC were concerned about “entertaining” their viewers. Stewart said: “I understand that you want to make finance entertaining, but it’s not a fucking game.”
No it’s not a game. Real money and real livelihoods are on the line. Real hard-earned wages went into now decimated 401k and pension plans. Real tax dollars are being spent to hold off collapse of the financial system.
I believe that if the financial reporters would do their jobs they would find criminal culpability on the part of many of the executives who ran these failed companies. I don’t believe that a blow up of the entire financial system to the tune of a trillion dollars happened without actual fraud taking place. With dollar amounts that large it should not have been that hard for the so-called “experts” to figure out what was going on.
Much has been made of the need for more oversight and regulation in the financial services sector. But, the government needs to take a hard look at possible criminal violation of regulations already in place. And the journalists need to get back to holding the government and CEOs accountable by investigating and asking questions. Leave the entertaining for the comedians.
Joseph Ganem is a physicist and author of the award-winning The Two Headed Quarter: How to See Through Deceptive Numbers and Save Money on Everything You Buy