iPhonAsia comment: If you haven’t seen it yet, this March 12, 2009 > Jon Stewart interview with CNBC’s Jim Cramer was funny, provocative, deadly serious and watched by millions on Wall Street and Main Street USA.
This “Stewart verses Cramer (CNBC)” interview focused on the media’s failures in coverage of the turmoil in our financial markets, including CNBC’s failure to investigate the shadow markets and role of hedge funds and other institutional gamesters who employ criminal rumor mongering and other market manipulations tactics, all of which are done right under the noses of the keystone cops SEC.
To his credit, Jim Cramer has been on a mission of late to terminate the Ultra Short Financials SKF, bring teeth to short selling rules, and to reinstate the uptick rule. Yet Stewart rightly, in my opinion, calls on Cramer and CNBC to do more in the way of serious investigative reporting.
Lord knows the SEC has been out to lunch and we need a few more Harry Markopolos whistleblowers out there to step forward. Instead of coddling John Paulson, Jim Chanos a frequent CNBC guest host, and his ilk (who feed tips to CNBC) the media needs to get more Street insiders to come on the air and unveil the shadow market machinations that take place on a daily basis. The sad fact is that the Street players are smarter than the regulators and the only way reforms will occur is when the media takes a role in exposing the tactics that are used to manipulate the markets.
CNBC has gone out of their way to curry favor with billionaire hedge fund managers and short sellers (often one in the same), and to this day, many CNBC commentators are still on the talking points … “the uptick rule will not make a difference” (unless of course you make it priced based – see image at right) … “short sellers are being unfairly vilified” (Jim Chanos told me it was so). Until you realize that no one is really verifying good “locates” as required by SEC Reg SHO and options market makers are 100% exempt from the locate requirement (finding actual shares to borrow before selling short).
Many hedge funds and professional short sellers will tell you that this is not much of an issue. Why then was the October 26, 2008 Porsche induced Volkswagen (VLKAY) “short squeeze” the greatest in history? Because thousands of shorts did not have legitimate locates. Hello SEC, that’s a rules violation costing “longs” hundreds of millions in depressed VW market value until the Porsche CFO (my hero) announced to the world that he had options to purchase a majority stake in VW (shares that were not available to be loaned to short sellers). Porsche actually wound up selling shares to shorts who needed to cover at hugely inflated prices. For a brief period, the short squeeze in Volkswagen, pushed Volkswagen’s valuation as high as $370 billion, above the market cap of Exxon Mobil (NYSE: XOM).
Sidebar: For those who don’t know, Jon Stewart’s brother is a senior exec with NYSE Euronext whose CEO, Duncan Neiderauer, is a major proponent of reinstating the uptick rule.
Jon Stewart vs. Cramer (CNBC) Part 2 > MUST SEE TV
Full transcript of the Stewart v. Cramer interview > HERE