Thursday, April 9, 2009

The Importance of Jon Stewart


Lately I’ve been quite impressed with the quality of the interviews conducted by American comedian Jon Stewart. Unafraid of speaking truth to power, his style is to attack the surreal immorality he sees around him every day, rather than simply recycling material from the media to entertain. His constant mantra is to demand that the US news media and politicians speak to Americans like adults, and he is quick to criticize them when they do not, whether it be the blatant right wing media bias, the so-called financial guru shows, or – most refreshingly, considering he is Jewish - the pro-Israel bias of the American political system:


The Daily Show With Jon StewartM - Th 11p / 10c
David Gregory
thedailyshow.com
Daily Show
Full Episodes
Economic CrisisPolitical Humor
(jump in at about 4min 50s)


One recurring theme of Stewart's argument seems to be ‘why am I the only one asking these questions?’ A consistent tactic has been to appear as a guest on supposedly 'authentic' news shows on rival channels - which obviously feel threatened by his ratings - to allow his deceptively irreverent style to be questioned, revealing in the process the shallowness of the other's approach. Stewart's persistent plea is for someone – anyone – to fill the intellectual and moral vacuum that exists at the core of American network news, so he can go back to ‘making fart jokes and pulling funny faces.’

Two of the most groundbreaking pieces I’ve seen are this one on Gaza (on the same show as above):


The Daily Show With Jon StewartM - Th 11p / 10c
Strip Maul
thedailyshow.com
Daily Show
Full Episodes
Economic CrisisPolitical Humor


And this piece on the incompetence, deception and game-playing by so-called financial experts on TV. After weeks of verbal hand grenades between Stewart and financial pundit Jim Cramer of CNBC, the belligerent Cramer finally agreed to come on Stewart's show on March 12, 2009. His subsequent excoriation by Stewart is some of the most honest and angry television I've ever seen:


The Daily Show With Jon StewartM - Th 11p / 10c
Jim Cramer Pt. 2
thedailyshow.com
Daily Show
Full Episodes
Economic CrisisPolitical Humor



Brilliant stuff.

As an intro to the Cramer piece he happened to mention disgraced Ponzi investment manager Bernie Madoff, but seemingly only to hold him up as the worst of a bad bunch, a criminal who got his just deserts:


The Daily Show With Jon StewartM - Th 11p / 10c
Bern After Pleading
thedailyshow.com
Daily Show
Full Episodes
Economic CrisisPolitical Humor



Watching this again the other day I realized what’s been bugging me. How on earth do you spend $65 billion dollars?

OK, that's the amount the investors expected back after Madoff's fairy tale reports of annual yields of 10% compounded over at least fifteen years, but we still have to be talking about at least $25 billion originally invested.

Even if he had an enormous extended family that lived on $20 million a year and he bought a $5 million house and a $10 million executive jet every year for twenty years, he'd still be only putting a $700 million dent in the fund (even with the escalating price of aviation fuel). This is in the ballpark of the Madoff assets that have so far been accounted for and frozen.

So where's the other $24 billion?

A Ponzi scheme relies on a constant supply of new customers joining the fund to allow you to pay what's due to old ones. Any dividends due to established clients are paid not from returns on their investments but from newly presented funds from new clients who want a piece of the action. This leaves you to use the older deposits as your own private income stream, siphoning off money to yourself, your family and your friends.

In a word, you steal it. And from your oldest, most loyal customers.

The key is to keep pulling in new investors while retaining old ones and avoiding clients who are likely to make unexpected withdrawals. The other necessity is not to be audited.

Madoff was a great salesman, so new customers were forthcoming right to the end. By focusing on charities, Madoff avoided unscheduled withdrawals. By enrolling in a peer review audit program, audits were postponed for fifteen years. By telling clients who threatened to withdraw they would never be allowed back in, his company often managed to talk people out of leaving the fund.

Although an audit was avoided for so long, this is now the urgent task of the investigators. In simple terms, there are two ways to do it. The first is to look at what has been bought, and try to account for the income (the tax audit approach). Having found only a few yachts and houses, this is obviously not working for the US authorities. The second way is to establish the known income and determine where it has gone (the deposed tyrant audit). So far, British investigators appear to be the only ones doing this.

In the absence of any progress, the rumours are mounting. So far they are no more than conspiracy theories from the fringes of cyberspace: rumours about international money laundering and Israeli-Americans channeling funds to Israel. Some of the more complex theories link the bank-bailout, international banks and the Fed in even more incredible scenarios of an Israeli plan to asset-strip America of hundreds of billions of dollars in the dying days of US global supremacy.

Used to conspiracy theories, Israel will of course shrug them off - it is quite possible the funds were channeled to organised crime, or British tax havens, or Switzerland. But Israel will continue to be the bogeyman until we find out where this enormous amount of money has gone.

Resistance to an investigation is already occurring. One red herring is to argue that, because Madoff is Jewish, even to investigate this would provoke an anti-Jewish backlash. The number of Jewish victims in this case should be enough to persuade anyone that this is not a Jewish conspiracy against the rest of us. Maybe a conspiracy of Jew against Jew at worst.

And if the trail leads to Israel, so be it. As Jon Stewart makes clear in the clips above, and as Sir Gerald Kaufman has shown in the British parliament, it is now acceptable for Jews around the world to question Israel's motives. Gaza was the tipping point.

But if the trail leads somewhere else then where, and to whom?

Five years ago, I would have expected a whitewash on something like this. With rising American anger at financial corruption, and with people like Jon Stewart now staring down those in power, I'm not so sure.



OTHER TAKES:

No comments: