Stewart/Cramer

The video of the uncut interview is available at the Daily Show site, because their code is screwing up my blog. Bleh.

My take on this is one I've seen elsewhere: why does it take a comedian to ask these kinds of questions? And how does Cramer defend himself? At the end he was a whining fifth grader, asking for another chance to let him at those lying CEOs. But he kept saying, "These guys were friends of mine and they lied to me." Well, the reason Cramer bought the lies instead of doing investigative reporting is because they were friends of his.

Again and again, it comes down to access. Who tends to get the access? The people who are going to tell the best story for the companies. Who tends to get those kinds of jobs? People who are friends of the CEOs.

In the uncut version, this exchange occurs:

JIM: There's a market for it and you give it to them.

JON: There's a market for cocaine and hookers.

JIM: Well --

[LAUGHTER and APPLAUSE]

JON: So what?

JIM: I think those should be legalized -- no.

JON: What is the responsibility of the people who cover Wall Street?

Making sure that the people who are pushing cocaine and hookers don't have the chance to swamp the global financial market sounds like a good start to me.

Roubini: The Ponzi Economy

Combine this insight with Bernanke's stressing of savings relative to investment below:

According to Minsky and according to economic theory Ponzi agents (households, firms, banks) are those who need to borrow more to repay both principal and interest on their previous debt; i.e. Minsky’s "Ponzi borrowers" cannot service neither interest or principal payments on their debts. They are called "Ponzi borrowers" as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations.

By this standard media US households whose debt relative to income went from 65 percent 15 years ago to 100 percent in 2000 to 135 percent today were playing a Ponzi game.

And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350 percent was a Made-Off Ponzi economy. And now that home values have fallen 20% and they will fall another 20% before they bottom out and now that equity prices have fallen over 50% (and may fall further) using homes as an ATM machine and borrowing against it to finance Ponzi consumption is not feasible any more. The party is over for households, banks and non-bank highly leveraged corporations.

The bursting of the housing bubble and of the equity bubble and hedge funds bubble and private equity bubble showed that most of the "wealth" that supported the massive leverage and overspending of agents in the economy was a fake bubble-driven wealth; now that these bubble have burst it is clear that the emperor had no clothes and that we are the naked emperor. A rising bubble tide was hiding the fact that most Americans and their banks were swimming naked; and the bursting of the bubble is the low tide that shows who was naked.

I'm sitting here happy that my credit has been crap for years. I never took out any liar's loans. It scares me to even think I could have before the bubble burst. My major debts right now are student loans, which I'm repaying slowly.

It is hard to see how this economy gets better anytime soon, when the best solutions to the problem are so politically untenable or simply undoable (nationalize the banks which, among other obstacles, the FDIC could never back up right now).