Sunday, March 15, 2009

CNBC - Journalism or Entertainment?

The big media event of this last week was the appearance of CNBC’s Jim Cramer on The Daily Show as described in Stewart Hammers Cramer on 'The Daily Show'.

Jon Stewart hammered Jim Cramer and his network, CNBC, in their anticipated face-off on ''The Daily Show,'' repeatedly chastising the ''Mad Money'' host for putting entertainment above journalism.

''I understand that you want to make finance entertaining, but it's not a (bleep)ing game,'' Stewart told Cramer.

Stewart said he and Cramer are both snake-oil salesman, only ''The Daily Show'' is labeled as such. He claimed CNBC shirked its journalistic duty by believing corporate lies, rather than being an investigative ''powerful tool of illumination.'' And he alleged CNBC was ultimately in bed with the businesses it covered -- that regular people's stocks and 401Ks were ''capitalizing your adventure.''
All this was brought on by the cancellation by CNBC’s Rick Santelli of an appearance he previously agreed to make on The Daily Show. And as John McCain who cancelled out on David Letterman during the presidential campaign can tell you, it’s not a good idea to incur the wrath of a TV comedian with a sharp tongue.

Check out this scathing indictment by Stewart of CNBC in general and Jim Cramer in particular in
this video link.

I am one of those that believe that The Daily Show is one of the very best shows on TV although I can understand why others, especially conservatives who are often the butt of the show’s jokes would feel differently. Its self described ‘fake news’ format as an entertainment show allows it to use satire to drive home its messages that a straight news show simply cannot do.

One of Stewart’s criticisms is that financial networks like CNBC seem to cater to those who are out to get rich quick while others who are long term investors saving for their retirements are given short shrift. Commercial networks like CNBC to attract enough viewers feel that they need to have glitz and often hobnob with the movers and shakers, perhaps with the intention of giving its viewers the vicarious thrill of interacting with the super wealthy.

But whether Stewart likes it or not, much of the action around Wall Street does revolve around casino-like activities like
options where people bet on which way the price of a stock or a commodity is going to go. And just the opposite from those who are buying stocks for long term appreciation to finance their retirements are short sellers who profit on the fall of stock prices.

But the biggest criticism Stewart had (which I agree with) is that all of the financial networks’ closeness with all of those movers and shakers can make them either blind to or worse look the other way for corporate wrongdoing. We know now that the financial companies we are bailing out with public money were indulging in very unsound financial practices. Surely networks like CNBC that make recommendations on specific stocks are investigating the balance sheets of these companies. Or are they?

The first line of defense here in the US against financial misbehavior is the Securities and Exchange Commission. But as anyone who has been following the
Bernard Madoff scandal knows about the total incompetence the SEC displayed in letting Madoff fleece people out of billions of dollars over the years even when a whistleblower approached them to investigate Madoff.

Concerns about Madoff's business had surfaced as early as 1999, when financial analyst-whistleblower Harry Markopolos informed the SEC that he felt it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. Others felt it was inconceivable that his growing volume of accounts could be competently serviced by his documented accounting/auditing firm, a three-person firm with only one active accountant.

However, no serious inquiries were made into his business practices until December 2008, when the financial crisis created a rising demand of cash withdrawals.
But when the government isn’t doing its job to protect us, a free society must rely on its journalists to ask the tough questions and demand answers. Perhaps the most notable example is Woodward and Bernstein helping to uncover the Watergate Scandal.

This begs the question of whether CNBC is primarily journalism or whether it is as Stewart charges, entertainment masking as journalism. Cramer during his interview with Stewart said that his network needs to do better. So does the SEC.

Just like the health of the economy is built to a great degree on confidence, the same goes for the financial markets. If too many prospective investors feel that the markets are there to benefit the professional traders at the expense of the little guy, it will make it that much more difficult for the equity markets to recover — along with the retirement savings so many of us had hoped to rely on.

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