So Jon Stewart brought Jim Cramer onto his show for the Smackdown Of The Year. Kudos to Cramer for having the guts to go on the show, when he knew that it was not going to a fun, lighthearted interview. I don't really have a strong opinion on Jim Cramer. He seems like a decent guy, but I'm not a fan of the premise of his show, acting crazy about investing. Investing is driven by two emotions: greed and fear. Either can be productive; either can be counterproductive. Successful investors are those who manage to soberly rational about how and why they invest. Emotions cannot be eliminated from investment decisions. But they can be modulated, and they should be understood. Yelling and screaming is not, to my mind, conducive to careful analysis.
This is not to say that Cramer is not a smart guy; he is. He knows his stuff. It's impossible to judge how he has affected markets or individuals specifically.
But Stewart makes a great point: whose side is a network like CNBC on? Are they on the side of the players gaming the system and making millions by being wildly irresponsible, or are they on the side of the masses watching their shows? Cramer is honest enough to admit that he was close enough to some of these people that his familiarity with them may have compromised his judgment. Yeah, just a little, maybe.
One of the great virtues of capitalism is that it occasionally does hold people accountable for their mistakes. This is one of those moments. Jon Stewart represents Jim Cramer's customers, holding him accountable in a very public way. And Cramer knows that he has no choice but to face the music if he is to have any credibility. Small comfort as the markets melt down, but better than nothing.
One thing that Jon Stewart does not point out is that there is always a conundrum in financial reporting: if you are smart enough to understand the financial world well enough to be able to critique it, you probably aren't going to be working for an organization that is truly critical of these financial institutions. This is why I don't read financial analysis in newspapers and magazines like The Nation and Mother Jones. It's why I do read financial analysis in newspapers and magazines like Forbes and The New York Times. It's one reason I have a subscription to The Financial Times. This does not necessarily apply in areas like human rights and civil rights; there are great lawyers working for Amnesty International and the ACLU.
Another part of the problem is the audience. If someone had written a great, penetrating piece in The Nation several years ago criticizing collateralized debt obligations, no one would have been surprised that The Nation was criticizing capitalism. And no one would have been surprised that readers of The Nation were receptive to an argument that was critical of capitalism. On the other hand, if Jim Cramer had been critical of collateralized debt obligations, he would have had more credibility, but it's not clear that it would have made much of a difference. As someone once said, it is difficult to convince someone of something, if their paycheck depends on them believing the opposite. As long as everyone was making money, the most damning questions didn't get asked, answered, or even acknowledged. Except by short sellers.
As for this particular interview. There has been a great deal of discussion of this segment; it made the front page of the FT today. There were some interesting comments about it on Megan McArdle's blog.
Cramer himself dismissed Jon Stewart as just a comedian in the days before he went on the show. That misses the point of comedy like Stewart's entirely. Sure, there are large swaths of comedy that are low-rent, bordering on the imbecilic. But someone like Jon Stewart has to think about the issues he is discussing to be able to make jokes about them. His articulation of the issues in this interview is superb. Comedy at its best offers instant insight.
So this is what accountability looks like. Enjoy. I am posting all three segments of the unedited interview.