Creative Destruction

| Mad Money host Jim Cramer took a drubbing from Jon Stewart on The Daily Show last night (watch online). But talk about creative destruction — at the end of the interview, Cramer accepted a challenge to take a more hard-nosed, investigative tack on his own show. Imagine if Cramer had gone on Mad Money in August of last year to deliver the same kind of withering take-down to then-Lehman C.E.O. Richard Fuld that he endured last night? Would it have made a difference in the meltdown? [%comments]

Joan A.

Wow. Not much empathy for the regular lower-income working folks who were only trying to have their own home, but lost it all as they financed others' private jets. Yes, they may have been misguided, but by whom? I thank John Stewart for speaking up.
"Some people are born on third base and go through life thinking they hit a triple." –– Barry Switzer


“I would like to see them talking about how to get out of this mess rather than throwing blame. Hind sight always has 20/20 vision. We need to look forward now.”

You can't do one without the other. Unless you use your 20/20 hindsight to learn what went wrong in the past, you'll simply repeat the mistake in the future.

I'm glad that the media is finally getting some attention for not having been critical enough during the last few years. If you really want to look forward on how to prevent such disaster in the future, you will realize that we will need people to be more critical at every step of the way. You can't prevent bubbles by predicting the specific ways in which they form, but a healthy dose of rational skepticism is the only hope we have of avoiding herd mentality and popping bubbles before they get too big.

Tim K

Stewart is trying to do what the traditional media is refusing to do - challenge the accuracy of what is being reported. The media has largely failed in it's job to be the "fourth estate" of government the last decade and we are all paying the price for it.

Whether you like him or hate him, Stewart's job is political satire. Last night was him doing his best Howard Beal and shouting "I'm as mad as hell and I'm not gonna take it anymore." Maybe the next time Cramer interviews some CEO on his show, he'll ask a couple pointed questions like "how can you say that's true when the numbers don't support it?"

Someone has to bring this all into question. And the guilty must be punished to prevent it from happening again.


Hasn't anyone read the CEO's blog about Cramer and his shenanigans?

It's at Very interesting reading.

Colin Toal

This was really a low point in the media circus and I'm actually surprised at Mr. Stewart. I feel I need to question his motives in his treatment of Mr. Cramer, and I feel I need to question the position he wishes to force upon the business media.

Firstly - the clips he pulled of Mr. Cramer acting like the sleazy hedgefund manager are from an old interview on In that interview, Mr. Cramer was arguing against the kind of behavior he was describing - and for regulation against it. It was Mr. Cramer outing that behavior to the ill-informed. It wasn't some private joke. This seems to be too fine a point for Mr. Stewart and possibly some of his audience. Mr. Cramer was right when he said 'he was inarticulate' there - its too easy for that fine point to be manipulated.

Even the bombast of the 'In Cramer We Trust' promo is purely self-satirical. This is Mr. Cramer's media character. He plays the role of the bombastic former insider who is giving you a view from the outside. To suggest that Mr. Cramer was any more informed about the liquidity challenges facing Bear Stearns than any other investment professional is to actually accuse him of something very serious. To suggest he knowingly gave bad advice based on information he shouldn't have is to accuse him of a criminal act. As far as I know, Mr. Cramer may have been wrong about Bear Stearns - but that's all he was - wrong. Any reasonably informed investor knows an analyst can be wrong. If you don't know that, you should not participate in the market.

As for Mr. Stewart's axe of CNBC not being a '"powerful tool of illumination" - well, powerful tools of illumination are at a premium on cable channels. It might be welcome for Mr. Stewart to consider that investigative journalism is hard and rare, and satire is relatively easy.

I wonder if he expects the daily newspaper to report the rapes and bank robberies as they happen, and thereby catch the villains in the act. It is a ridiculous position - the fourth estate as crimefighter and defender of the meek - in which Mr. Stewart wants to place CNBC. Investigative journalism that results in indictments are exceptional 'black swans' - not common occurences - and its certainly too much to put faith in.

Instead, I will put my faith in regulators and law enforcement officials armed with expertise in these matters over reporters and media talking heads. This position is even more ridiculous when you consider that there is no evidence that anything untoward occurred that caused this market catastrophe. Two years ago, NO ONE (except maybe Warren Buffett and noted chronic doomsayer Nassim Taleb) expressed much concern at all about the 35:1 leverage. Not Mr.Stewart, not WSJ, not CNBC and certainly not the homeowners who bet on the future value of their homes through equity extraction. It was bad risk management on everyone's part. Mr. Buffett was canny in his analogy, to paraphrase - we don't blame the Navy for Pearl Harbour.

For Mr. Stewart to go after Mr. Cramer and CNBC this way is a mystery. CNBC's "House of Cards" documentary did an excellent job of telling the story of the subprime melt down. Mr. Cramer himself issued one of the few early warnings of the difficulty that was coming. CNBC gave 3 hours of their best airtime to Mr. Buffett, and turned coverage over to Ben Bernanke the next day, and Tim Geithner and the President the day after.

Indeed - here is the risk in Mr. Stewart's position for the fourth estate. It is not for the journalist to tar and feather suspected 'evil doers'. Libel and slander laws exist in part to protect people from vigilante journalism, as it is too easily wielded in a partial or callous manner that is indifferent to the effects it has on society.

In recent episodes of Mad Money, just around the same time that Mr. Stewart discovered that CNBC and Mr. Cramer exist, Mr. Cramer had been very openly critical of the current adminstration - including specifically President Obama, and Speaker Pelosi.

I would hate to think that Mr. Stewart, as a supporter of the President, would take Mr. Cramer's criticism of the administration as motive to turn his acid wit and 'investigative responsibility' on CNBC. Actions like this can cause a chill that discourages others from being critical of the administration. I mean - Mr. Stewart, for all his "making fart noises and funny faces" schtick, carries weight as many more people turn to his comedy on the state of the economy than turn to the analysis of Mr. Levitt and company, or even the commentary of Mr. Cramer. This weight - even if he is a comedian - comes with responsibility to not cause such chills.



Problem with asking “how can you say that's true when the numbers don't support it?” is that by and large the numbers reported in the business press come directly from press releases put out by the companies.

I think CNBC failed as a journalistic enterprise, but if you listened to them on any given day (and here in NY, you can't help but get their reports via NBC and WNBC), all they do is read press releases. There is nobody going in to GE with forensic accountants to confirm that the numbers the company reports are correct.

And face it, the SEC, even if it wanted to find lies (and Maddoff suggests that was a priority) it could not possibly run the books of even 1% of the corporations in the US in any one year. We work on the honor system and when the incentives to lie outweigh the risks of getting caught, you have these 100yr catastrophes that bring us painfully back to reality.


In a world gone mad and full of insanity, John Stewart might be the only sane and sober voice. Just listen to the adjectives being used by news people where a drop of 100 points on the Dow is described a massive, unheard of, huge, immense, monstrous, monumental, stupendous, tremendous, etc. which are all exaggerations reminiscent of the fear-mongering that has been going on since 9/11. This creates a vicious cycle of fear which mirrors the "irrational exuberance" when the market was going up.


See post #7 - well said.


I wouldn't mind being wealthy someday. Just not the filthy type.

D. Johnson

The middle paragraph of my comment was meant to be in the voice of a person from 2 years ago, not actually me. Reading it back now sounds like I was being a pompous ass...not at all what I intended. I was trying - and not very successfully - to make the point that technical reporting on the risks of over-leverage and CDSs, while fascinating in a sad and maddening way now, would probably not have received much attention at the time. People back then would probably have been more inclined to watch something more entertaining and continue to believe that markets always rise.


The thing about Stewart is that he's a Court Jester - he has no credibility, but his job is to destroy the credibility of others. And this is all right and good, because normally when someone with far too much credibility gets called into question, they'll use all sorts of character attacks to erode the credibility of their attacker. There's no balance when someone gets too much respect, other than having them fail. But the Court Jester has no credibility, and puts on a silly hat and wanders around in tights to avoid earning any. That makes them unattackable, and it means the powerful have to avoid letting them get enough material that they can redefine you. For the most part, that means walking the talk.

My point here is that CNBC attempting to attack Jon Stewart was stupid. What they needed to do was make Jon Stewart's jokes look off-base - a bit tricky because The Daily Show has one of the best uses of archive footage I'm aware of, and the point they were making through the jokes was one that was probably fair. CNBC didn't walk the talk, and when it was pointed out, they panicked.

This is Stewart's job. Let's not put it down to political sides here, CNBC was an attractive target because they were big and wrong.



"The media needs to be more self-critical. Someone needs to speak up for the regular American."

Are we not aware that the media does nothing but criticize the influence of the media and speak up for the regular American? If anything, the regular American has more respect for Wall Street than the media does. Obviously the media pretending benevolent Wall Street leaders isn't the problem.


I just wonder what we learn from the Daily Show. Does Jon Stewart really seek to be the fourth branch of government? He definitely shows a complete lack of knowledge about basic economic theory.
Granted. Cramer was a "straw man" and didn't seek to defend himself.
He won't get a pity vote from the public who don't understand what has caused the present financial crisis.
The great tragedy is that Cramer could have used his time to really explain to Stewart's audience what did happen and where the recovery and administration should be directed.
Obama's team is starting to gel but in reality there is no "group think" -unified strategy seeking to rebuild that damage done to the economy-yet going on. Until that happens, I keep my money out of the market.


It's sobering to see so many Freakanomics readers support Cramer and his ilk of Wall Street shills. Jon Stwart was right on in his take-down of the industry, and he did make it clear numerous times that this wasn't about Cramer in particular, but about the entire "financial media" which touted the bubble and never questioned the numbers.

The one cogent point made by Cramer is that they believed this could be real because it had been going for 12 years, and there was a belief that it could last.


Did Stewart's "wealth is work" comment catch anyone's ear the way it did mine?

Eric M. Jones

I think BOTH Stewart AND Cramer won. Stewart because he said what people wanted to say, Cramer, because he came across as Everyman.

Stewart's “wealth is work” comment requires some examination. The gyrations of the market are mostly psychological. There may or may not be a connection to a piece of industry....or anything. After all, owning dollar bills does not give one ownership of mystical one-eyed pyramids.

But whether or not the game is only a human invention, there have to be some regulations....and real penalties for violating the rules. Otherwise there can be no investments.

We need a lot more frog-marching on Wall Street..


It's ironic that the first comment is asking for the networks to draw attention to the fact that the market's performance is down to manipulation not value.
That clip from interview with Cramer, where HE DOES EXACTLY THAT, is from 2006. A little maths will show... he actually did exactly what you asked him to. Yay Jim.
I think that Cramer went in expecting Stewart to attack him for one thing, and didn't adjust quickly enough when Stewart went for him in another way. But he's in the tough position of being the figurehead without the power to back it up.
As Cramer said, it's Stewart's show, and he's on the back foot from the start. All things considered, he actually came across pretty well. He didn't come across as flippant or insincere. And if this drives him to make his show with a little more integrity, then that's all to the good.

Brad S.

Weather Crammer deserved to be the face of this dispute is debatable. What I do feel is indisputable is that some one needs to start calling CNBC on its B.S.

I think Stewart's point about two markets is a great one and the fact that Crammer couldn't admit to which side him and his network cater too shows the major flaws in a network like this.

Time and time again I see Crammer, Kudlow, Mathews, and the rest of the gang make mistake after mistake after mistake and None of them are ever called on it. No one is held accountable.

Calling every support line after 11,000 the bottom, saying financials where to stock to be in 08, and not only missing the recession but refusing to believe it exists because of some out dated definition, then continuing to recommends stocks! (For more examples of this see

Some one needed to decipher between charisma and competence, even if it wasn't the prettiest of ways.

Maybe instead of the tag line "In Crammer We Trust" CNBC can rewrite their acronym for a new catch phrase..




The question Jon is asking is whether Financial news reporting should be like real journalism - asking the hard questions, uncovering lies, showing both sides of a story.
As we saw with Fox News fawning over the Bush administration for 8 years and not even reporting things that they considered counter to the "message", you do not get much enlightenment that way.
But, Cramer may be the last person to take down on this. His show is more like Hannity or Olbermann, more editorializing than reporting. The real blame has to go to the reporters on CNBC and Fox Business news and Bloomberg that never tried to undercover the truth, never challenged CEOs who were lying, etc. That is what Jon's message was, but he was attacking the wrong person in my view. Fox news should not be challenged for the nonsense from OReilly or Hannity but for the nonsense from Britt Hume and other "reporters" and anchors, who should be reporting serious and thoughtful analysis, not just entertainment. Likewise for financial news networks: entertainers like Cramer are not news reporters; whether it was a good idea to trust his stock picks is a separate point, but his show is/was about how to make money in the stock market, not to report.


Joe Smith

All right, so there are others more deserving of a public humiliation than Cramer - bring them on.

There has been rampant incompetence bordering on criminality in Washington, on Wall Street, in the law firms that drew derivatives contracts that were little more than suicide pacts and the accounting firms that blessed the financial statements.

Pretending that you are competent when you should know you are not should be a criminal offense and there are thousands who should be in prison as a result.