Cramer vs. Cramer
March 11, 2009 11:54 PM Subscribe
I guess we can thank Steve Zissou's heroic recuse for the collapse of our economy. Never trust a bond company stooge who claims to be a human being.
posted by bunnytricks at 12:22 AM on March 12, 2009
posted by bunnytricks at 12:22 AM on March 12, 2009
I was expecting an instructables link.
posted by TwelveTwo at 12:28 AM on March 12, 2009 [6 favorites]
posted by TwelveTwo at 12:28 AM on March 12, 2009 [6 favorites]
It would be a fun drinking game to watch this video and take a shot every time Cramer blows off the suggestion that what he's talking about is illegal---or the number of times he says 'foment.'
I suggest a really strong vodka, so your weeping doesn't interfere with the taste of your alcohol.
posted by librarylis at 12:48 AM on March 12, 2009
I suggest a really strong vodka, so your weeping doesn't interfere with the taste of your alcohol.
posted by librarylis at 12:48 AM on March 12, 2009
the first rule of fight club...
posted by Glibpaxman at 12:52 AM on March 12, 2009 [1 favorite]
posted by Glibpaxman at 12:52 AM on March 12, 2009 [1 favorite]
There's a reason he's the only one talking about creating artificial bear raids, because it would be idiotic to do so (let alone talk about it).
(Anyways, the big money on shady market shenanigans are around options expiration)
posted by amuseDetachment at 12:54 AM on March 12, 2009
(Anyways, the big money on shady market shenanigans are around options expiration)
posted by amuseDetachment at 12:54 AM on March 12, 2009
Here's your bucket. There's a hole in it. The river dried up a hundred miles upstream anyway. So it goes.
posted by loquacious at 12:56 AM on March 12, 2009
posted by loquacious at 12:56 AM on March 12, 2009
Note to self: catch Daily Show tomorrow...
posted by From Bklyn at 1:04 AM on March 12, 2009
posted by From Bklyn at 1:04 AM on March 12, 2009
Cramer: "I would encourage anyone who's in the hedge fund unit to do it, because... it's legal."
Host: "Riiight..." ಠ_͡๏
posted by Rhaomi at 1:16 AM on March 12, 2009 [1 favorite]
Host: "Riiight..." ಠ_͡๏
posted by Rhaomi at 1:16 AM on March 12, 2009 [1 favorite]
An all too honest insider look at exactly what was going on in these peoples' minds as they leveraged the 25 year bull market to death ... a hazardous overdose of power, adrenaline, shrewd maneuvering, stupidity, and wall-to-wall ego tripping.
posted by dacoit at 2:55 AM on March 12, 2009
posted by dacoit at 2:55 AM on March 12, 2009
Everybody's profit is somebody else's loss. (Not generally true, but it certainly is in Cramer's case.)
posted by aeschenkarnos at 3:37 AM on March 12, 2009
posted by aeschenkarnos at 3:37 AM on March 12, 2009
Bill Fleckenstein (pay service) has been talking about the 'month end tape painting' for a number of years, and opined that, eventually, in the profound crash he correctly saw coming, this and many other very slimy (and quite illegal) manipulations of the market would come to light.
Apparently, virtually every big fund did this for years; a judicious application of a small fraction of their assets under management could be used to artificially raise prices for Reporting Day -- so, on the 31st of the month, your account looked better than it really was. They worked even harder on producing rosy quarter- and year-ends.
I imagine this probably hasn't worked for awhile. I haven't looked at month-end results in detail for, geeze, years now, but when everything was going up, an informal conspiracy of silence kept the game going. Everyone knew everyone else was doing it, and nobody rocked the boat. But when things started getting dicey, I imagine that gentlemen's agreement went south very quickly indeed.
That's probably why Cramer's actually talking about it now. It doesn't work anymore, so he's probably trying for 'street cred', hoping to convince the world that he isn't, in fact, a blowhard con artist. I doubt his makeover attempts will work.
It'll be interesting to see how Wall Street reacts to this. Do they aggressively go after him and try to get him jailed, to punish him for admitting what was so obvious? Or do they keep quiet and hope the regulators won't come snooping?
posted by Malor at 3:41 AM on March 12, 2009
Apparently, virtually every big fund did this for years; a judicious application of a small fraction of their assets under management could be used to artificially raise prices for Reporting Day -- so, on the 31st of the month, your account looked better than it really was. They worked even harder on producing rosy quarter- and year-ends.
I imagine this probably hasn't worked for awhile. I haven't looked at month-end results in detail for, geeze, years now, but when everything was going up, an informal conspiracy of silence kept the game going. Everyone knew everyone else was doing it, and nobody rocked the boat. But when things started getting dicey, I imagine that gentlemen's agreement went south very quickly indeed.
That's probably why Cramer's actually talking about it now. It doesn't work anymore, so he's probably trying for 'street cred', hoping to convince the world that he isn't, in fact, a blowhard con artist. I doubt his makeover attempts will work.
It'll be interesting to see how Wall Street reacts to this. Do they aggressively go after him and try to get him jailed, to punish him for admitting what was so obvious? Or do they keep quiet and hope the regulators won't come snooping?
posted by Malor at 3:41 AM on March 12, 2009
Only watched the first minute, because I can't stand Cramer any more, but why the concern here? He's talking about trying to influence sentiment, big deal. All of Cramer's grand standing aside, I would be happy to be the counter party when he is spending $5m or $10m to try and steer market sentiment. I'm not an investor in US markets, but why would it be illegal for him to make some purchases (or sell) at a time of thin trade, or in futures, in the hope this swayed the market to go up or down?
I think the only people feeling dudded could be day traders trying to 'feel' the mood of the market, if they were suckered that there was weight of money in one direction.
If I go down to the farmer's market and try to bid up prices on bananas, well, big deal. If you think bananas are worth 20% more you will still pay it, otherwise you will shake your head and buy apples instead.
Similarly, if you are buying stocks, not because you think they are good companies but to speculate on the moving of the market, well, you need to take what you get.
posted by bystander at 4:15 AM on March 12, 2009
I think the only people feeling dudded could be day traders trying to 'feel' the mood of the market, if they were suckered that there was weight of money in one direction.
If I go down to the farmer's market and try to bid up prices on bananas, well, big deal. If you think bananas are worth 20% more you will still pay it, otherwise you will shake your head and buy apples instead.
Similarly, if you are buying stocks, not because you think they are good companies but to speculate on the moving of the market, well, you need to take what you get.
posted by bystander at 4:15 AM on March 12, 2009
I saw Cramer on Colbert the other night, and he always looks so uncomfortable when he's not running around like a fool, pressing large buttons, and spouting pump-and-dump.
posted by gman at 4:20 AM on March 12, 2009
posted by gman at 4:20 AM on March 12, 2009
I like the comment over there that says he "can't fault" Cramer because "at least he's honest". How low do your standards have to be to type that? (Answer: Very.)
posted by DU at 4:41 AM on March 12, 2009
posted by DU at 4:41 AM on March 12, 2009
The rest of make things for a living Jim. You should try it, you'll sleep better at night.
posted by nola at 4:45 AM on March 12, 2009 [4 favorites]
posted by nola at 4:45 AM on March 12, 2009 [4 favorites]
Our economy, and largely the world's economy, has not been based on tangible wealth for a very long time. Rather it is a house of cards built on the tenuous base of the perception of value. Keeping the house standing was a tricky balancing act that benefited many, some more than others, but allowed big and small investors to make real money essentially out of nothing. This changed when the Gordon Gekko "Greed Is Good" mantra outshouted common sense. What was a somewhat controlled thrill ride transmogrified into a poorly maintained roller coaster climaxing in a death spiral. And now is sucks to be you and me ...
posted by ElvisJesus at 4:49 AM on March 12, 2009 [2 favorites]
posted by ElvisJesus at 4:49 AM on March 12, 2009 [2 favorites]
Only watched the first minute, because I can't stand Cramer any more, but why the concern here? He's talking about trying to influence sentiment, big deal.
Keep watching. He moves on from the legal. He goes on to recommend fomenting lies for personal gain and price fixing as a needed strategy in the cell phone market. That is a little more than the influencing sentiment he talks about in the first minute.
posted by Pollomacho at 4:56 AM on March 12, 2009 [1 favorite]
Keep watching. He moves on from the legal. He goes on to recommend fomenting lies for personal gain and price fixing as a needed strategy in the cell phone market. That is a little more than the influencing sentiment he talks about in the first minute.
posted by Pollomacho at 4:56 AM on March 12, 2009 [1 favorite]
Our economy, and largely the world's economy, has not been based on tangible wealth for a very long time.
What is "tangible wealth"? The concept of wealth is intangible - money is a human-made concept - wealth doesn't actually exist in the world. If you were the last man on earth, gold would be worthless. The very notion of "tangible wealth" is a contradiction. Better to have a system based on that reality, than one that believes wealth is shiny and hard and dug out of the ground, a physical object it's not.
posted by stbalbach at 5:17 AM on March 12, 2009
What is "tangible wealth"? The concept of wealth is intangible - money is a human-made concept - wealth doesn't actually exist in the world. If you were the last man on earth, gold would be worthless. The very notion of "tangible wealth" is a contradiction. Better to have a system based on that reality, than one that believes wealth is shiny and hard and dug out of the ground, a physical object it's not.
posted by stbalbach at 5:17 AM on March 12, 2009
I wonder what percentage of the world is made up of people who can't bear to play by the rules and thus feel compelled to connive to their utmost in order to make unnecessary amounts of money to make themselves feel superior. It seems like a lot.
posted by digsrus at 5:27 AM on March 12, 2009
posted by digsrus at 5:27 AM on March 12, 2009
I don't know nearly enough about finance to understand all the nuances of this - but the interview reminded me of somebody playing "the shell game". Keep everything moving very fast, repeat some elements a few times to establish a pattern in people's minds, tell the crowd "look - its a trick and I'm going to show you how its done", give a demonstration. And then go right back to pulling the same sleight of hand you have just demonstrated. The effect could only have been improved if he had ended the interview by fleeing seconds in advance of a police raid. Here's hoping.
posted by rongorongo at 5:58 AM on March 12, 2009 [2 favorites]
posted by rongorongo at 5:58 AM on March 12, 2009 [2 favorites]
What is "tangible wealth"?
700 hundred board feet oak
300 acres of farmable land
2T of coal
and so on.
posted by nola at 6:09 AM on March 12, 2009
700 hundred board feet oak
300 acres of farmable land
2T of coal
and so on.
posted by nola at 6:09 AM on March 12, 2009
Yeah, by tangible wealth I meant producing things like cars or TVs or washing machines as opposed to piles of electronic paper
posted by ElvisJesus at 6:11 AM on March 12, 2009
posted by ElvisJesus at 6:11 AM on March 12, 2009
Cramer and his ilk are just garden variety venal scumbags. You don't expect crooks to act crooked? You don't expect thieves to steal? What pisses me off is that we supposedly have a government to protect us from these criminals. Where the hell were they?
posted by rusty at 6:18 AM on March 12, 2009
posted by rusty at 6:18 AM on March 12, 2009
If you were the last man on earth, gold would be worthless.
But what would safety from predators be worth? Or the ability to make fire?
posted by DU at 6:19 AM on March 12, 2009
But what would safety from predators be worth? Or the ability to make fire?
posted by DU at 6:19 AM on March 12, 2009
DU: "If you were the last man on earth, gold would be worthless.
But what would safety from predators be worth? Or the ability to make fire?"
If you were the last man on earth? Precisely nothing. Things are worth what someone else will pay for them. Which means if I invent a security (essentially, a contract), and you'll pay money to sign that contract, then guess what? It's worth something, by definition.
posted by TheNewWazoo at 6:27 AM on March 12, 2009
But what would safety from predators be worth? Or the ability to make fire?"
If you were the last man on earth? Precisely nothing. Things are worth what someone else will pay for them. Which means if I invent a security (essentially, a contract), and you'll pay money to sign that contract, then guess what? It's worth something, by definition.
posted by TheNewWazoo at 6:27 AM on March 12, 2009
First of all, the video is from last year (transcript), and so is the outrage. Furthermore, he hasn't operated a hedge fund for years, quitting long before this video was recorded. So at worst he's talking about illegal things for which the statute of limitations has run (assuming anyone could prove it anyway). More likely, he's talking about quasi-legal things other people are doing now.
Because what makes it illegal is the very specific details of how you move stocks up and down, it is difficult to take anything from that video as direct evidence of anything illegal. Just like if you said on Metafilter that you smoked pot, the cops couldn't arrest you for that, because having smoked pot in the past isn't actually a crime. Possession is a crime, but having once possessed it in the past isn't.
Furthermore, it always makes me laugh and laugh when I hear people call this guy stupid. He's a Harvard undergrad and a Harvard law grad who came from nothing and now has a $100 million.
The rest of make things for a living Jim. You should try it, you'll sleep better at night.
posted by nola at 7:45 AM on March 12
"make things?" He started a website more popular and influential than this one, has a TV show, and has written three books. Unless you are also prepared to argue that Jon Stewart doesn't actually make anything, I think it's clear that he does. And hedge funds make things too. They make money (except when they don't).
posted by Pastabagel at 6:29 AM on March 12, 2009 [2 favorites]
Because what makes it illegal is the very specific details of how you move stocks up and down, it is difficult to take anything from that video as direct evidence of anything illegal. Just like if you said on Metafilter that you smoked pot, the cops couldn't arrest you for that, because having smoked pot in the past isn't actually a crime. Possession is a crime, but having once possessed it in the past isn't.
Furthermore, it always makes me laugh and laugh when I hear people call this guy stupid. He's a Harvard undergrad and a Harvard law grad who came from nothing and now has a $100 million.
The rest of make things for a living Jim. You should try it, you'll sleep better at night.
posted by nola at 7:45 AM on March 12
"make things?" He started a website more popular and influential than this one, has a TV show, and has written three books. Unless you are also prepared to argue that Jon Stewart doesn't actually make anything, I think it's clear that he does. And hedge funds make things too. They make money (except when they don't).
posted by Pastabagel at 6:29 AM on March 12, 2009 [2 favorites]
Cramer and his ilk are just garden variety venal scumbags. You don't expect crooks to act crooked? You don't expect thieves to steal? What pisses me off is that we supposedly have a government to protect us from these criminals. Where the hell were they?
posted by rusty at 9:18 AM on March 12
You should watch the Frontline episode from a few weeks ago about how the bailout bill in the fall came about. Once you watch that, you realize that as badly as Paulson and Bernanke may have fumbled during the crisis, absolutely every other person in Washington, bar none, was so stupid and totally ignorant on matters of finance and economics that they had no idea there was even a problem, let alone the magnitude of the problem.
In other words, 'they', like the rest of America, had their collective heads up their asses.
posted by Pastabagel at 6:33 AM on March 12, 2009 [1 favorite]
posted by rusty at 9:18 AM on March 12
You should watch the Frontline episode from a few weeks ago about how the bailout bill in the fall came about. Once you watch that, you realize that as badly as Paulson and Bernanke may have fumbled during the crisis, absolutely every other person in Washington, bar none, was so stupid and totally ignorant on matters of finance and economics that they had no idea there was even a problem, let alone the magnitude of the problem.
In other words, 'they', like the rest of America, had their collective heads up their asses.
posted by Pastabagel at 6:33 AM on March 12, 2009 [1 favorite]
If you were the last man on earth? Precisely nothing. Things are worth what someone else will pay for them.
This clarifies a big flaw with economic theories that base value entirely on demand. I don't value my house solely because I can sell it. That's part of why I value it, but I also value it because it gives me a comfortable place to sleep at night. The latter value persists regardless of the housing market. Given the current market, people are becoming more interested in such persistent value, and claims it doesn't exist sound increasingly like claims the Earth is flat.
posted by scottreynen at 6:40 AM on March 12, 2009 [6 favorites]
This clarifies a big flaw with economic theories that base value entirely on demand. I don't value my house solely because I can sell it. That's part of why I value it, but I also value it because it gives me a comfortable place to sleep at night. The latter value persists regardless of the housing market. Given the current market, people are becoming more interested in such persistent value, and claims it doesn't exist sound increasingly like claims the Earth is flat.
posted by scottreynen at 6:40 AM on March 12, 2009 [6 favorites]
If you were the last man on earth? Precisely nothing. Things are worth what someone else will pay for them.
Response 1: I don't value my house solely because I can sell it. That's part of why I value it, but I also value it because it gives me a comfortable place to sleep at night.
Yes, exactly. Regardless of how the market fluctuates, my house keeps me equally warm and dry. *That's* the value of a house. If you are valuing it differently, then you are likely part of the problem.
Also, response 2 is more theoretical. Even in your formulation, are things worth what someone *would* pay for them or what someone *has* paid for them? Because even as the last man on Earth I'd be *willing to* pay for predator protection. But I bet the official line is that it's only what someone *has* paid for them, which would explain why R&D departments have fallen like flies over the last 40 years. Basic research builds things that people *would* pay a lot of money for but haven't yet, therefore they are "worthless".
posted by DU at 7:04 AM on March 12, 2009 [1 favorite]
Response 1: I don't value my house solely because I can sell it. That's part of why I value it, but I also value it because it gives me a comfortable place to sleep at night.
Yes, exactly. Regardless of how the market fluctuates, my house keeps me equally warm and dry. *That's* the value of a house. If you are valuing it differently, then you are likely part of the problem.
Also, response 2 is more theoretical. Even in your formulation, are things worth what someone *would* pay for them or what someone *has* paid for them? Because even as the last man on Earth I'd be *willing to* pay for predator protection. But I bet the official line is that it's only what someone *has* paid for them, which would explain why R&D departments have fallen like flies over the last 40 years. Basic research builds things that people *would* pay a lot of money for but haven't yet, therefore they are "worthless".
posted by DU at 7:04 AM on March 12, 2009 [1 favorite]
I'm beginning to believe the only ethical thinking that has gone on in the minds of these financial guys is "If I don't do it, somebody else will."
Just, ick.
posted by readery at 7:09 AM on March 12, 2009
Just, ick.
posted by readery at 7:09 AM on March 12, 2009
Pastabagel: You should watch the Frontline episode from a few weeks ago about how the bailout bill in the fall came about.
I think it's this one.
posted by djeo at 7:48 AM on March 12, 2009
I think it's this one.
posted by djeo at 7:48 AM on March 12, 2009
I saw Cramer on Colbert the other night, and he always looks so uncomfortable when he's not running around like a fool, pressing large buttons, and spouting pump-and-dump.
He looked scared. All pale and stumbling and contrite, like a kid in the principal's office.
posted by The Whelk at 8:01 AM on March 12, 2009
He looked scared. All pale and stumbling and contrite, like a kid in the principal's office.
posted by The Whelk at 8:01 AM on March 12, 2009
"Yes, exactly. Regardless of how the market fluctuates, my house keeps me equally warm and dry. *That's* the value of a house. If you are valuing it differently, then you are likely part of the problem."
Except, you have to buy insurance (unless you really like to live on the edge) and pay property taxes, at the very least. Both of these things depend on the value of the house on the market.
posted by krinklyfig at 8:15 AM on March 12, 2009
Except, you have to buy insurance (unless you really like to live on the edge) and pay property taxes, at the very least. Both of these things depend on the value of the house on the market.
posted by krinklyfig at 8:15 AM on March 12, 2009
This clarifies a big flaw with economic theories that base value entirely on demand. I don't value my house solely because I can sell it. That's part of why I value it, but I also value it because it gives me a comfortable place to sleep at night.
Yeah--I think the crucial missing concept here is one of "Real Value." Not all goods and services have Real Value, and that's fine.
On the one hand, there's Perceived Value--the value of vanity-driven, identity oriented products like bumper stickers that say "Hot Momma on Board" or t-shirts with the John Deere logo on them (which, actually, as free-advertising for John Deere, arguably has a negative Real Value, in utilizing the wearer's chest as commercial space without compensating him or her for the use)--if it sells, it has some kind of value, like it or not. Sometimes, Perceived Value aligns well with Real Value; other times it doesn't. When it doesn't, that's a market distortion.
But many things have Real Value. And many of those things with Real Value can't in fact be bought and sold at all (although informal barter systems might sometimes facilitate their trade). That's what economists so often overlook; that's why economics so often seems to deserve its pejorative characterization as "the dismal science."
posted by saulgoodman at 8:29 AM on March 12, 2009 [1 favorite]
Yeah--I think the crucial missing concept here is one of "Real Value." Not all goods and services have Real Value, and that's fine.
On the one hand, there's Perceived Value--the value of vanity-driven, identity oriented products like bumper stickers that say "Hot Momma on Board" or t-shirts with the John Deere logo on them (which, actually, as free-advertising for John Deere, arguably has a negative Real Value, in utilizing the wearer's chest as commercial space without compensating him or her for the use)--if it sells, it has some kind of value, like it or not. Sometimes, Perceived Value aligns well with Real Value; other times it doesn't. When it doesn't, that's a market distortion.
But many things have Real Value. And many of those things with Real Value can't in fact be bought and sold at all (although informal barter systems might sometimes facilitate their trade). That's what economists so often overlook; that's why economics so often seems to deserve its pejorative characterization as "the dismal science."
posted by saulgoodman at 8:29 AM on March 12, 2009 [1 favorite]
Except, you have to buy insurance (unless you really like to live on the edge) and pay property taxes, at the very least. Both of these things depend on the value of the house on the market.
Insurance depends on cost to rebuild, not market value. Around here in western NY, cost to rebuild is almost always SUBSTANTIALLY higher than market value. I'd have to look at our policy, but it's for in the neighborhood of 150% of appraised value.
posted by ROU_Xenophobe at 9:20 AM on March 12, 2009
Insurance depends on cost to rebuild, not market value. Around here in western NY, cost to rebuild is almost always SUBSTANTIALLY higher than market value. I'd have to look at our policy, but it's for in the neighborhood of 150% of appraised value.
posted by ROU_Xenophobe at 9:20 AM on March 12, 2009
If I take out a $50K life insurance policy, does that make the value of my life $50K? Or the $N / month premium I pay? Or the trade in value of the policy over time? Or the loss to the nation/world's GNP if I no longer am productive? If I get sick, does that mean my life is valued less? If I have a high sperm count does that increase my value because I am adding more productive workers to the pool? Or decrease it because I am increasing the carrying cost? Is my value as a human based solely on commodity value then?
If I have no money but I paint beautiful, inspiring paintings that only sell after my death is my talent of value? Or is it a measure of my wealth? If I have no money but I am a kickass farmer and hunter-gatherer for my family, do I not have any value to anyone outside my family? Can my well fed, protected family be considered wealthy?
The problem with Capitalism, and Socialism, and Jismism is that followers see everything in their own context and discard other economic value systems. The same problem exists with politics, religion, whatever.
Value is relative to others. Wealth, in my mind, is the accumulation of some commodity or intangible which fills a need (or more dangerously a desire) to me. You can put some value on my wealth, and I can trade it for other commodities of wealth, which begins to create some "value". But when a society bases its tangible existance on the theoretical and relative base of value over wealth, the sit will invariably hit the fan.
posted by ElvisJesus at 10:00 AM on March 12, 2009
If I have no money but I paint beautiful, inspiring paintings that only sell after my death is my talent of value? Or is it a measure of my wealth? If I have no money but I am a kickass farmer and hunter-gatherer for my family, do I not have any value to anyone outside my family? Can my well fed, protected family be considered wealthy?
The problem with Capitalism, and Socialism, and Jismism is that followers see everything in their own context and discard other economic value systems. The same problem exists with politics, religion, whatever.
Value is relative to others. Wealth, in my mind, is the accumulation of some commodity or intangible which fills a need (or more dangerously a desire) to me. You can put some value on my wealth, and I can trade it for other commodities of wealth, which begins to create some "value". But when a society bases its tangible existance on the theoretical and relative base of value over wealth, the sit will invariably hit the fan.
posted by ElvisJesus at 10:00 AM on March 12, 2009
Not all goods and services have Real Value, and that's fine.
No, no goods have real value. All goods are worth what people will pay for them. But feel free to cite some counterexamples. If you say "love" I reserve the right to kick you in the nuts.
posted by electroboy at 10:08 AM on March 12, 2009
No, no goods have real value. All goods are worth what people will pay for them. But feel free to cite some counterexamples. If you say "love" I reserve the right to kick you in the nuts.
posted by electroboy at 10:08 AM on March 12, 2009
of course the shit will hit the fan
posted by ElvisJesus at 10:08 AM on March 12, 2009
posted by ElvisJesus at 10:08 AM on March 12, 2009
Pastabagel, you do realize that a large portion of Jim Cramer's wealth exists because his wife had to join the staff of his famous hedge fund and then worked there for several years and eventually rescued it and made it profitable, after he'd made quite a hash of it? Also, please do not conflate going to an Ivy League school like Harvard and being intelligent. As a third generation Ivy grad, I can assure you the the better correlation is between going to an Ivy League school and being a simpering douchebag who thinks he knows it all. The majority of the schmucks who got us into this financial mess were Ivy grads. Masters of the Universe, every one.
posted by Asparagirl at 11:08 AM on March 12, 2009 [2 favorites]
posted by Asparagirl at 11:08 AM on March 12, 2009 [2 favorites]
No, no goods have real value. All goods are worth what people will pay for them. But feel free to cite some counterexamples.
To some extent, this is definitely true. A value requires a value judgment which requires judgment. Therefore a thing only has value to humans, which makes it not "real" in the sense of "objectively 'out there'". That said, this is a very narrow view of value. It's a narrow view even of economic value, let alone things like intellectual, emotional or artistic value.
Think of the posthumously recognized artist idea from upthread. Nobody was willing pay him while alive, so by your metric his work is valueless. One hundred years later people are willing to pay a million dollars for his work so by your metric it's worth $1e6. But wait--if it's worth $1e6 now then surely it was a good investment then, i.e. it had value that no one realized.
Another example is a commodity product like food in the Land O' Plenty. Manna falls from the sky there, so nobody has to pay for food. Is the food valueless? Not really, because if you removed someone's food they would die. It has "value" in the sense of "making a difference" even if there's no money changing hands.
posted by DU at 11:17 AM on March 12, 2009
To some extent, this is definitely true. A value requires a value judgment which requires judgment. Therefore a thing only has value to humans, which makes it not "real" in the sense of "objectively 'out there'". That said, this is a very narrow view of value. It's a narrow view even of economic value, let alone things like intellectual, emotional or artistic value.
Think of the posthumously recognized artist idea from upthread. Nobody was willing pay him while alive, so by your metric his work is valueless. One hundred years later people are willing to pay a million dollars for his work so by your metric it's worth $1e6. But wait--if it's worth $1e6 now then surely it was a good investment then, i.e. it had value that no one realized.
Another example is a commodity product like food in the Land O' Plenty. Manna falls from the sky there, so nobody has to pay for food. Is the food valueless? Not really, because if you removed someone's food they would die. It has "value" in the sense of "making a difference" even if there's no money changing hands.
posted by DU at 11:17 AM on March 12, 2009
electroboy: if you kick me in the nuts, i reserve the right to kick you in the nuts back. harder. and i'll be wearing steel-toed boots. /not really
why? how did we determine value before people paid for things, then? before currency? we bartered, right? well, what logic drove the barter system? the logic of basic necessity and survival to some extent, but also human desires, personal tastes, social norms and expectations. since all of these things can be factors in how the market prices goods and services, and since the underlying "value" of goods and services is what ultimately informs price finding, doesn't it only stand to reason that the implicit, underlying factors that combine to determine the market value of goods or services each represent a particular subcategory of value? those values aren't explicitly priced by the markets, so how are they determined? skip it--i'll answer that one: they aren't. they are what drive market pricing.
consider an example, say i'm a farmer in a small barter system economy. i might not be willing to leg go of the dozen eggs from my hen house for a bale of hay, but i might be willing to give them to the cobbler to repair my shoes. he might counter that he doesn't need any eggs. i say, no deal, then take my eggs to the barber shop. a few weeks later, the cobbler comes back to my house and says he's starving--do i still need those shoe repairs? he looks a little gaunt and run-down. turns out i'm the only guy in town, with any extra food left, and he hasn't eaten in days.
i tell him i'll give him half as many eggs as i offered originally to do the job. he agrees. he repairs my shoes and i pay him with six eggs.
what's implicit in this whole series of examples is that systems of trade, whether currency-based or not, are just practical mechanisms for distributing resources efficiently and getting people the things they want and/or need with a minimum of waste. real demand is the need side of it. people have to have food. at the end of the day, it's not an option not to eat food, so to view the various markets for food as being at bottom "demand driven" is absurd, because the basic demand for food is universal and completely non-discretionary.
posted by saulgoodman at 11:19 AM on March 12, 2009 [3 favorites]
why? how did we determine value before people paid for things, then? before currency? we bartered, right? well, what logic drove the barter system? the logic of basic necessity and survival to some extent, but also human desires, personal tastes, social norms and expectations. since all of these things can be factors in how the market prices goods and services, and since the underlying "value" of goods and services is what ultimately informs price finding, doesn't it only stand to reason that the implicit, underlying factors that combine to determine the market value of goods or services each represent a particular subcategory of value? those values aren't explicitly priced by the markets, so how are they determined? skip it--i'll answer that one: they aren't. they are what drive market pricing.
consider an example, say i'm a farmer in a small barter system economy. i might not be willing to leg go of the dozen eggs from my hen house for a bale of hay, but i might be willing to give them to the cobbler to repair my shoes. he might counter that he doesn't need any eggs. i say, no deal, then take my eggs to the barber shop. a few weeks later, the cobbler comes back to my house and says he's starving--do i still need those shoe repairs? he looks a little gaunt and run-down. turns out i'm the only guy in town, with any extra food left, and he hasn't eaten in days.
i tell him i'll give him half as many eggs as i offered originally to do the job. he agrees. he repairs my shoes and i pay him with six eggs.
what's implicit in this whole series of examples is that systems of trade, whether currency-based or not, are just practical mechanisms for distributing resources efficiently and getting people the things they want and/or need with a minimum of waste. real demand is the need side of it. people have to have food. at the end of the day, it's not an option not to eat food, so to view the various markets for food as being at bottom "demand driven" is absurd, because the basic demand for food is universal and completely non-discretionary.
posted by saulgoodman at 11:19 AM on March 12, 2009 [3 favorites]
You guys realize this video is a couple of years old, right?
Or is this a new one? I don't have audio at work, but it looks like a video I saw a couple years ago of Cramer talking about how they used to manipulate markets back when he was still a hedge fund guy)
posted by delmoi at 12:43 PM on March 12, 2009
Or is this a new one? I don't have audio at work, but it looks like a video I saw a couple years ago of Cramer talking about how they used to manipulate markets back when he was still a hedge fund guy)
posted by delmoi at 12:43 PM on March 12, 2009
You don't expect crooks to act crooked? You don't expect thieves to steal? What pisses me off is that we supposedly have a government to protect us from these criminals. Where the hell were they?
These garden variety venal scumbags of whom you speak, they've got us convinced that "I'm from the government and I'm here to help you" should be a frightening, losing proposition, to the point that we now run shrieking from the very idea of government management for the public good.
posted by five fresh fish at 7:26 PM on March 12, 2009
These garden variety venal scumbags of whom you speak, they've got us convinced that "I'm from the government and I'm here to help you" should be a frightening, losing proposition, to the point that we now run shrieking from the very idea of government management for the public good.
posted by five fresh fish at 7:26 PM on March 12, 2009
...you realize that as badly as Paulson and Bernanke may have fumbled during the crisis, absolutely every other person in Washington, bar none, was so stupid and totally ignorant on matters of finance and economics that they had no idea there was even a problem, let alone the magnitude of the problem.
And this is why openness is required to ensure those things "too big to fail" are not allowed to fail. More eyes is more better.
posted by five fresh fish at 7:31 PM on March 12, 2009
And this is why openness is required to ensure those things "too big to fail" are not allowed to fail. More eyes is more better.
posted by five fresh fish at 7:31 PM on March 12, 2009
And this is why openness is required to ensure those things "too big to fail" are not allowed to fail. More eyes is more better.
posted by five fresh fish at 10:31 PM on March 12
But see "moral hazard." If those things that are "too big to fail" will not be permitted to fail, it creates a perverse incentive to become as big a possible through whatever means in order to achieve that magical status where your risk profile drops to zero.
Specifically, you should read about Dick Fuld's arrogance in the weeks leading up to Lehman's collapse, when he ignored Paulson's cries for find a buyer for Lehman and when Fuld was convinced that his deep connections in Washington and at the Fed would ensure that they's never let Lehman fail.
The problem they faces was that there was no right answer. Bail out Lehman and every bank becoems convinced that the government will bail them out, and their don't curtail thier recklessness. Allow Lehman to fail, and you crash the system. There solution, to let some fil and bail others out, seemingly arbitrarily, creates enough confusion about who would get bailed out that it's as effective as bailing no one out, but doesn't result in as great a systemic shock as if all the banks failed.
posted by Pastabagel at 8:24 PM on March 12, 2009
posted by five fresh fish at 10:31 PM on March 12
But see "moral hazard." If those things that are "too big to fail" will not be permitted to fail, it creates a perverse incentive to become as big a possible through whatever means in order to achieve that magical status where your risk profile drops to zero.
Specifically, you should read about Dick Fuld's arrogance in the weeks leading up to Lehman's collapse, when he ignored Paulson's cries for find a buyer for Lehman and when Fuld was convinced that his deep connections in Washington and at the Fed would ensure that they's never let Lehman fail.
The problem they faces was that there was no right answer. Bail out Lehman and every bank becoems convinced that the government will bail them out, and their don't curtail thier recklessness. Allow Lehman to fail, and you crash the system. There solution, to let some fil and bail others out, seemingly arbitrarily, creates enough confusion about who would get bailed out that it's as effective as bailing no one out, but doesn't result in as great a systemic shock as if all the banks failed.
posted by Pastabagel at 8:24 PM on March 12, 2009
Oh wow, Stewart is eviscerating Cramer right now. The full interview should be up on thedailyshow.com shortly.
posted by Rhaomi at 8:24 PM on March 12, 2009
posted by Rhaomi at 8:24 PM on March 12, 2009
Jon Stewart told Cramer that his actions were "at worst, criminal," and had the man on the verge on a breakdown. He called his shots by minute and second from this video, and used them to counter-point Cramer, to the point of interrupting Cramer with a rebuttal from Cramer's own mouth.
It was exactly what you wanted it to be.
posted by paisley henosis at 8:29 PM on March 12, 2009
It was exactly what you wanted it to be.
posted by paisley henosis at 8:29 PM on March 12, 2009
That was uncomfortable to watch. Jon wasn't quite as ruthless as he was in his appearance on Crossfire, but he was still pretty brutal. I doubt that Cramer's show will meet the same fate as Crossfire, but Jon may actually succeed in convincing CNBC to do some real journalism.
posted by Galvatron at 9:43 PM on March 12, 2009
posted by Galvatron at 9:43 PM on March 12, 2009
"No, no goods have real value. All goods are worth what people will pay for them. But feel free to cite some counterexamples. If you say "love" I reserve the right to kick you in the nuts."
He knows the price of everything and the value of nothing.
There is a reason that economists call the price that people will pay for something it's "market value", and not it's "value". And that reason is that "market value", while a useful metric, is not the only metric, or even the best metric.
If you just want to liquidate stocks, then "market value" is all you need care about. Any moron can do that.
But if you want to build a productive business that increases real wealth over time, then you need to care about more substantial forms of value than this straw poll of what some fickle outsiders think they should do with their money.
posted by -harlequin- at 10:07 PM on March 12, 2009 [1 favorite]
He knows the price of everything and the value of nothing.
There is a reason that economists call the price that people will pay for something it's "market value", and not it's "value". And that reason is that "market value", while a useful metric, is not the only metric, or even the best metric.
If you just want to liquidate stocks, then "market value" is all you need care about. Any moron can do that.
But if you want to build a productive business that increases real wealth over time, then you need to care about more substantial forms of value than this straw poll of what some fickle outsiders think they should do with their money.
posted by -harlequin- at 10:07 PM on March 12, 2009 [1 favorite]
It occurs to me that the sentiment that a thing is only worth what someone else will pay for it, seems to result from some kind of beginners economics class. So perhaps a better way to correct the sentiment is with an example from just such a class:
Trade makes people wealthier. Not because trade magically creates ipods and ferraris out of thin air, but because both parties, after trading, have something worth more to them than what they traded to get it. And yet - it's a single transaction with a single price. Therefore, that price (the market value) cannot possibly be the only value.
If things really were only worth their market value, then trade wouldn't occur, because no-one would have anything to gain, therefore would have no incentive to trade. You trade because something that you have has less value to you than what the other guy will give you for it. And he is giving you something that has less value to him than what you have.
Let's twist that even more: Trade only occurs when the market value of something fails to match it's value to someone in the market.
Trade occurs, therefore the value of things is not the value that the market will pay.
posted by -harlequin- at 10:25 PM on March 12, 2009 [1 favorite]
Trade makes people wealthier. Not because trade magically creates ipods and ferraris out of thin air, but because both parties, after trading, have something worth more to them than what they traded to get it. And yet - it's a single transaction with a single price. Therefore, that price (the market value) cannot possibly be the only value.
If things really were only worth their market value, then trade wouldn't occur, because no-one would have anything to gain, therefore would have no incentive to trade. You trade because something that you have has less value to you than what the other guy will give you for it. And he is giving you something that has less value to him than what you have.
Let's twist that even more: Trade only occurs when the market value of something fails to match it's value to someone in the market.
Trade occurs, therefore the value of things is not the value that the market will pay.
posted by -harlequin- at 10:25 PM on March 12, 2009 [1 favorite]
Is Cramer some sort of CNBC executive? Because I don't see how a guy with a 30 minute show on a station that ran a 0.0 is gonna change the focus of an entire network from reporting press releases to investigative journalism.
It wasn't CNBC that broke Enron or Worldcom or Madoff. That'd take real effort and digging. Hell, even this guy Faber, who people purport to be "the good one", is only able to put reports together on the good grace of their subjects. Enron was "found out" by taking a hard look at the details publicly reported. Thats not something you can do in a 2 minute televised "lighting round".
posted by pwnguin at 10:26 PM on March 12, 2009
It wasn't CNBC that broke Enron or Worldcom or Madoff. That'd take real effort and digging. Hell, even this guy Faber, who people purport to be "the good one", is only able to put reports together on the good grace of their subjects. Enron was "found out" by taking a hard look at the details publicly reported. Thats not something you can do in a 2 minute televised "lighting round".
posted by pwnguin at 10:26 PM on March 12, 2009
Well, the full video isn't up on the website yet, but the episode is repeating now for anyone who missed it.
posted by Rhaomi at 10:31 PM on March 12, 2009
posted by Rhaomi at 10:31 PM on March 12, 2009
But see "moral hazard." If those things that are "too big to fail" will not be permitted to fail, it creates a perverse incentive to become as big a possible through whatever means in order to achieve that magical status where your risk profile drops to zero.
At which point you nationalize it, and make it even more open, and subject it to public oversight, etceteras.
Or you make laws that break up these monopolies and oligopolies, re-introducing competition and reducing the risk of any one failure being catastrophic to the public. And, again, make sure openness is built into it, so that collusions and fraud are not easy to get away with.
posted by five fresh fish at 10:40 PM on March 12, 2009
At which point you nationalize it, and make it even more open, and subject it to public oversight, etceteras.
Or you make laws that break up these monopolies and oligopolies, re-introducing competition and reducing the risk of any one failure being catastrophic to the public. And, again, make sure openness is built into it, so that collusions and fraud are not easy to get away with.
posted by five fresh fish at 10:40 PM on March 12, 2009
You trade because something that you have has less value to you than what the other guy will give you for it.
Or because you must have it, re: food, shelter, emergency health care.
posted by five fresh fish at 10:42 PM on March 12, 2009
Or because you must have it, re: food, shelter, emergency health care.
posted by five fresh fish at 10:42 PM on March 12, 2009
I just saw the Daily Show segment. It was interesting, I think it was a little unfair though because Stewart was talking about the sort of "Big Lie" that's been told, which was that the stock market was a safe, long-term investment and that you could put your money in an index fund and forget about it. But people who did that were never Cramer's audience. The people who are watching Cramer's show are the ones who believe in what Jon calls the "Real Market", who follow the daily action and buy and sell regularly. They may not be getting good advice, but they are speculators not "prudent investors"
The other problem is that while there were people out there who called this, guys like Nouriel Roubini, it isn't fair to say that guys like Cramer and other CNBC types actually knew that problems were coming. They were drinking the koolaid, and they believed their own hype.
It also doesn't get to the real problem, which is the tight integration of the government with wallstreet. This financial crisis is like Enron, except that rather then breaking laws, they just got laws rewritten.
posted by delmoi at 11:53 PM on March 12, 2009 [1 favorite]
The other problem is that while there were people out there who called this, guys like Nouriel Roubini, it isn't fair to say that guys like Cramer and other CNBC types actually knew that problems were coming. They were drinking the koolaid, and they believed their own hype.
It also doesn't get to the real problem, which is the tight integration of the government with wallstreet. This financial crisis is like Enron, except that rather then breaking laws, they just got laws rewritten.
posted by delmoi at 11:53 PM on March 12, 2009 [1 favorite]
The full, unedited interview is now up (for Americans, at least).
I assume the link will be blocked for viewers outside of the United States -- for those unable to watch the first link, the meat of the interview is already available on YouTube. Canadians will be able to see the episode soon on the Comedy Network site.
posted by Rhaomi at 12:33 AM on March 13, 2009
I assume the link will be blocked for viewers outside of the United States -- for those unable to watch the first link, the meat of the interview is already available on YouTube. Canadians will be able to see the episode soon on the Comedy Network site.
posted by Rhaomi at 12:33 AM on March 13, 2009
i love the daily show. but what have we come to where we need our comedian to call out hacks like the crossfire brothers and actually speak to the big lie of wall street? if "the news" wonders why i won't pay for their content maybe they should take some lessons.
thanks for posting the video this morning ryoshu. it was good to see it before the ritual stoning.
posted by Glibpaxman at 12:47 AM on March 13, 2009
thanks for posting the video this morning ryoshu. it was good to see it before the ritual stoning.
posted by Glibpaxman at 12:47 AM on March 13, 2009
The interview kept frustrating me because I don't think Cramer really understands what Jon Stewart's complaint is. Stewart isn't expecting CNBC only to make perfect recommendations and never get anything wrong, and he really doesn't even care if there's poor advice being offered! What Stewart really cares about is the fact that CNBC is representing itself as a news organization that will actually analyze the markets and offer advice based on evidence gained through journalistic endeavors.... Whereas, really, it takes giant CEOs at their word in interviews and doesn't seem to do any of the hard research that they should be doing. All of Stewart's comments about "who is CNBC really working for?" was trying to get to that point: if CNBC is really trying to help its viewers, and not the giant corporations it often discusses, it should be doing a whole lot more.
Cramer was just responding with how much he tried, and how he knows he's not always accurate, and he wants to change the laws about how the market is run or whatever... But he never really seemed to get Stewart's point that CNBC, as a purported news network, fails to do what journalists should do.
posted by Ms. Saint at 2:03 PM on March 13, 2009
Cramer was just responding with how much he tried, and how he knows he's not always accurate, and he wants to change the laws about how the market is run or whatever... But he never really seemed to get Stewart's point that CNBC, as a purported news network, fails to do what journalists should do.
posted by Ms. Saint at 2:03 PM on March 13, 2009
and forget about it. But people who did that were never Cramer's audience
...but they had their investments destroyed by the machinations of Cramer's crowd.
posted by five fresh fish at 4:23 PM on March 13, 2009
...but they had their investments destroyed by the machinations of Cramer's crowd.
posted by five fresh fish at 4:23 PM on March 13, 2009
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