When the going gets weird, the weird turn pro. - Hunter S. Thompson

08 August 2008

Jim Cramer's famous rant, one year later

Cramer Day is upon us. This weekend marks the anniversary of former hedge fund manager Jim Cramer’s outburst on CNBC that the Federal Reserve was “asleep” and that there was “Armageddon” in the fixed income markets.

It was possibly the most entertaining five minutes of financial television ever broadcast. Those who do not work in a Wall Street trading room and have not watched the excerpt repeatedly over the past year, can watch it on YouTube, where it is a popular view.


The outburst signalled for the first time to the general public in the US that the largely technical problems for the credit market could have serious repercussions for them.


Reviewing the rant, we can see it set the template for all that followed.


Finally, Cramer wanted to pin the blame on Alan Greenspan, who had left the Federal Reserve with an impeccable reputation early in 2006. He pointed out, correctly, that Greenspan had encouraged borrowers to take out mortgages at low “teaser” rates and then proceeded to raise rates.

Those comments have become the new orthodoxy. The easy money with which the Greenspan Fed responded to the bursting of the tech bubble at the beginning of this decade is now deemed a mistake.

This was the first crisis to afflict the YouTube generation. The “Rant That Shook The World” as CNBC called it, will be an important item in financial history years from now.

Long view: Jim Cramer’s TV outburst that will last for ages (Financial Times, 1 August 2008)

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