In the Mad Money Swamp

What part of “Bear Stearns is fine” don’t you understand?

“Bear Stearns is fine,”—Jim Cramer, on CNBC’s Mad Money, March 11.

The Mad Money swamp beckons. The Audit cannot resist its murky waters.

It is warm and familiar, this swamp. I have been here before. I have spent time here, hours and hours of my life. So many hours.

I find it, if not entirely relaxing, very time-consuming, wading through Cramer’s calls—what is a “call,” anyway?— the cow moos, the bear roars, the gags. Ha ha. Bald man funny. But not! Bald man serious. Listen up, Kokomo! But don’t! Wait! No! Ha ha ha. HAHhahahahaha. (Sob. What is happening to me? ) In the Mad Money swamp, the footing is treacherous; its muddy bottom is pocked with slippery holes that will suck down any seeker of enlightenment. What did the man say? What did he mean? Who gives a *%$&? What is the meaning of the word “fine,” after all?

I mean, you’re fine. I’m fine. We’re all flipping “fine,” but are we really fine, in the Bear Stearns sense? What about our relationships? Are they really what they should be? We could be hit by a train or bought by the Fed, then how “fine” are we?

Whatever happened to that guy from Barron’s, by the way? He went deeper in the swamp than anyone should ever go. I hope he’s fine.

In the Mad Money swamp, icky things bob up and break the slimy surface. Eeek! I’m on the same side as Fox Business News! That’s disgusting!

Last week, stupid commentators from Portfolio to Jon Stewart mocked Cramer for the above remark, the “fine” one, which came as part of an answer that some people stupidly understood to be a recommendation to hold Bear Stearns common shares, a few days before they crashed from $35 to $2:

Peter writes: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? No, no, no. Bear Stearns is fine. Do not take your money…if there’s one take away other than (unintelligible) … Bear Stearns is not in trouble. It’s more likely to be taken over. Don’t move your money from Bear. That’s just being silly. Don’t be silly.”

Cramer rejoined, to the effect: You are wrong, Mr. Sophisticated Media Writer Man, Mr. Big Star Funny Comedy man. He said he was talking about brokerage accounts, or deposits, or some damn thing, just not the stock. Nyah, nyah.

Obviously, he meant “fine” in the sense of “insured by some fine federal brokerage insurance” or “will be saved by some fine miraculous Fed intervention that has never happened before.”

As a CNBC spokesman said: “He was 100 percent right.”

So, understandably, Cramer was in a position to, not gloat, but point out his critics’ errors on Mad Money on March 18, a week after the “no, no, no” call:

I have made many wrong calls in my life, but this is not one of them. The questioner was an e-mail, directly asked whether his money was safe at bear Stearns. He did not ask me about Bear Stearns stock. Given that everyone in the world was worried about their deposits at Bear, it was a gutsy call to say he could keep his money there. Turns out, the Federal Reserve made good, and you didn’t get hurt or frozen if you kept your money there, which by the way has always been the case in these deals.

Ha ha, you ignorant non-Cramers. He was totally right.

What’s more, he was right not once but twice. The Jon Smart-Alecs of the world hadn’t noticed that on Friday the14th, on another CNBC show, while Bear was still in the $30s, he had said Bear was “worthless.” Or that’s what he said he had said.

Meanwhile, on Friday, on our network, I said the common stock of Bear Stearns, then trading at $35, was worthless. Even as it would be safe to keep your money there. Jon Stewart didn’t get the memo [Audit translates: Ha ha, funny man. You suck]. Give him the worthless tape. People in the know in our business, this one’s flabbergasting me.

People in the know in our business, the hedge fund guys [Audit: non-comedians who know what the &%$* they’re *&%$$#$ talking about], are saying these were two of the most prescient calls I have ever made, that the common stock was worth zero but that you would not get hurt if you kept your money at Bear. It was good. People seriously dumped Bear Stearns common stock on my call, yet knew to keep their money there and their deposits would be bailed out. Memo to Jon Stewart and others [Audit: ya damned morons]. Here’s a riddle: Why would I recommend buying [Audit: Um, who said anything about buying? Sorry, my fault, I’m sure] the stock if I said it was going to zero? No, no, no. But who can resist taking Cramerica apart? [Audit: ha ha. Nobody can. But they should. Resist, I mean.]

And if you still didn’t believe him, here CNBC’s Web site breaks it down with a story under this headline: “Cramer Was Right About Bear Stearns.”

People who banked with Bear Stearns - hedge funds, prime brokerage clients - haven’t suffered despite the company’s need for a Federal Reserve bailout.

So CNBC stock guru Jim Cramer was right on the money.

Last week, the Mad Money host, responding to a viewer e-mail, emphatically told his viewers not to move their money from the bank, saying, “If anything, they’re more likely to be taken over.” Speaking to Erin Burnett during his regular Stop Trading! segment, he defended his call. Cramer wasn’t recommending the common stock, he said. He was only allaying concerns about Bear’s liquidity.

Got that, morons? So shut yer #@*$% yaps, ya ignorant #@*$% yappin’ bastards. On the #@*$% money.

Fortunately, for posterity’s sake, we have the transcript of Cramer’s “sell” call on Friday, March 14. Bear was dropping like a giant safe holding a giant piano from a very tall building. But still, the man was bloody #@*$% right. Or I think he was.

Here’s what he said at 10:34, talking with Erin Burnett on another CNBC show:

BURNETT: Two biggest stocks down today, no shock, Bear and Lehman brothers. Is there a—what do you do here? Forget if you were owning them. What do you do at this time?

CRAMER: Well, I think there are two ways to look at this. One is to look at the common stock of Bear and look at the debt. Debt tells a better story. If you want to try to make money off Bear, you have to believe that debt will be money good, and it’s down substantially, and they can go by that, and it’s senior to the common stock.

EB: Do you think there’s going to be—Meredith Whitney came out and the Oppenheimer analyst, and she said the stock may be worth zero. Is Bear Stearns worth zero?

JC: It could be in a take under. I lived through 1990 and traded through 1990 the institutions that were worth 20 and the Bank of New England had been a big deal and then it went to zero. So this is not an FDCI-insured business. I like them very much, and I certainly don’t want to be the one who nails the coffin.

EB: Right. It’s interesting because David’s been reporting we may get a deal by Monday.

JC: Right. They need to get a deal—I think it will be under the price.

EB: Under the price of where it is right now.

JC: Yeah.

EB: We’re not talking a take under.

JC: The debt would be made whole by anybody. If you’re willing to speculate there’s lots of senior debt being sold furiously right now.

EB: Overall for the market.

JC: We’re talking with Mark Haines and you off camera. If you’ve got something like that you’ll open down big and that will be your chance to buy, but let’s get that push and crescendo.

Got that? “Let’s get that push and crescendo”—see, that’s Wall Street talk.

Or, put another way:

Q: So I pick up the ball and I throw it to Naturally.

A: No you don’t you throw the ball to Who.

Q: Naturally.

A: That’s different.

Q: That’s what I said.

A: You’re not saying it…

Q: I throw the ball to Naturally.

A: You throw it to Who.

Q: Naturally.

Why I oughta…

See, this is what the Audit calls “actionable intelligence.” Clearly the lesson is: When making important financial decisions, the first thing prudent investors should do is turn on the &%#% TV.

Phew. Feeling very woozy now. Strange odors in this swamp. Noxious fumes. Vomit rising in esophagus.

Anyway, everything got cleared up yesterday on CNN’s “Reliable Sources,” with Howie Kurtz, who runs the “no no no” tape and asks:

KURTZ: All right. How do you plead?

CRAMER: Okay. First we have to understand that the question was—the question was, “If I have my deposits at Bear Stearns and…”—it was an e-mail—“If I have money at Bear Stearns, is it safe, or is Bear Stearns in trouble and my money won’t come back?”

Okay. I was wrong about—Bear Stearns was in trouble. But the idea was that you are going to be safe.

Later that week I said that Bear Stearns was worthless at $37. Why would I say that the stock is worthless if I was recommending it? What mattered is that, unbelievably, the Federal Reserve did guarantee your investment over the weekend.

So, there are two issues here. Was your money safe at Bear? And that was right. And anyone who thought they should pull it out was, no, no, no.

But I said the common stock was worthless. So, I don’t know. I mean, a lot of professionals thought it was a good call. A lot of people shorted (ph) Bear off of my call.

Dem’ pros knows.

Hey, but then, last January 24, Cramer also said:

How about a Bear Stearns, which I believe will be taken over imminently, on any downtick. It did trade as low as $70, down $16?

How about Bear at $70? Intriguing!

Call? No call. Just askin’ a question, dude.

What’s that crawling up my &$%#* leg?

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.