Superhero economist and top-notch investor John Maynard Keynes famously told one of his critics, "When the facts change, I change my mind. What do you do, sir?"
On Mad Money we happen to share that same philosophy. And unfortunately, it's still something of a radical position.
On Thursday, the Business and Media Institute released its list of "The Media's Top 10 Worst Economic Myths of 2008." Jim is mentioned in three of them, but it's myth number 2, "the news media drew hundreds of parallels to the Depression, despite economic data that is not even close," that reminded me of that Keynes quotation.
Here's the criticism: "CNBC’s 'Mad Money' host Jim Cramer went further than most journalists actually warning that the country was in danger of 'Great Depression, No. 2.' On 'Street Signs' Sept. 11 Cramer excitedly warned that unless the banking system was bailed out, a second Depression could be in the future." Later the author writes, "Ironically in December, Cramer chastised people using Great Depression warnings calling them 'scare tactics.'"
That's right, the facts changed, and we changed our mind. When everyone in the Bush administration was still proclaiming that the fundamentals of the economy were sound, and we believed the government was doing little if anything to help resolve the credit crisis, we said that it was possible we would enter a second Great Depression. This wasn't fear mongering, and it certainly wasn't propagating a myth. Remember, Sept. 11, 2008, was before Lehman Brothers fell, before AIG got bailed out, before we got our big banking bailout in the form of the TARP that passed billions to Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley and a host of smaller institutions.
In 1932, our country experienced a wave of massive bank failures. We thought that this could happen again if the federal government didn't take action. Now, we'll never know what would have happened without the $700 billion TARP and measures taken by the Federal Reserve and the Treasury since to help prop up the financial system. But it certainly made sense to worry about a large-scale collapse of the banks before the government intervened.
Then the facts changed. I don't know how this article can criticize Jim for saying another depression was possible without a bailout for the banking system, and then, after we got that bailout, saying comparisons to the Great Depression no longer made sense. That's not ironic, it's exactly what you'd expect. We come under a lot of fire for changing our minds. And when I say we, I mean Jim, but the facts are changing all the time. This happens with macroeconomic predictions as much as with individual stocks.
Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.
Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.
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