EYE ON RE-REGULATION: Special Edition

Jon And Jim’s Excellent Adventure

I never wonder to see men wicked, but I often wonder to see them not ashamed.
- Jonathan Swift

This year we had two Friday the 13ths back to back – first February, now March. If you are Jim Cramer, you might be reading this while hiding under the bed and wishing your astrologer had warned you about making comments like “A comedian’s attacking me! Wow!” in between two Friday the Thirteenths. Thursday’s “Daily Show” turned out to be the Main Event, for which Steele vs. Limbaugh was merely the undercard.

By the way, Jimbo, there will be Friday the Thirteenth Part III in November, so if you’ve already got your head down, keep it down.

Cramer showed up on the Daily Show and sat abashed, embarrassed and tongue-tied as Jon Stewart, setting aside his arch funnier-than-thou persona, gave the most direct, on-point grilling of a public figure’s irresponsible behavior that the major media has seen in a generation. One of the great takeaways of the evening was the clarity with which Stewart laid bare the incestuous relationships in the Media-Financial Complex.

Sensationalism, the sine qua non of journalism, is inimical to proper investment process. How does Cramer appear on TV and not run smack into conflict? Like the stockbroker who must generate a trade to get paid, the media star must keep his viewers frothing at the mouth to maintain ratings. Cramer’s entity, TheStreet.com, is registered as an Investment Adviser with the SEC. Its registration Form ADV states that the entire business of the entity is providing an investment newsletter, and the website’s Terms of Use includes all the right disclaimers.

Cramer looked more than a little uncomfortable when Stewart tossed out the notion that both of them are in the business of selling snake-oil – but that The Daily Show labels it as snake-oil, while Cramer appears to be marketing his brand as having magical curative powers.

“I’m not Eric Sevareid,” Cramer said at one point. “I’m not Edward R. Murrow. I’m a guy trying to do an entertainment show about business.” Ah! Now you tell us…

Are we the only ones who find this revelation confusing, on the heels of years of “In Cramer We Trust”? Do Cramer’s lawyers fear we are facing a legal and legislative inflection point where all the disclaimers in the world won’t keep you out of trouble? Which is it? Is Cramer the Solon of investment wisdom, or merely the Ed Sullivan of Wall Street?

Arbitration panels and regulatory enforcement divisions have taken a dim view of aggressive sales organizations that rely too heavily on the small print. We wonder which enterprising lawyer will be first to make the case that Cramer’s shrieking and horn honking constitute high-pressure sales tactics, not in search of commissions, but of ratings.


Yes, Cramer is a knowledgeable Wall Street professional. Yes, Cramer has taken stands on critical issues – and we have agreed with many of them. And yes, Cramer admits when his calls have gone against him. But as Jon Stewart rightly points out, all Cramer’s knowledge, experience and self-correction blend into a cacophony of constant patter. Any deep message there may have been is lost in the maniacal screaming.

This goes to the tenor of the dialogue that has so ill-served the investing public. The owners of the debate so far have been those with enough cash to buy air time, and enough bluster to scream Booyah! at the top of their lungs.

It’s enough, folks. Enough.

The Wall Street Journal, which also must sell newspapers (a dying business, we are told), has this screeching banner headline on Friday: “Madoff Jailed After Admitting Epic Scam”.

“Epic”? Bernard Madoff is not Achilles. He is a common creep who got mega-lucky. The greatest tragedy of the Madoff affair is that he will not be tossed into an open cell. That he will not be sent out to the prison yard to exercise and lift weights and play basketball and get abused and stabbed with the rest of the inmates. This punishment will never fit the crime – which means it will neither punish the perpetrators, nor deter future criminals.

Sorry, Bernie. You are not “Epic”. You are not Lear. You are mere garbage, and to pretend anything else is to debase the suffering you have caused.

The way of Wall Street used to be that one’s word was one’s bond. Lost in the need to sell newspapers, Madoff has taught us that Trust is still the fundamental principle. Don’t look to Ezra Merkin or Henry Kaufman. Don’t look to Dan Tully – or even to Steven Spielberg or Fred Wilpon. Those professionals were themselves, or were advised by people in a position to Know Better. They all knew that Madoff was doing something highly illegal, they just didn’t know what it was. And, as long as they were the beneficiaries, they were willing not to ask deep questions.

But alas, poor Miriam Siegman, now on food stamps. Alack, poor Sharon Lissauer, whose entire life savings were wiped out. These were the Little People – not in a position to Know Better. They trusted the mechanism of the market to keep things legitimate.

Were they wrong?

The proliferation of scammers has taken the markets by storm, and has now laid them low. Jim Cramer made himself Court Jester to Bernie’s Wizard of Oz, and now the curtain has been ripped aside. The scummy underside of the industry has been turned up and the maggots are writhing in the sunlight – the talking heads of the Wall Street-Media Complex not the least.

Miriam Siegman and Sharon Lissauer were fools to not seek more information. Yet, fundamentally they were not wrong. We must be able to have trust in our markets, otherwise there are not only no markets. There is no capitalism, and there is no America. There is nothing. The media do us a disservice by obfuscating the real issue. The flip side of the coin of Trust In The Markets is not More Regulation. Rather, it is socking away a year’s supply of food and buying an AK-47.

This week saw analysts on Bloomberg talking about civil unrest in the wake of the global financial meltdown, and we do not need a roadmap to know that the government has drawn up contingency plans for civil war. When the S&P goes to zero – when people are bartering gold for liquor and hogs for bullets – when the Social Contract represented by the dollar bill has been dissolved and in God we no longer trust – the ultimate doomsday scenario becomes highly credible.

Those of us who believe in the natural integrity of the markets must do everything in our power to restore that integrity. It is people, not markets, that lack integrity. People, not markets, that cloak their actions under a curtain of falsehood.

Jim Cramer knows all about regulatory error, wrong-headed legislation, and outright fraud and market manipulation, having admitted to a range of interesting dealings in his earlier incarnation as a hedge fund manager. By diverting all his immense energy away from exposing these problems, and putting it all into getting folks to call in and ask what to buy, he has done his employers a great service, and the world a great disservice. This is perhaps the definition of dishonesty – diverting one’s talents from producing effects, to producing income.

On Thursday morning – mere hours before Cramer walked the Last Mile to Jon Stewart’s desk – the talk on MSNBC’s “Morning Joe” turned to Obama-bashing. One commentator (our back was turned) attacked the Obama team’s notion that Every Crisis Is An Opportunity. He said “To paraphrase Groucho Marx, ‘Sometimes a crisis is just a crisis.’”

This reveals much about why the media are so feeble at explaining what is really going on. Sigmund Freud, an inveterate smoker of large cigars, was once asked about his own oral-phallic fixation. His response: “Sometimes a cigar is just a cigar.” We realize that both Freud and Groucho were Jewish cigar smokers, but beyond that we do not see how anyone could confuse them. Should a man whose mind is disorganized enough to confuse Sigmund Freud and Groucho Marx be trusted to give an analysis of the policies of a President he has already told us he dislikes?

Cramer is one of the guys who knows where the bodies are buried in this industry, having buried plenty himself. Cramer went for sympathy at one point, and his whining did not do him credit. It is pathetic for this self-styled major television journalist to complain “I’ve had a lot of CEOs lie to me on the show! It’s very painful!”

Dick Fuld “lies to me, lies to me, lies to me…”

“We/re not always told the truth…”

Looking mournfully into Stewart’s eyes, Cramer said “It challenges the boundaries” to say on television that Henry Paulson lied.

Since challenging the boundaries is what journalism is, by definition, all about, we are glad that Cramer has finally enlightened us as to what he actually does. “I’m a guy trying to do an entertainment show.” Thanks for clarifying that.

Jon Stewart, by the way, earns our highest accolade for his simple restatement of what made America great: “When are we going to realize in this country that our wealth is Work.” Wow! Jon Stewart for President?

The morning after this interview aired, it was announced that Thomas J. Clarke was stepping down as CEO of Cramer’s company, TheStreet.com. We are not believers in the gods of Coincidence.

So now for the Sixty-Four Trillion Dollar Question. Why did Cramer show up for what he knew was going to be the equivalent of a Red Chinese self-criticism session? Guys like Cramer don’t get their butts whipped in public unless their lawyers tell them they had better. Does Cramer get a bye, because no one takes a television personality seriously, or does he now get skewered on the rapier of public opinion and a thundering herd of highly motivated lawyers? Is he Bozo The Stockpicker, or is he personally liable for millions of people’s losses in their personal portfolios?

This one ain’t over yet. We’d get short Cramer, if we could find a borrow.

BOO-yah!

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