Walter Hutchens’ Blog

Lots of people are talking about Jon Stewart’s skewering of Jim Cramer last night.

Cramer was surprisingly passive in the face of Stewart’s assault. I wonder why. Was he just caught flat-footed?

Stewart was loaded for bear, and his delivery was brilliant.

But was Cramer a worthy target for Stewart’s skillful attack? I don’t think so.

Cramer can be rightly criticized for many things. He seems like a megalomaniac. He often acts like a buffoon, intentionally. Often his stock picks are just flat wrong. (I’ve personally lost money taking his advice a time or two, though in fairness almost any advice except “short everything” has been bad lately). Stewart also showed some old webcast footage of Cramer apparently confessing to trying to foment misinformation about companies whose shares he had shorted when he ran a hedge fund (and advising other hedge fund managers to do likewise). All that can be condemned.

But Cramer doesn’t seem like the ideal stand-in for everything Stewart was targeting. Cramer’s show is called MAD Money for goodness’ sake. It is filled with silliness. His shtick is to act goofy while giving ordinary investors the kind of advice he claims professional traders use. It’s not supposed to be prudent advice for grandmother’s 401k allocation. Indeed, Cramer explicitly disclaims being a buy-and-hold guy or a “value” investor. Has he ever held himself out as a financial journalist? I don’t think so. He’s reminds me more of a sports broadcaster; a commentator on highlight reels. “In Cramer We Trust” (a promo Stewart used as a “gotcha”) isn’t meant to be taken literally (Stewart of all people should recognize irony and sarcasm).

Yes, finance is ultimately serious (as Stewart opined), but so is politics, and Stewart’s fame is built on making humor out of politics.

I don’t think Cramer has really misrepresented himself as something other than what he is. He is, or was, a stock picker/trader who now tries to entertain others who want to trade, giving them his opinions about good trades at any given moment.

Stewart, however, lambasted Cramer for the failings of Wall Street speculators generally. Stewart said speculation itself is “morally dubious” and said “they” (the speculators) had capitalized their adventures using other people’s 401k money but then “burnt the house down.”

It is certainly true that average people are suffering because of some dumb things Wall Street bankers and other executives did. I am outraged that my tax dollars are being used to bail out investment banks, AIG, the US auto industry and others; firms and executives shouldn’t be allowed to privately capture the upside of risky deals while socializing the downside. But as vast as his ego is, the roots of the current economic crisis are much bigger than Jim Cramer.

Cramer’s show is about public markets—trading listed securities. But mortgage-backed securities and credit default swaps are traded OFF exchanges, among financial institutions and ostensibly sophisticated institutional investors. Ordinary investors had no direct part of those markets.

Moreover, before he became a television buffoon, Cramer ran a hedge fund. Hedge funds don’t take money from ordinary investors, so Cramer never capitalized his “adventures” with grandma’s (or Stweart’s) 401k money.

Yes, hedge funds have influenced the market by de-leveraging and speculating, thus indirectly affecting ordinary investors, but does anybody really think stocks are down 50% or more because of day traders? The blame belongs much more to the Fed and participants in the secondary markets for mortgage products and derivatives.

However, even if Cramer isn’t the best target, CNBC as a network, which was more of Stweart’s focus, has indeed not acquitted itself very well in all this. Although they sometimes air good stuff, much of it is dross. Their Silicon Valley correspondent is good, and I like a few of their other journalists and commentators. Some of their longer-format specials have been good. But they ain’t the Wall Street Journal, Barron’s or Forbes. Or Fortune or Business Week.

Basically CNBC is a ticker tape service with some on-air eye candy “talent.” (I hasten to ad that one or two of their beauties are quite good content-wise, too). CNBC’s over-produced graphics and rat-a-tat format are better for amplifying bull market sentiment than doing the careful, nuanced analysis that helps us understand how we got into this mess, how we’ll get out, and how we’ll avoid getting here again.

Indeed, lately CNBC has become nauseating to me because a disproportionate number of their commentators blithely blame the Obama administration for “attacking Wall St.” or acting incoherently.

Obama’s plans may not work, but they are neither fundamentally anti-market nor incoherent . . . the President’s speech to the Business Roundtable yesterday made all that quite clear.

I’ve had enough of their vapid “analysis,” so when I turn on the network I often turn down the volume, and I hardly ever watch Mad Money anymore—I like the panel on Fast Money better. I’ve certainly learned a lot more from NPR’s Planet Money team than I have from CNBC about this crisis.

So, yes, CNBC should do better and deserves to be called out (or made fun of) for missing lots of opportunities. But Cramer is not CNBC.

I’ll further agree that financial journalists in general deserve some of the blame for this mess—along with elected officials, regulators, central bankers, mortgage lenders and brokers, investors, and consumers (and many others). But Cramer is not a financial journalist.

Lambasting Cramer for this crisis is like . . . blaming Stewart for sarcasm about politics.

Booya.