In a response to an e-mail posted on his Web site on March 11, Cramer said Bear Stearns (NYSE:BSC) wasn't in trouble and advised the writer to keep his money in the investment bank:
"Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter
Cramer says: "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear."
On the day Cramer posted that on his Web site, Bear Stearns had a stock price of $62.97. As of noon March 17, the stock price had plummeted to $3.80 a share after the market opened. On March 16 it was announced that J.P. Morgan Chase & Co. (NYSE:JPM) was purchasing the beleaguered investment bank rocked hard by the mortgage fallout.
Jim Cramer is known for wearing his heart on his sleeve. But the host of CNBC's "Mad Money" normally lets his emotions show over matters financial. In August, for example, he went ballistic at Ben Bernanke, pleading with the Fed chairman to lower interest rates in the face of widespread home foreclosures.
This morning, however, Cramer got verklempt not over the discount rate but at the falling fortunes of his friend Eliot Spitzer. Cramer went to Harvard Law with the embattled governor and his wife Silda, and over the years has defended Spitzer against the torrent of criticism directed at the so-called sheriff of Wall Street for his high-handed tactics.
Cramer appeared on this morning's Today to discuss with Meredith Vieira yesterday's dramatic Fed move. But at the end of the interview, Vieira raised the Spitzer situation, and that sent Cramer to the verge of tears. The transcript below doesn't do justice to just how emotional Cramer became, so readers might want to view the video.
In a report from the presidential campaign trail in Wyoming early Saturday morning, Sara Kugler of the Associated Press picked up on an economic meme created out of whole cloth by one of her colleagues, and treated it as an undisputed fact -- all in the name of creating support for campaign rhetoric coming from one of the two remaining Democratic presidential candidates.
The Labor Department's report, released Friday, also showed that the nation's unemployment rate dipped to 4.8 percent as hundreds of thousands of people — perhaps discouraged by their prospects — left the civilian labor force. The jobless rate was 4.9 percent in January.
ABC's "World News Tonight" had a hard time on Friday without normal anchor Charles Gibson, as in its segment about the employment numbers released by the Labor Department, guest host George Stephanopoulos said the figures were from January 2008.
This was stated as a graphic came on the screen reading "JOBS LOST, January 2008, 63,000." Of course, Labor's report was for the month of February.
Sadly, that wasn't the only mistake "World News" made concerning this crucial piece of economic data, for just as the Associated Press had done earlier in the day, ABC's Business Correspondent Betsy Stark claimed (video available here, h/t NBer Gary Hall):
There's no denying the economy is slowing, and may have either entered a recession, or is on the brink of one. Maybe.
However, the media's hysterical response to Friday's February jobs report lacked any historical reference to how the labor market behaved in previous recessions.
Instead, press outlet after press outlet decided that the loss of 63,000 jobs in February was a clear signal the recession they've been calling for since Hurricane Katrina hit New Orleans in September 2005 had finally begun.
In fact, as they fretted over this decline in non-farm payrolls, media chose not to ask and answer an important question:
During a story suggesting that Angelo Mozilo, the former CEO of the mortgage company Countrywide, is unworthy of his millions of dollars and perhaps enjoys too much time lying in the sun, ABC's Dan Harris, possibly not picking up on the former CEO's Italian ethnicity which could be the source of his skin's dark complexion, remarked that Mozilo's "deeply tanned face" could become the "face of the mortgage mess." The story ran on Friday's World News with Charles Gibson, substitute hosted by George Stephanopoulos, with Harris beginning his report: "This may well become the deeply tanned face of the mortgage mess. The face belongs to Angelo Mozilo, the once-celebrated CEO of Countrywide, now facing allegations of predatory lending and rapacious greed." Harris also ended the report seeming to lament that Mozilo is not facing foreclosure on any of his homes: "If the sale [of Countrywide] goes through, Mozilo will walk away with about $40 million. And with not one of his homes in foreclosure." (Transcript follows)
For years, NewsBusters and the Business & Media Institute have regularly complained about the abysmal financial coverage offered by the mainstream press while accusing media of consistently painting a negative -- and oftentimes fallacious! -- picture of the economy.
On Friday, a perfect example of such was illustrated by the Associated Press whose article about the February unemployment data just released by the Labor Department grossly misrepresented what was announced.
In fact, the AP's Jeannine Aversa actually fabricated data that went completely contrary to what was reported. Take a close look at paragraph two of Aversa's article published at Yahoo at 9:39AM (emphasis added):
Here's is the core information the Associated Press's Jeannine Aversa had to work with today in the Employment Situation Report released by the government's Bureau of Labor Statistics (BLS):
The "Dec.-Feb. change" column was added by me, but is easily calculated from the data in the BLS report. What Aversa did with this info, and my comments, are after the jump. (see also Noel Sheppard's post here)
Here's how her report began (scare words in bold; the headline is also from AP):
When January's retail sales failed to meet expectations, Old Media made sure we knew about how "disappointing" the result was. But today, February's result, which beat expectations by about as much or more than January's trailed them, was described as a mere "reprieve."
Associated Press reporter Anne D'Innocenzio's January coverage began as follows:
Stores Post Disappointing January Sales
Here's a sign of how shaky the economy has become: Wal-Mart says its shoppers are redeeming their holiday gift cards for basic items — pasta sauce, diapers, laundry detergent — instead of iPods or DVDs.
Looks like Pinch Sulzberger is facing some stiff carping from the NYT's shareholders and there are rumors of the dynastic family being pushed to move the paper's Internet migration at a faster pace. The Telegraph reports "outside investors" are also trying to loosen the iron grip the long time owners have had on the Gray Lady. The feelings of these outsiders is that the Times will fail if it doesn't realize that the times they are a changin'.
The Sulzberger-Ochs family has controlled what is arguably America’s most influential newspaper since 1896. Next month outside investors will try to make the family loosen its grip. It is shaping up to be a spectacular battle.
Of course the reason is that the NYT is lagging too far behind in their attention to the Internet. Some of you may recall the abject failure the paper's premium content program was, this being an example of its failed Internet ideas. As the Telegraph reports: "Dissident shareholders and other critics say Sulzberger is moving too slowly into the digital age and putting one of the world’s great news brands in jeopardy."
It certainly is no surprise the stock market's big decline on Friday would be the lead story for evening news programs.
But, citing an economic study from an organization with direct and verifiable ties to Democrat presidential candidate Hillary Clinton as simply a "consumer group" while not even mentioning the liberal leaning of the think-tank seemed pretty absurd even for NBC.
Yet, that's what occurred Friday evening as the NBC "Nightly News" began its broadcast:
If you haven't gotten to check out the Business & Media Institute's new weekly video blog, The Biz Flog, this week's topic is the media's shift from reporting on "recession" to all-out "depression."
Complete with old-timey piano music and grainy film, this week BMI gives you our take on the many instances when reporters have compared the current economy to a time when soup lines and the Dust Bowl carried headlines.
What follows is coverage of the February 28 presidential news conference. I focused mostly on the questions posited by the media. Video of the most biased questions should be posted shortly thereafter. [Update: White House transcript available here.]
Bottom line: Most of the really biased questions came down on the economy, particularly with regard to gas prices. Other than that and a question by Bill Plante about FISA immunity for telecom companies, most of the questions were fine, although the reporters often tried to draw Bush into handicapping the 2008 presidential contest or commenting on how his policies affect Sen. John McCain's chances:
For years, NewsBusters and the Business and Media Institute have informed readers about how the press, since George W. Bush was first elected, have tried to create a self-fulfilling prophecy by misrepresenting economic data in as negative a way as possible.
This is likely the cause of the public's continued pessimism about economic conditions even as the economy has expanded for 25 consecutive quarters.
On Tuesday, in an interview on CNBC, Los Angeles Times and Chicago Tribune owner Sam Zell took this thinking a little further when he suggested to "Squawk Box" anchor Becky Quick that many of the economic problems facing the country today are caused by fear-mongering and politicking by Hillary Clinton and Barack Obama.
It's an extraordinarily clever claim. It gets your attention. It's misleading. And of course, Old Media isn't questioning it.
I am referring to the following statement made by Barack Obama in radio ads currently running in Ohio and Texas:
Some CEOs make more in 10 minutes than some American workers make in a year.
In the full context of the ad, I believe that what Obama wants listeners to take away is that "Quite a few CEOs typically, year after year, make more in 10 minutes than some American workers make in a year."
But let's limit things to the literal wording. Start with a full-time minimum-wage worker who earns (rounded) $12,000 annually ($5.85 per hour times 2,080 hours is a bit more than that). How much would a CEO have to make in a year to be earning over $12,000 every 10 minutes?
During the four weeks preceding February 20, New York Times Company stock had been staging a nice comeback.
Lord only knows that the company's long-suffering shareholders, who before then had seen the share price drop more than 70% since June 2002, a point in time that roughly coincides with the onset of the Old Gray Lady's seemingly intractable case of Bush Derangement Syndrome, welcomed any kind of reversal of fortune.
For a while, they had it. From a intra-day low of $14.01 on January 23, the stock rose over 50%, closing at $21.07 last Wednesday.
But on Thursday and Friday, that climb was halted abruptly, and partially reversed. While the Dow Jones Industrial Average lost 0.4% in those two days, and the S&P 500 dipped 0.5%, NYT stock dove almost 9.7%, closing Friday at $19.03.
Steven Pearlstein, a one-time reporter for the Post who now pens a column for the newspaper, wrote February 20 that “the best thing that could happen to our economy is for a dozen high-profile hedge funds to collapse; for investment banking to enter a long, deep freeze; for a major bank to fail; and for the price of a typical Park Avenue duplex to fall by 30 percent.”
“For only then,” Pearlstein wrote, “might we finally stop genuflecting before the altar of unregulated financial markets and insist that Wall Street serve the interest of Main Street, rather than the other way around.”
He didn’t explain how hedge funds collapsing or banks failing would help Americans. Instead, he opted to cheer for a situation that would see millions of people suffer, admitting his was a “harsh and vengeful solution, and there will be lots of collateral damage.”
"But airline mergers have traditionally meant job losses, especially in the airlines' hub cities, as well as fewer flight options for passengers in smaller cities and higher ticket prices," NBC correspondent Tom Costello said. "In Atlanta, we found frequent travelers fearing that's exactly what could happen."
Yesterday, the Associated Press, in its ongoing campaign to make sure that readers get and stay downbeat about the economy, made sure that its story on January's retail sales had can't-miss gloom and doom in it:
Retail sales posted a surprising rebound in January following a dismal December, although much of the strength reflected rising gasoline prices. Economists saw the increase as a temporary blip rather than a sustained recovery.
..... The Commerce Department reported Wednesday that retail sales rose by 0.3 percent last month after having fallen by 0.4 percent in December.
What does Sen. Barack Obama (D-Ill.) and the February 12 "Potomac Primary" have to do with a BlackBerry outage? Beats me, but apparently Reuters writer Wojtek Dabrowski found a way to work the presidential candidate's campaign staff into his Toronto-datelined February 12 story, "RIM reports 'critical' BlackBerry outage.'
RIM's worldwide subscriber base reached about 12 million people by late last year, mainly executives, politicians, lawyers and other professionals who rely on the BlackBerry to send secure e-mails. Sleeker new models are also catching on with students and others outside professional circles.
Jen Psaki, a spokeswoman for Democratic presidential hopeful Barack Obama, said, "While the outage did confirm our widespread addiction to BlackBerry service, fortunately it did not cause more than a temporary inconvenience."
In an appearance on the Fox Business Network February 8, Business & Media Institute Vice President Dan Gainor criticized the media's refusal to fully report the costs associated with campaign promises being made by presidential candidates.
"You would actually think the media had talked about how much it's going to cost," Gainor said of the hundreds of billions of dollars in new spending promised by the candidates. "And in fact it's quite the opposite."
Aside from some coverage of Sen. Hillary Clinton's massive universal health care coverage proposal, much of her $217 billion in promises has gone unreported. The same goes for Sen. Barack Obama, who leads all candidates with $287 billion in new proposals, according to estimates from the National Taxpayers Union Foundation.
"[T]here's a system out there where basically what happens is the government makes some assumptions about how many jobs are created or lost every month," Burnett explained. "How many businesses are created - they can't check it every single month, so they have to make some assumptions. It turns out if you look out over history they always do the ‘businesses dying estimate' in the month of January - as a matter of fact, always in the month of January."
♪♫ ♪ Say, say, one, nine, three, zero, party over, oops, out of time! So tonight I'm gonna party like it's 1929! ♪♫ ♪
It's the kind of rhetoric legislators in Congress were probably hearing following the economic downturn that occurred in 1929, which instigated the infamous Smoot-Hawley Tariff Act of 1930 that sent U.S. tariff rates sky high. That is, the February 11 issue of BusinessWeek, showing all the disadvantages of free trade for the United States and ignoring the advantages.
An article, "Economists Rethink Free Trade," by BusinessWeek Washington Bureau Chief Jane Sasseen ignored the benefits of free trade and the consequences of enacting anti-free trade policies.
Business & Media Institute Director Dan Gainor appeared on the Fox Business Network January 31 to discuss reasons why The New York Times Company (NYSE: NYT) revenue numbers decreased recently - saying that its product is the problem.
"People have lost confidence in the media according to most studies...Most Americans understand that the...mainstream media are overwhelmingly liberal, overwhelming out of touch with a lot of their issues," Gainor said.
Gainor cited an instance where the Times was ran a story about veterans being more violent when they come back to the United States - turning "anecdotes into a loosely connected story and when you do that you alienate readers. They're the people that the Times work for. Journalists forget that."
On January 18, Cramer appeared on MSNBC's "Hardball with Chris Matthews" and warned if the government didn't intervene and prevent the failure of two large insurance companies, Ambac and MBIA, the Dow Jones Industrial Average would drop 2,000 points in the upcoming weeks. Cramer isn't talking about that sort of collapse anymore.
"For months I was worried about [MBIA CFO] Chuck Chaplin and MBIA (NYSE:MBI) and ABK [Ambac Financial Group, Inc.] (NYSE:ABK)," Cramer said on the January 31 "Street Signs." "Everyone's worried about it now? Why should I be worried about it? When you have a problem on your hands and everyone's worried knows about it, [New York State Superintendent of Insurance] Eric Dinallo to [President of the Federal Reserve Bank of New York] Tim Geithner, it's done. It's done."