The Madness of Mad Money

You may have tuned in to the CNBC show, "Mad Money," starring Jim Cramer. Cramer has always been a highly entertaining guy - loud, bombastic, talks a mile a minute, and very opinionated. Sometimes to his own detriment.

Now, I used to kind of like Cramer. He's actually made me some money over the years with his stock picks. Based on his research, I bought Ulta and Ambarella, and did quite well in the former and pretty good in the latter. But he's also made some real dud calls - like urging people to buy Bear Stearns in early 2008. (Bear Stearns failed in March of that year.)

Cramer is a very smart guy, and generally a great stock-picker. His record, and his portfolio, speak for themselves (although he's undoubtedly made more money as a TV celebrity and off his personal brand than he ever did, or could have, in the markets; otherwise he'd still be working in the markets am I right?).

However, I have long been aware that Cramer either doesn't know jack about macroeconomics, or he simply doesn't care about the greater good where macroeconomic policy is concerned. We can now extend that to public health policy, and public policy in general, and in a frankly alarming way. But first, let's focus on the macroeconomic piece.

In 2007, Cramer went on an epic, on-air rant on CNBC, screaming that then-Fed Chair Ben Bernanke should open the Fed's discount window - the borrowing till for banks - and cut the borrowing rate for banks to zero in order to save firms like Bear Stearns from failing. He predicted that, if the Fed didn't do that, those firms would indeed fail.

Well, Bear Stearns did. So, six months later, did Lehman Brothers. The rest of Wall Street, and much of the rest of the banking system, eventually had to be bailed out. So Cramer was right, yes? Yes, but ... so what? The Fed knew all that would happen, too. So Cramer wasn't omniscient; he didn't know anything that Bernanke didn't know. (Don't get me wrong; Bernanke didn't see the housing bubble forming, or the bust coming. Neither did Cramer, for that matter. I did. So I'm not defending Bernanke. I think he's an idiot. I'm just saying he knew what Cramer knew. So did anyone who was paying attention back then, because we were in the middle of a shyte-storm.)

So why didn't the Fed open the discount window, like Cramer wanted them to do, and cut the borrowing rate for banks to zero? Because ...

Saving those banks from failing isn't the Fed's job.

There's this thing called moral hazard. And it comes from letting huge companies take huge risks, then bailing them out instead of letting them fail when the risks go against them. It creates an incentive for them to keep taking huge risks, and it puts the taxpayer on the hook for it. (That's a gross over-simplification, but I don't want to take the time to expound on it.)

Why, then, did Cramer want the Fed to save those firms, if it isn't the Fed's job? Two reasons: one, he had a lot of buddies that worked there, from the corner offices to the trading floors. And they were all calling him, crying that they were going to lose their seven-figure-a-year jobs - never mind that it was because they made a bunch of risky trades that they probably didn't really understand when they made them. But they were afraid they'd lose their houses in the Hamptons, so they called their buddy Jim, who's on TV all the time, hoping he could persuade somebody, anybody, to listen, and help them out.

And the second reason?

Cramer makes money when the stock market goes up. So he wants it to always go up.

That's key. Cramer will say anything, advocate for anything, to try to prop up the stock market. Even if it's bad policy. Bad economic policy, bad fiscal policy, and now bad public health policy. Or just bad public policy.

(The Curmudgeon, on the other hand, has figured out that you can make money when the market goes up OR down. Seeing the market crash coming in 2008, he shorted the market, and made money while it was tanking.)

After the Great Recession was over, the Fed kept rates too low, too long, which is how the housing bubble got inflated to begin with; they did the same thing after the dot-com recession in 2000. So when Bernanke and Co. decided to start raising rates, Cramer went on another rant, screaming that they shouldn't do it, they should keep rates low - even though the economy was ready to stand on its own two feet, and continuing to keep rates that low would probably fuel another bubble.

Why would Cramer do that? Why would he advocate for bad - actually, dangerous - monetary policy?

Because he was afraid that, if the Fed began to raise rates, the stock market rally would end, and stock prices would stop going up.

In other words, Jim Cramer is nothing more than a prostitute, and his pimp is a rising stock market.

Now, recently, Cramer went even further off the deep end. He actually said that the government needed to just mandate covid vaccines for every man, woman and child - not just workers at companies with more than 100,000 employees. Not just government employees and contractors. EVERYBODY. And, get this - how would Cramer make sure that everyone complied?

He would have the military enforce this new mandate.

That's right, boys and girls. Jim Cramer would have armed American soldiers stand guard over you while someone sticks a needle in your arm. And I guess, if you tried to cut and run, he'd have the soldier shoot you.

Let that sink in for a minute.

Now, why would Cramer make that quantum leap into the realm of totalitarianism?

Simple: he made that statement the day the news of the omicron variant dropped, which sent the Dow Jones Industrial Average down more than 900 points on the day.

Never mind that we've since learned that omicron is much milder than delta (4700 cases in the UK; 10 hospitalizations; 1 death). Never mind that the Dow since recovered (in just ten trading days) to more than the level where it was prior to the omicron news.

Never mind that, of the 43 US cases as of a couple of days ago, 79% of them were among vaccinated people, and 41% of those vaccinated people had gotten a booster. So much for your vaccine mandate, Cramer, you stupid sack of ...

But I digress. See, Cramer is tired of seeing covid news cause big market drops. So he thinks if we just vaccinate everybody, covid will go away, and the market will go up forever. Well, I've got a few hard life lessons for ya, Jimmy-boy:

1. Covid ain't going away. Don't like it? Blame Fauci and his Chinese buddies; they created it. The vaccines aren't working - witness the data points listed above, and there's plenty more where that came from. Plus, they wear off. Your plan would keep the army pretty busy, I guess, because we'd be vaccinating every couple of months. And people would still get infected. And there would still be new variants.
2. As long as we have a media in this country, we'll have those market reactions, because the media is selling fear, and the market is buying. Maybe if your buddies on the trading floor were a mite bit smarter, they wouldn't freak out every time the media hypes something like omicron. The rest of us seem to have figured out that all of this fearmongering from the media (and hacks like Fauci) is much ado about nothing. Why does the market have to poop its collective diaper every time CNN projectile-vomits up some new covid crisis?
3. If you were a little smarter with your (and your viewers') money, you could profit from those dips. I bought stocks after the omicron dip, and I'm looking pretty good today. I jump in and out of the market on covid news, buying when these freak-out headlines send the market reeling, and taking my profits when it recovers, so that I have some cash on hand to jump back in.

Now, Cramer has taken it even one step further, if you can believe it: he just tweeted that "the government has a right to force you to obey."

Think about that for a minute. If you've read the same Constitution and Bill of Rights that I read, do you recall seeing anything about the government having rights? Doesn't the government exist to protect and defend our rights? Are governments endowed by their Creator with certain unalienable rights?

No. Because you know who their Creator is?

WE ARE, Cramer, you blathering, mindless, no-good, rotten, four-flushing, low-life, snake-licking, dirt-eating, inbred, overstuffed, ignorant, blood-sucking, dog-kissing, brainless, hopeless, heartless, bug-eyed, stiff-legged, spotty-lipped, worm-headed sack of monkey poop!!!

(Yeah, I borrowed heavily there from Chevy Chase's rant in "Christmas Vacation," edited for decency. 'Tis the season, ho ho ho, and all that.)

So yeah, I can only assume that Cramer has gone finally and fully MAD; so hell-bent on arguing for any policy that will put a jack under stock prices that he'd advocate for his children to be sent to the gulag, if he thought it would result in a 10% pop in the FANGs.

Hey Jim, if you haven't figured out by now that markets go down as well as up; and if you can't figure out how to advise your audience what to do when that happens; maybe it's time to admit that you're over your head. It was a good ride, you milked it for all you could, but you've exposed yourself. You're clearly out of your depth. Hand the reins over to somebody who gets the big picture, the whole picture, and retire.

Before it's too late, and the grey matter goes so soft, you have trouble remembering what you were talking about. We've seen that happen quite a bit lately, and it's rather sad.