Cramer vs. Stewart

Not nearly as entertaining as the classic Dustin Hoffman/Meryl Streep film "Kramer vs. Kramer," but not as sad either. I'm referring, of course, to the recent skirmish between Jon Stewart of "The Daily Show" and Bubblevision's loudmouth-in-chief, Jim Cramer of "Mad Money."

Let me first say that I'm a fan of neither of them - at least, for what they try to be. I am a fan of both for what they are.

Stewart first. He's a comedian. He's not a political pundit. He himself said it best: he's at his best making fart noises and funny faces. Political commentary, let alone market commentary, just isn't his long suit.

To wit: this whole escapade started with Stewart's incensed reaction to Rick Santelli's recent rant about having a "Chicago Tea Party," in protest of the housing bailout.

After Robert Gibbs (can you say worst press secretary ever?) stated that Santelli doesn't know what he's talking about, Stewart repeated that, and took it a step further.

Let me first take a quick detour: Rick Santelli has forgotten more about economics and finance than Gibbs and Stewart combined will ever know (and you can throw in President Obama, Treasury Secretary Geithner, and Sens. Dodd, Frank and Waters for good measure). Santelli is a former interest rate derivatives trader - as am I. Trust me, it's not a layman's game.

Anyway, Stewie didn't like the notion that Santelli didn't like Stewie's favorite president's latest bailout plan. So he went after CNBC.

Now, readers of this space know that I'm no fan of Bubblevision. So it was entertaining to me that Stewart went after them. He threw up one example after another of bad calls they've made over the last year, then followed them up with the facts. And Lord knows they've made their fair share of bad calls. That's to be expected; we're in a bear market, and CNBC's advertisers make money off of bull markets. So CNBC gets paid handsomely to talk the bullish talk. If I had a buck for every time they've called a bottom to this market over the last year or so, I could retire.

But some of Stewart's examples made the point that CNBC was saying this company or that was in good shape, when in fact, if you watched the clips, they were interviewing company management, who was saying the company was in good shape, and they simply reported that. I recall watching David Faber grill then-Bear CEO Alan Schwartz, just days before Bear collapsed. Faber was hitting Schwartz hard, and the latter was clearly flummoxed, stammering that Bear had adequate liquidity, to which I wanted to invoke the classic Eddie Murphy line from "Beverly Hills Cop" (British version below):

"You were lyin' your arse off!"

But, what was Faber supposed to do, say that? Call Schwartz on it? No, all a journalist can do at that point is say, "There you have it, folks - according to Bear Stearns' CEO, they don't have a liquidity problem." Then it's up to the market to judge for itself - which it did.

Now, a Stewart could probably call a Schwartz a liar. But that's because (A) Stewart's a comedian, not a journalist, and (B) for that very reason, an Alan Schwartz wouldn't give a Jon Stewart the time of day.

So anyway, one of Stewart's targets is Cramer. Now, let me turn my attention to him. Cramer once ran a hedge fund. And if he'd been any good at it, he'd be at it still. Why?

Because when Cramer ran his fund, the rule of pay for hedge fund managers was "one and twenty" - a 1% management fee, and 20% of the fund's gains. More recently (until last year brought hedge fund redemptions en masse, which brought the funds to their knees), the rule was expanded to "two and twenty."

For a decent-sized fund, that kind of coin would far eclipse what Cramer could make pitching stocks on TV.

Yeah, he has an impressive knowledge of every obscure stock his callers ask him about - so impressive, in fact, that it's obvious the calls are pre-screened, so his staff can bone him up on the stocks in question.

His "boo-yahs," cute sound effects and theatrics are a sideshow. It truly is "Mad Money," but it ain't smart money (you want that, tune in here - my recommendations have beaten the snot out of Cramer's over the last year).

So these two duking it out is about as enthralling for students of the market as Tonya Harding going toe-to-toe with Nancy Kerrigan. Just not very exciting stuff.

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Gotta take another swipe at Warren Buffett. I read the other day that Berkshire Hathaway's stock got downgraded by Fitch because of:

"Potential losses from derivatives."

Now, in and of itself, that's not such a big deal, compared to concerns like, oh, AIG for instance.

But I immediately recalled Mr. Buffett's 2004 letter to Berkshire's shareholders, in which he made the following statements:

"Derivatives are financial weapons of mass destruction."

"Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years."

"Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers ... which can trigger serious systemic problems."

Buffett also likened the derivatives market to hell: "Easy to enter and almost impossible to exit," and he said that some contracts appeared to have been devised by "madmen."

So, were I a Berkshire shareholder, my question would be:

"So, Mr. Buffett, having so eloquently and ominously warned us against the dangers of derivatives, why, pray tell, did you choose to expose us to them?"

Tomorrow, I take on "Helicopter Ben" Bernanke on "60 Minutes."