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    What’s wrong with the financial system


    by Sunny
    6th March, 2009 at 6:09 am    

    This isn’t just one of Jon Stewart’s best rants; it actually illustrates the emptiness of the American financial punditry, who basically refused to believe the shit was about to hit the fan. This isn’t just a few bolshy investors trying to make a quick buck. This is a microcosm of the entire system enveloped in that corruption. Watch it in full.


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    Filed in: Current affairs,Economics,United States






    16 Comments below   |  

    Reactions: Twitter, blogs
    1. pickles

      New blog post: What’s wrong with the financial system http://www.pickledpolitics.com/archives/3511




    1. shariq — on 6th March, 2009 at 9:38 am  

      I was going to post this myself. It sort of backs up what I was trying to say when I made the case that putting equal amounts of blame on the consumer and the business/journalist class isn’t right. I agree there are counter-arguments but this clip is great.

    2. Golam Murtaza — on 6th March, 2009 at 10:09 am  

      Even now I still get taken aback when I watch American TV news and see the style and mannerisms of their presenters. It’s more showbizz than news. That makes it easier for Jon Stewart to parody, as his targets do so much of his job for him.

    3. douglas clark — on 6th March, 2009 at 10:25 am  

      I’d missed this, so thanks for posting. What an excellent rant. John Stewart is my favourite commentator on the US scene, up there at first equal with the very wonderful Rachel Maddow.

    4. Riz Din — on 6th March, 2009 at 10:34 am  

      Agree that financial media are bunch of mentalists, but surely it is not these guys job to ‘see it coming’ in any form whatsoever. Their job is to churn stories about what people are talking about, forget them the next day, and then start over. Oh, and to provide endless obscuring whizz-bang 3-D charts of financial variables along with pointless sound effects. For the most part it is simply glorified fortune telling, nothing more.

      Did anyone read the Playboy blog that started a mini-storm about how Santelli’s rant may have been a pre-rehearsed set-up by CNBC? Turns out it wasn’t but their was a mini storm in the financial blog world for a few days. Also, while Santelli is not talking from a position which will get much support from the public (i.e the trading room), I do agree with much of what he said, that essentially those who didn’t bear the risks and thus enjoy any of the upside are now being asked to subsidise the losses.

      Golam - I still find the style crazy. J.Stewart is great although when we started watching, it took some time for us to get over even his level of energy, the exaggerated movements, shouting, and bait-applausing antics. What do they feed all these guys?

      PS - A shame More4 don’t show the Colbert Report - that looks pretty funny as well.

    5. Riz Din — on 6th March, 2009 at 10:44 am  

      ‘I don’t have what I got’

      Re my comment of ‘what do they feed these guys’, here is a chap at CNBC called Charlie Gasparino a few months back. I think he’d consumed a little something that caused his brain cells to misfire a tad. Here’s a portion of the interview:

      Gasparino: No. You know what you got. That’s right.. you have… you have… You have one choice: shoot to the capitalist system. ‘Cause that’s what you’ve got.

      Ratigan: Do what?

      Gasparino: No. That’s what you got. That’s what you got.

      Lee: Okay.

      Ratigan: Shoot the capitalist system?

      Gasparino: Shoot to the capitalist system. That’s what you got.

      Lee: Okay. Thanks Charles.

      I blogged the full thing and took down the dialogue for posterity:

      http://www.rizdin.com/2008/10/cnbcs-gasparino-loses-ball-big-time.html

      Proper mental.

    6. MaidMarian — on 6th March, 2009 at 12:54 pm  

      Riz Din (4) - ‘Agree that financial media are bunch of mentalists, but surely it is not these guys job to ’see it coming’ in any form whatsoever.’

      Here’s a thought on that - what about the ‘property porn’ media? They all just seem to have spent 10 years blithely pouring out ‘media’ about how wonderful massive house price increases are and how there is nothing to see coming in the way of a crash and how when it comes to mortgages money is no object.

      It maybe a red-herring, but some of the property shows have skated mighty close to something that could justifiably be seen as cod-financial advice.

    7. Riz Din — on 6th March, 2009 at 1:21 pm  

      MM - Yes, the media and sellers of ‘How I made a million in property’ seminars, etc, are all part of the very the ugly side of the system, and good people are swindled into believing the hype and buying into false dreams. Too many good years allows the charlatan’s to thrive and breed like rabbits, but having lived through this at least we have been taught a lesson in objectivity, self-reliance and independence of thought, and hopefully that should stand us in good stead in the future.

      I guess it depends what we choose to learn from it. To improve the system over the long-run, I think it is important not just to shift the blame and move on, but to analyse where ‘we’ went wrong so we can pass on the lessons to future generations without sounding like burned out has-beens who got screwed and have a hang-up about the system - by providing them with a better way to analyse the system in which they live. It sounds optimistic, but I imagine marginal improvements with respect to understanding bubbles, human psychology etc can all lead to an improvement in how we as individuals act when we find ourselves in the middle of these storms of blind exuberance.

      Simply put - I believe there is less to be gained by asking who is to blame, and more to be gained by asking what I can do better. I believe this outlook will lead to a better outcome for society and the individual.

    8. Sunny — on 6th March, 2009 at 4:27 pm  

      but surely it is not these guys job to ’see it coming’ in any form whatsoever. Their job is to churn stories about what people are talking about, forget them the next day, and then start over.

      Yeah but they’re part of that system that then feeds into rising stock prices and investor sentiment. What else are they supposed to do other than inform investors??

    9. Riz Din — on 6th March, 2009 at 7:43 pm  

      Sunny, I’m with you that they are part of the system but I don’t think they are deceiving themselves and others if they think they are providing a public service such as informing investors - the problem is that the professional investors for the most part know better than to pay attention to what the likes of CNBC say (extrapolating from my experience, if the channels are indeed on in the trading rooms, the volume will be muted and no one really looks up), and folks at home shouldn’t be investing based on what might happen in the next week or month anyway. Thus, I believe they CNBC brethren fulfil the role of financial entertainment for the most part - folks are are increasingly obsessed with where the S&P or Dow (or FTSE) closed for the day. The mainstream media are really there to make money any which way and I guess there are enough people around who enjoy seeing these frantic bunnies jumping all over the place. For the most part, to me, it fake fortune telling by false prophets who will happily go on tv to sell their wares (be they investment funds, technical analysts, bankers, etc) - they are all their selling something, and some people, somewhere, are buying. I think the trick is ‘know’ what you are watching, to know context, motive, etc.

    10. MaidMarian — on 7th March, 2009 at 1:40 am  

      Riz Din - ‘but having lived through this at least we have been taught a lesson in objectivity, self-reliance and independence of thought, and hopefully that should stand us in good stead in the future.’

      Really? To me the lesson seems to be that government will bail out the feckless, very possibly at the expense of the cautious because the housing market is too big to allow to fail.

      I really, really want to believe this stuff about how in future there will be less finger pointing - but blame shifting seems to have been rewarded. Apparantly some feel it the the fault of their lender that they recklessly took 100%+ mortgages.

      Now this is not to say that everyone who has (and will) see the benefit of government intervention is ‘unworthy,’ far from it. But what it is to say is that I disagree with you about why we will see more caution. You believe that it is about a greater apprecition about the psychology of bubbles.

      I think it is about a realisation on the part of everyone that this is a one-time only get out.

      Hope I’m wrong.

    11. Nyrone — on 7th March, 2009 at 2:02 am  

      Superb clip!

    12. um — on 7th March, 2009 at 5:07 am  

      What else are they supposed to do other than inform investors??

      Anyone investing their hard-earned on the advice of a talking hack, whether on TV or in blogland deserves all they get frankly.

      And anyone calling out American capitalism for being corrupt whilst holidaying in Dubai…

      Well.

      You work that one out.

    13. Riz Din — on 7th March, 2009 at 11:01 am  

      MM- I absolutely hate the idea of shifting resources away from the deserving and rewarding poor decision making, truly and deeply, for the very reason you point out - that it sends out all the wrong incentives for future action. I guess when I am talking long-term I am talking in the context of many hundreds of years if not thousands, and along the lines that the framework will always jerk backward and forward but that over time, people will realise that agents that make the poor decisions need to bear the brunt of the losses.

      I do wonder about my idea of the long-run though, as it seems a bit too long!

      You know, I think the housing market is kind of being allowed to fail because it is too big to save (thank the lord!) and I also think policy makers at least acknowledge that the blame has to shared by all who took part, but the reluctance to quickly nationalise or liquidate the bankrupt banks and sort out a solution where the risk-takers suffer the downside (not just shareholders, who are suffering in spades, but also the bond holders who are being kept whole). If we do engineer a way out of this mess, I do hope the regulators start looking at the degree of interlinkage in bond-holdings, insurance, etc, across the system, to stop governments being held hostage by the ‘if one falls, we all fall’ scenario that we are currently facing. Alas, being held hostage by the system like this means that taxpayers are simply having to plug the holes as and when they appear because not doing so will produce a series of failures throwing the entire financial system in complete ruin. I need to do more research and perhaps write a short article or blog that maps out my thoughts, but I am starting to see the system as a kind of global keiretsu with no one at the helm (though perhaps we can put AIG at the head of the table!).

    14. MaidMarian — on 7th March, 2009 at 12:43 pm  

      Riz Din - I agree absolutely.

      I do not as such have a problem with the government involving itself in banking. It has since the 1930 been an entirely legitimate thing for government, for example, to secure the deposits of people held in registered banks.

      I don’t even have a problem with taxpayers covering short-term holes.

      What I do have a problem with, as you rightly say, is being held hostage by a system on which so many depend. It has to be bailed out - like it or not.

      I really am not sure what it the best - there are downsides with all the alternatives. To my mind, reigning in the housing market would be the best start though I have no idea how to sell that the public.

    15. Riz Din — on 11th March, 2009 at 7:41 pm  

      Oooh, Jon Stewart is going guns a blazing after CNBC. Apparantly, Jim Cramer is due to be on his show this Thursday (the show comes on a day later on More 4). Cramer is a mentalist who seems to have more adrenaline than a bull in its prime, so the match-up should be fun.

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