In his new book, CNBC’s shamed business expert ostensibly forgets a decade’s worth of duplicity and failures.
“What, me worry?” Cramer gets grilled by Jon Stewart (AP/Jason DeCrow)
One of the more disturbing aspects of American punditry is that failure and poor analysis are so often rewarded. Pundits who were wrong about the war in Iraq, for example, were routinely given promotions, space on the country’s most read op-ed pages, and face time on television. William Kristol took the term wrong to new levels in 2002 and 2003, yet was granted plum gigs with the New York Times and the Washington Post. There is an entire Wikipedia page devoted to Times columnist Tom Friedman’s woeful miscalculations on Iraq. Peter Beinart, New Republic editor and a staunch supporter of the war, snagged himself a fellowship from the Council of Foreign Relations and a book deal. And on it goes. Everywhere you look in the world of media, those who got it wrong have stayed on as dominant voices in the public sphere.
So it only makes sense that, in the waning days of the global economic crisis, on goes the reign of Jim Cramer, CNBC’s wild-eyed investment advisor and one-man circus show. Not only has Cramer’s stock advice, often screamed loudly on his program Mad Money, been notably horrendous, his shady business dealings, lack of ethics, and failure to stand up to Wall Street greed have all been very publicly exposed (thanks, Jon Stewart).
And yet the degree of arrogance Cramer continues to maintain is downright staggering. Consider his latest book, Getting Back to Even: Your Personal Economic Recovery Plan. (One assumes the title is talking about leveling readers’ stock portfolios, but, given Cramer’s history, perhaps it should be referencing his credibility.) Claiming that, with the help of his tome, readers will not only survive the crisis, but "thrive" and make “what’s essentially free money,” Cramer has proven again that, while his wallet is brimming, his senses of history and reality are bankrupt.
As one might expect, Cramer works very hard in Even to hide his past shortcomings. At one point, he brags that in September 2008, he wisely urged people to take 20 percent of their money out of the stock market, which was “too dangerous.” “It was one of the best calls I’ve ever made,” writes Cramer, who’s never been embarrassed about tooting his own horn. “Basically, I hit the investing equivalent of a grand slam.”
Later, he derides financial advisors and fee-based mutual fund managers for keeping investors in the market for selfish reasons. “You must be wary of these types,” he warns. “Except, that is, for me.” Like a wolf in sheep’s clothing, Cramer maintains he has nothing but benevolent intentions for readers. “I don’t want your assets or your commission. I just want to give you honest advice,” he writes. He also insists that the entire economic calamity could have been averted, if only people had listened to him: “I was literally screaming about the financial crisis starting in the summer of 2007, warning anyone who would listen that our financial system could come crashing down.”
It’s all a sweet tale of the world’s most well-meaning investor. But to anyone in the know, it’s also a piece of grotesque revisionism. The only accurate part of Cramer’s account is, of course, that he was screaming. Literally.
To begin with, Cramer’s history of ethical lapses is fairly long. In 2000, he had a dust-up with Fox News. The news outlet complained, according to the Associated Press, that “[Cramer] promoted [his company’s] stock on the air.” Six years later, in a now widely circulated interview, Cramer boasted of his ability to manipulate the market through misinformation. "What’s important when you are in that hedge fund mode is to not do anything remotely truthful, because the truth is so against your view that it’s important to create a new truth, to develop a fiction,” he said, sounding very different from the man who just wants to give “honest advice.” He then recommended skirting laws, saying, “You can’t foment. That’s a violation … But you do it anyway because the SEC doesn’t understand it.”
Even if one is not worried about truth or ethics, Cramer’s straightforward economic advice—that in which he’s not telling you to lie, cheat and steal—seems equally suspect. For instance, 2000, he gave a speech declaring his "Winners of the New World" at the Internet and Electronic Commerce conference. The address found Cramer recommending 10 stocks and saying he “wouldn’t own any other stocks in the year 2000." By 2009, all of his picks were either out of business, sold, or close to worthless. Leading financial magazine Barron’s once studied Cramer’s picks over a two-year period and concluded that, simply by consistently betting against him, one could yield 25 percent gains.
Leading up to the most recent crisis, in March 2008, Cramer responded to a viewer’s question about investment bank Bear Stearns’ solvency. "Bear Stearns is not in trouble,” Cramer promised. ”Don’t move your money from Bear." Six days later, Bear would be almost worthless.
Even is classic Cramer, with plenty of hypocritical and dubious advice to go around. Perhaps most glaring is that, after years of opposing government intervention in the economy, Cramer now praises government bailouts like the Troubled Assets Relief Program. He even dedicates the book to Federal Reserve Chairman Ben Bernanke, saying Bernanke “pumped the stock market back to life using governmental measures.” Of course, why wouldn’t Cramer support the $700 billion bailout? It allowed the U.S. taxpayer to handle the losses, while letting big banks keep the profits. Guys like Cramer can always support Keynesian policies so long as the rich are the welfare recipients.
Cramer also devotes a sizable portion of his book to giving young people tips on what to do with their money, and it’s here where he shows just how out of touch he is with American youth. Young people, Cramer says, are “extremely lucky” and “should be thanking their lucky stars for virtually every bad thing that has happened [to the market],” as he believes it’s created a “once-in-a-generation” buying opportunity.
Set aside the fact that Cramer wants kids to be excited by the losses of their parents and grandparents, and let’s focus on this idea that young people are currently “extremely lucky.” Because, actually, we are totally screwed.
This is a terrible economic time to come of age. College tuition has outpaced inflation and federal aid increases for nearly 20 years; student debt is at an all-time high; real wages have become stagnant, while the cost of everything—oil, housing, food—has gone up. President Obama has clearly stated that the economic crisis impacts young people the most. Heidi Schieholtz, of the Economic Policy Institute, explained the circumstances well to the Cleveland Plain Dealer, when she noted, "[Young workers] are really seeing the brunt of this because employers, when push comes to shove, are shedding their less experienced workers first.” If this is good luck, I’d hate to see the bad.
To be sure, many young people are unlikely to have the capital to indulge (or the time and inclination to entertain) Cramer’s reckless speculation. Many will spend a large portion of their earnings paying off student loans, medical bills, and exorbitant rents—but that doesn’t mean America’s youth can totally ignore Cramer. Because when he’s not hopping around on TV like a mad kangaroo, or conjuring pig oink sound effects, Cramer is actively working to kill progressive legislation and boost the stock of exploitative student lenders.
What’s more, in the wake of the economy’s collapse, it is now incumbent upon young journalists to create a responsible and dutiful business press, one that treats the country’s financial security as a serious matter. To better do that, Cramer needs to be held up as a perfect symbol of what is so very wrong with current and past economic punditry. In other words, if Jim Cramer were a stock, the world would be wise to sell.
Michael Corcoran is a correspondent for The Boston Globe’s metro desk and graduated from Emerson College in 2007.