James J. Cramer: You Got Screwed!: Why Wall Street Tanked And How You Can Prosper

The American public tends to like its scandals sleazy and sensational, which helps explain why the deluge of recent corporate scandals felt a little bloodless and abstract. Sure, Americans lost untold fortunes due to corporate chicanery, but without the benefit of titillating details involving sexual favors or bloody gloves, the economic scandals failed to produce the anger and outrage they might have. In You Got Screwed!, pundit, thestreet.com co-founder, and former hedge manager James J. Cramer argues compellingly that Wall Street's problem wasn't with a few bad apples, but with a system that encouraged widespread corruption on multiple levels. In assigning blame for the stock-market dive, Cramer implicates a web of corruption that stretches far beyond "creative" accountants and duplicitous executives to include a sycophantic press, corrupt analysts, and a dearth of regulatory oversight. Using Enron and Worldcom as examples, Cramer explains how a convergence of factors—the democratization of the stock market through widespread Internet trading, the changing nature of the banking business, and the Internet bubble—resulted in a hugely flawed system in which analysts created artificial "targets" that corporations could easily beat. Stocks that "beat the street" would then skyrocket in value, even if they came from poorly run companies hemorrhaging money. Inevitably, the corporation's economic house of cards would collapse, but not before doing considerable damage. As a journalist, Cramer's greatest gift lies in his ability to convert complex economic matters into punchy, vivid soundbites. Yet for a man who spends much of his book railing against conflicts of interest, Cramer doesn't seem overly concerned with full disclosure: When he makes a derogatory reference to Motley Fool, for example, he neglects to mention that it no doubt competes for subscribers with thestreet.com. Cramer does a better job elucidating why the market tanked than suggesting how readers can prosper; his advice amounts to a blast of pre-bubble conventional wisdom. But for anyone wondering how debacles like Worldcom and Enron happen, and what can be done to prevent them, Screwed serves as a useful, accessible resource.