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Missing The Point Entirely

Speaking for the BubbleHeads*, Pethokoukis [1]:

So what is Stewart suggesting, that we “workers” just save insane gobs of money that we squirrel away into low-yielding savings accounts and rely on those savings and Social Security for our retirement?

I’m not sure if Pethokoukis is kidding, but it seems as if he really doesn’t understand anything Stewart was saying on the show. What Stewart was objecting to was the promotion of unrealistic expectations of large, quick returns on investment. At one point, Cramer tries to push back against Stewart by citing the period 1999-2007 as a time when these sorts of returns were considered normal, as if referring back to the artificially propped-up bubble fed by the Fed helps his cause, when what it does is drive home Stewart’s point. Hence Stewart’s constant refrains about “two markets.” In one market, Stewart was arguing, long-term investors, including my family and friends and probably a lot of you reading this, were conditioned to invest in equities on the assumption that they were not unduly exposing themselves to unacceptably high risk, while in the other financial institutions and their cheerleaders were creating instruments that greatly increased risks to everyone participating in the market and caused significant losses to the responsible, long-term investors through no fault of the latter or even of most of the companies in which they were/are invested. At no point did Stewart say or imply that people should not invest in the stock market. He did dare to suggest that work should matter (and he might have added that complicated financial instruments that are so impenetrably opaque that Soros and Buffett wouldn’t touch them with a ten-foot pole are inherently unsound and dangerous), which does not necessarily mean that he rejects investing. Americans might have benefited had he made an argument for saving (as a protection against exactly the sort of sudden and severe declines in the market that we have been seeing for the last many months), but that was not the matter under discussion.

* In honor of his attack on any critic of the TARP as a “MellonHead.”

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5 Comments To "Missing The Point Entirely"

#1 Comment By whetstone On March 13, 2009 @ 1:31 pm

There’s a CNBC interview with Nouriel Roubini and Nassim Taleb that makes the point Stewart was trying to make much better, I think. About three minutes in the total insanity of the mindset you describe kicks in. The hosts come *this close* to just being openly hostile.

It’s pretty terrifying: [2]

#2 Pingback By Balloon Juice » Blog Archive » Extending a Hand to Daniel Larison On March 13, 2009 @ 3:01 pm

[…] Larison reads the latest nonsense from James Pethokoukis, and remarks: […]

#3 Comment By rawshark On March 13, 2009 @ 3:35 pm

Two markets also in that there’s the one we know about, stocks and bonds and such. We’re told to put our money there so we do, we save in 401Ks and our pensions are invested there. But there is another market where that money is used to make more money for a small group with inside knowledge and the cash to play the game. We are funding this venture as he says. This risk isn’t made known to us. No one asked us if we want our money gambled this way. We’re pawns. With this going on and laws getting changed to make it easier for banks to get involved and harder for us to see it CNBC is the place we should be able to go to learn about these things. How they work and what dangers might lurk there. Instead CNBC is encouraging us to give more money to the players. CNBC is leading fish to sharks instead of alerting the fish that there are sharks in the water. And then they bame the fish. They say people should have done more to ensure things were on the up and up but isn’t CNBC one of the places we should go to do that research? Isn’t that why someone like Cramer is on?

#4 Comment By DarrenG On March 13, 2009 @ 4:31 pm

@rawshark: Exactly.

Stewart’s line of criticism was about CNBC playing the role of uncritical stenographer and cheerleader for CEOs and traders instead of anything that might be called journalism. It had nothing whatsoever to do with the wisdom of individual investment choices.

Greenwald gets it right: [3]

#5 Comment By Sean S. On March 13, 2009 @ 5:15 pm

The economic melt-down is one of the few reasons I wanted Mitt Romney to actually make it all the way; then he would have been forced to explain how he made all of his money. We can argue the merit’s of McCain’s marrying into wealth, but there is no argument, at the very least, that AB actually sells a product (or rather Cindy McCain’s family distributes it).

But Romney’s Bain Capital (an ironic name if there ever was one) is the perfect example of hedge fund duplicity. I remember it buying American Standard (the toilet people) shutting down the plant and shipping it off to China. I was wondering how exactly Mitten’s would have responded to that if he had made it that far.