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Cramer vs. Stewart: the media and financial crisis

By Danielle Gewurz

Section: Arts

March 20, 2009

One week ago was the showdown culminating a week-long media-hyped feud between Jon Stewart and Jim Cramer, of CNBC’s loudest finance show, “ Mad Money.” To commemorate the occasion, “The Daily Show” dispensed with the standard format, chose a self-mocking special introduction segment and spent the bulk of the show on the ‘interview’ of Cramer.

The conflict arose when Stewart and company aired a very pointed segment of CNBC’s financial advice that had subsequently proven to be wrong and/or disastrous in relation to the current financial crisis. Jim Cramer fired back that he had been unfairly maligned in that segment, leading Stewart to point out that Cramer had been touting, among other things, Bear Stearns as a worthy buy just a week before the firm collapsed and was liquidated in a Treasury-facilitated fire sale.

It all led to last Thursday’s show, where Cramer showed up, ostensibly to debate Stewart but more realistically to offer a mea culpa, while trying to diminish his own culpability.

The ratings stunt was hardly the most in-depth examination of the economy’s current dire straits, but it was an interesting watch that provided food for thought about the role of the media as fourth estate and a tool of the people, not power.

The entire interview was reminiscent of Stewart’s confrontation with Tucker Carlson of “Crossfire,” where he decried the network for airing “partisan hackery” instead of presenting honest political debate. Carlson responded that Stewart had failed to meet the same standard, with the obvious retort being that it’s not Comedy Central’s job to meet the standards of journalistic excellence.

Cramer was certain to mention the same thing on Thursday; no one, including Stewart had seen the crisis coming. Stewart was not to be deterred by claims that the “The Daily Show” should have been able to predict impending financial doom. He pointed out that, by many standards, financial experts might reasonably be expected to look critically at untenable leverage situations and the illogic of a system offering double-digit returns for years.

What’s not really received a lot of attention in the interview is that Stewart found previously unaired clips of a Cramer interview in which he advocates illegal market manipulation through rumors, given that the SEC will be unable to adequately police it, and explains the precarious position of shorting stocks when managing a hedge fund. In other words, Cramer was well aware of market vulnerabilities and intimately familiar with the less-than-ethical dealings of hedge funds and finance managers.

Cramer, speechless, shrugged guiltily and put his hands in a supplicating gesture when he saw those clips, and was unable to explain away that resounding indictment. The rest of the interview was a show trial, a chance for Stewart to rant on a predetermined line of questioning and Cramer to apologize while pleading that he had been lied to and misled by the same bankers who had misled the American public.

The issues raised, though, aren’t really about CNBC’s role in the financial crisis (while the network did promote the financial instruments on shaky ground, it has a small overall viewership). Nor do they have anything to do with Jim Cramer’s ridiculous television personality (though it is worth mentioning that, as Stewart pointed out, that does significantly detract from his credibility).

Instead, Stewart’s pandering populism ties into “The Daily Show” media absurdity meme. In recent years, with journalism in crisis, there’s been a consistent effort on the part of Stewart and his fellow satirist Stephen Colbert to take journalism and news organizations to task for their trivialities and, more importantly, for their failures to substantively inform the public.

Really, then, it’s not about Jim Cramer at all, though he did make the poor choice to involve himself. It’s about financial journalism. It’s, as Stewart explained, the idea that everyone in the field never questioned thirty-five to one leverage ratios, the fundamentals of a market producing absurd returns year after year, the underlying logic of subprime loans and credit-default swaps, or the intricacies of the bond insurance and ratings system.

Perhaps Cramer is right that he never could have seen a crisis coming. But there’s little sympathy to be had for someone who was part of an industry that never took the time to investigate any of these issues in boom times. Cramer’s lament that the CEOs on his program, or the former CEO of Bear Stearns, lied to him, was met with Stewart’s more than acerbic rejoinder, “A CEO lied to you!”

In other words, it’s not the job of a financial analyst, or journalists on a network dedicated to finance, to unquestioningly accept the words of those in power as truth, just as we resent journalists for unquestioningly promoting the Bush administration’s claims of pre-war intelligence with respect to Iraq. And though watching Jon Stewart yell at Jim Cramer would have, on its own, been a pointless exercise in pandering, he ultimately succeeded in drawing attention to the media failure to investigate and to protect its constituents. As he explained, CNBC has the power to be a regulatory force, just as The Wall Street Journal or the New York Times Business Section does. The fact that they failed to exercise that power, Stewart asserted, has hurt all of us. After all, “’[finance is] not a game,” it’s all of our futures.

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