I had a strong reaction to Jon Stewart’s piece titled “CNBC gives Financial Advice“. I don’t know if I am more angry at CNBC’s “analyst” Rick Santelli’s asinined rampage against homeowners who are going to be bailed out of their bad loans or if I am more angry in general at the lack of professional oversight of the news and financial industry as a whole.
Allow me to start with the latter.
I am a physicist. When I come up with a new theory, and I have, my theory is expected to explain everything that is known as well as make accurate predictions about phenomena that have not yet been observed. If my theories lead to predictions that turn out to be false, my ideas about how the world works are questioned. If I consistently get things wrong, my reputation is diminished. This aspect of science works, and works well.
However, over the last 10 years I have become painfully aware of the numerous “analysts” and “news personalities” in politics, finance and the media who make absolutely crappy predictions and are still revered as being authorities on the topic. These predictions have ranged from the idea that the Iraq War would be a “cake walk” to the idea that the economy is fine. Despite the fact that these ideas were not just wrong, but were as far off as one could possibly be, worse even than if one selected one’s beliefs by mere chance, these people are still looked to as having something intelligent or useful to say. It is mind-numbing that they still have jobs!
Contrast these individuals to Al Gore, who receives no end of constant ridicule. This man has been trying to warn the public about climate change since the 1980’s… seriously… the 1980’s! OVER TWENTY YEARS!!! And only in the last two years or so has the fact that the Earth is undergoing climate change become generally accepted by the public. Here is a man who has been right, yet is vilified. Think about it!
Jon Stewart’s piece on CNBC points out how full of shit their “analysts”, “reporters” and TV personalities are. They clearly don’t understand either finance or the economy, otherwise they would have made predictions that were remotely in the ballpark. Instead we have the following list of serious and I mean SERIOUS errors:
March 11, 2008 “Bear Stearns is FINE!” – Jim Cramer
Bear Sterns went under SIX DAYS later!
June 5, 2008 “Lehman Brothers is no Bear Sterns”
Lehman Brothers went under three months later!
April 7, 2008 “Will Merrill need to raise capital? No…” – Faber Report
Five months later Merrill Lynch ran out of capital, and is now owned by Bank of America.
October 4, 2007 “Bank of America is going to $60 in a heartbeat” – Jim Cramer
As of March 4, 2009, Bank of America trades at $4
December 5, 2007 “AIG…not going bankrupt… obviously they are the biggest insurance company in the world”- Charlie Gasparino
Federal Bailout Money for AIG: $85 BILLION in Sept 2008, $37.8 BILLION in Oct 2008, $30 BILLION in March 2009…
October 31, 2007 “You should be buying overvalued stocks” – Jim Cramer
Oct 31, 2007: DOW=13,930
February 1, 2008 “Market just wont quit no matter how poorly companies are actually doing” – Jim Cramer
Feb 1, 2008: DOW=12,743
April 16, 2008 “The worst of this sub-prime business is over” – Kudlow and Co.
April 16, 2008: DOW=12,619
June 13, 2008 “it means its time to buy, buy, buy” – Jim Cramer
June 13, 2008: DOW=12,307
November 4, 2008 “people are starting to get their confidence back” – Guy Adami (The Negotiator)
Nov 4, 2008: DOW=9,625
These people clearly don’t know what they are talking about. To get it wrong so consistently takes some kind of effort. It demonstrates that these individuals are unable to learn from mistakes and work within a culture that suffers from the same deficits. There is no improvement in their predictions or understanding of economics and finance.
Granted, I am not an expert on economics, but I can tell you who I will NOT go to for advice.
If the news and financial advice agencies really want to do well for themselves, they would forget the short-term gains made by employing showmen, and assess the performance of their employees by monitoring the soundness of the advice that they give the public. Furthermore, it is up to us, the public, to pay attention to people who make accurate predictions and stay away from those who don’t.
Now for this Rick Santelli…
As an American interested in a strong America, I am more than willing to have my tax money bail out individual Americans who were suckered into buying homes they could not afford than bailing out companies who operated solely out of greed.
This is America alright!
And it is not enough for Americans to support American companies and industry!
It is high time that American companies and industry ALSO support Americans!
Blow THAT out your shorts Santelli, you CNBC astrologers, and all the self-centered Wall Street Welfare Recipients!
Last, I can tell you what will help this economy. And that is spending! Economies are healthy only when money is flowing. We are fortunate to have a government that is able… even artificially… to force a flow of money into the system.
This Republican call to stop spending is like shutting down the heart… it would kill the economy. This idea that tax cuts are the solution is ridiculous. First, we can see how well that has worked in the last 10 years. Second, as the president of a company myself, I can promise you that tax cuts are not equivalent to profits! In my opinion, companies should focus on making profits rather than cutting taxes, but then again, I am not a CNBC analyst!
Kevin Knuth
Albany NY
Posted under Entrepreneurship, Opinion, Uncategorized
This post was written by drknuth on March 7, 2009
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