Mad Money, Mad Policy

Posted March 22, 2009, at 8:26 p.m.

The recent smackdown between Jon Stewart and Jim Cramer had all the trappings of a made-for-TV celebrity feud — lots of posing and hyped-up drama, not much substance. That is, until the two cable TV show hosts met on Mr. Stewart’s “The Daily Show.” In the remarkable interview — really more of a lecture by Mr. Stewart — the very heart of the economic meltdown was cut out and laid on the table. That the post-mortem was done on a show that appears on the Comedy Central network is a shameful measure of the disconnect between most Americans and the truth about this financial crisis.

The feud began when Mr. Stewart called out Mr. Cramer, whose show “Mad Money” is on CNBC, the peacock network’s financial outlet, for essentially abdicating his duties as a journalist. When the two met, Mr. Stewart played clips of an interview with Mr. Cramer on a Wall Street-theme Web site. In the clips, Mr. Cramer is heard advising would-be traders how to hype or depress a stock. He admits such actions are on the ethical fringes, but says the Security and Exchange Commission is oblivious.

Mr. Cramer admitted to falling short. “We’ve made mistakes,” he told Mr. Stewart, but defended himself saying, “We’ve got 17 hours of live TV to do.” The show promotes itself with lines such as “In Cramer We Trust” and other such hyperbole. Mr. Stewart said Mr. Cramer and his colleagues on CNBC “could be an incredibly powerful tool of illumination.” Instead, they failed to warn the public that banks were operating with unsustainable practices such as being leveraged with $35 in debt for every $1 in assets.

Mr. Cramer offered as an excuse that bank CEOs lied to him. Mr. Stewart suggested that CNBC do what any self-respecting news organization would do — find sources to challenge the propaganda. Especially offensive, Mr. Stewart said, was to hear CNBC commentators denigrate “loser mortgage holders,” such as those with $300,000 homes and $30,000 annual income, when they knew the high-stakes juggling in which banks were engaging.

But beyond CNBC’s failure to practice responsible journalism, the showdown between Mr. Stewart and Mr. Cramer led to the comedian expressing outrage to the financial analyst on behalf of “regular folks.” Those who watch the market, Mr. Stewart said, are well aware of the “games” being played on the fringes, he said, yet they continued to encourage working people to invest their pensions and 401(k) funds in the market as a “can’t miss over the long haul” prospect.

“We are capitalizing your adventure,” Mr. Stewart told Mr. Cramer. It’s an apt description, with millions of middle-class Americans ending up like the little old lady who drops $5 each week in the church collection plate, oblivious to the fact that the minister is using it in his weekly poker game. Never mind, as Mr. Cramer said, that 30 percent returns were enjoyed from 1999 to 2007.

A gamble is still a gamble, whether one wins or not. In failing to make this clear, Mr. Cramer failed as a journalist and an investment guru.

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