A more detailed look at The Street's interview of Jim Cramer:

http://www.roughlydrafted.com/2007/08/05/more-on-scott-moritz-and-the-jim-cramer-street-misinformation-engine/

Some quotes from Jim Cramer --

1. "...fomenting the market [the act of using disinformation to manipulate stock prices[... [is] actually blatantly illegal, but when you have six days and your company may be in doubt because you are down, I think it is really important to foment."

2. "It’s important to get people talking about it as if something is wrong with RIM. Then you would call the Journal [The Wall Street Journal] and talk to the bozo reporter on Research in Motion and you would feed that Palm has got a killer it is going to give. These are the things that you must do on a day like today. And if you are not doing it, maybe you shouldn’t be in the game."

3. "I think it’s important for people to realize that the way that the market really works is to have that nexus of: hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC; that’s also very important. And then you’ll have a vicious cycle down. It’s a pretty good game. It can be played for a percent or two."

This all reminds me of this little sound clip:



That's from the movie Wall Street, where Gordon Gekko tells Bud Fox to call up a reporter at the Wall Street Journal to spread disinformation to manipulate the price of Anacot Steel, a fictional company listed on the NYSE. Spoiler alert: the fictional Mr Gekko, by the way, ends up behind bars by the end of the movie.

Economists often describe the stock market as 'perfect' because it reacts instantly to reflect new information. The problem, as this blog has pointed out before, is that the information the stock market reflects may not be genuine. Mr Cramer has explicitly confirmed what many of us have long suspected or heard about: that fund managers often employ disinformation to manipulate prices. Jon Stewart has taken that train of thought to its logical conclusion: that "the game" -- usually played with short-selling -- Mr Cramer speaks of is being played at the expense of common investors.

Has the media lost touch with its responsibilities? A comment left on my last post suggested that Mr Cramer is an entertainer; well and good, but should a news corporation focus on entertainment or journalism designed to expose those who undermine society?