Jon Stewart Turns Up The Heat On Jim Cramer

Just a few days after ripping CNBC, The Daily Show's Jon Stewart was out again attacking the popular cable business news network. Stewart said his last skit on CNBC wasn't related to the fact that Rick Santelli, famous for his Rant Heard Round the World, cancelled his appearance. In fact, he said it was already prepared before his scheduled appearance.

Stewart went hard after outspoken CNBC host Jim Cramer after Cramer responded to Stewart's latest rouse, criticizing Stewart for using a "clever sound bite" that suggested he was recommending buying Bear Stearns' stock a few days before its collapse. Cramer contends that he was simply responding to a viewer e-mail telling people that their money was safe at Bear, not recommending buying the stock.

Cramer's response from the MainStreet.com site, "Take Frank Rich and Jon Stewart. Both seize on the urban legend that I recommended Bear Stearns the week before it collapsed, even though I was saying that I thought it could be worthless as soon as the following week. I did tell an emailer that his deposit in his account at Bear Stearns was safe, but through a clever sound bite, Stewart, and subsequently Rich -- neither of whom have bothered to listen to the context of the pulled quote -- pass off the notion of account safety as an out-and-out buy recommendation."

Stewart responded, showing other, older clips where Cramer was very vocal about his recommendation for Bear Stearns stock. It is pretty clear from the clips that Cramer was in fact recommending Bear Stearns stock at one point.

But to defend Cramer, no one had a clue, right up to the last minute, what was happening at Bear. The Fed, the Treasury, Bear management, the President! No one had a f@*$%ing clue.

No one expected a bank run at Bear, which is essentially what happened. No one knew Bear's repo partners would stop renewing loans, no one knew trading partners would stop trading with them, no one knew hedge fund clients would line up to request withdrawal. In fact, when news hit on March 14 that the company received federal funding because its "liquidity position in the last 24 hours has significantly deteriorated" the stock's first reaction was to trade higher. That's right - UP!. Within minutes, when the news was digested, the market started to realize how bad things were and the stock started trading off. But even though it was slammed 50% that Friday, it closed at $30 per share that day. The company even hosted a conference call saying their "book value" was at $80 per share that same day. That weekend, everyone was in shock as JP Morgan (NYSE: JPM) agreed to acquire Bear Stearns for a meager $2 per share with government protection on some losses. The deal was later adjusted higher to $10.

So while Cramer did recommend Bear Stearns' stock on a number of occasions prior to its collapse, it is not fair to chastise him as the situation in the last days of Bear was very fluid. The action in the stock that Friday, before the $2 buyout, shows that the smartest players in the stock didn't know what was happening. Right up until the last miniute no one knew. If they didn't know, then how could Cramer? And if Cramer had weighed in on Bear that Friday I'm sure he would have said stay away. At least I think so.

Jon Stewart "In Cramer We Trust"

Update: Cramer will now be on Stewart's show on Thursday March 12th to defend himself.

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