Cramer Pleads for a Fed Rescue as Bear Stearns Hit

In a truly astonishing clip, Erin Burnett interviewed Jim Cramer on Friday.

It is destined to become a classic Wall Street legend. I expect it will become required viewing for market historians and technicians alike.

There's no other way to say this: Jim goes postal. When Cramer essentially begs the Fed Chair to rescue the big Investment banks, you know things have gone awry.

Highlights include:

"Open the darn Fed window!"

"He has no idea what its like out there - None!"

"They [the Fed] know nothing. The Fed is asleep."

"My people have been in this game for 25 years . . . They are losing their jobs -- these firms are going out business"

"[President of the Federal Reserve Bank of St. Louis] Bill Poole is shameful"

"Cut the rate. Relieve the pressure."

"In the fixed income markets we have Armageddon."

But don't take my word for it, watch the video:

I am not sure what he means about people talking to him every night "off the record" (was Jim implying the Fed calls him?).

Ever since TV has been banned from our trading room (CNBC and Bloomberg alike), I only get to see these things when they show up online.

A truly astonishing performance. Kudos to Erin for maintaining her cool, as well as not adding to the madness.

I have two words for Jim: Moral Hazard. Contrary to everything we learned under Easy Alan Greenspan, it is not the Fed's role to backstop speculators and guarantee a one way market.

UPDATE August 4, 2007 8:20pm

Now for the punchline: "Completely meaningless, it has no relevance whatsoever"

Two weeks ago (July 16, 2007), Cramer mockingly said the Sub-Prime blow-up was utterly meaningless, and would have utterly no impact at all . . .

UPDATE 2 August 5, 2007 6:21am

Ask and you shall receive indeed:  DJ FiniFinito mashes up Jim's rant:

Crystal Method Right Here, Right Now Bill Poole No Idea_mix.mp3

Comments

[Richard Shaw]

WOW! Thanks for the post.

[bwbean]

Cramer is less than irrelevant. He is a circus sideshow performer. The Fed will not be bothered with his noisy performance and it is difficult to understand why any serious investor pays attention to him.

[Futures Lover]

>Ever since TV has been banned from our trading room (CNBC and Bloomberg alike), I only get to see these things when they show up online.

You know what they say about mushrooms - they're kept in the dark and feed manure. Sort of makes you wonder as to why they did this, right? Remember, there's always TiVo!

Thanks for the YouTube clip! I wish I can keep that on my hard drive. I think what Cramer ranted about is just the crack in the dam. I think when this whole scenario completely blooms out and we will see the total result of the national subprime / forclosure mess, as it will be worse than the S&L debacle. Personally, I'd stand in cash (hold cash in a CDARS account).

Loved the MP3! Thanks!!

[Futures Lover]

Seems Cramer was right!

From Wall Street Breakfast email:

Bear Stearns Co-President Warren Spector Resigns as Hedge Fund Woes Continue

Bear Stearns co-president Warren Spector's fate was decided last Wednesday, when he reportedly was asked to resign by CEO James Cayne. Over the weekend, Bear Stearns announced Spector's resignation, following S&P's downgrade of its credit outlook from "A+" to "junk" on Friday. Spector was head of fixed income and asset management, and thus, is being held responsible for the firm's hedge fund losses, which now extend across three funds, two of which have filed for bankruptcy (see full summary). Shares of Bear Stearns continued to free fall Friday, dropping 6.3% to $108.35. They are now down 28% since June -- when the hedge fund woes were publicly acknowledged -- and 33% year-to-date. An analyst at Punk, Ziegel & Co. in Florida told Bloomberg that by ousting Spector, management is acting as if it "didn't know what was going on, and that is just totally unsupportable. If there is no oversight system, people should be looking at Jimmy Cayne." Co-president and investment banker Alan Schwartz has been appointed president.
Sources: Press release, Bloomberg, TheStreet.com, Wall Street Journal
Commentary: Another Bear Stearns Hedge Fund Hit with Margin Calls * Brokers Are The New Homebuilders - Forget The Bailouts * Risky Business: Hedge Funds Can Freeze Redemptions
Stocks/ETFs to watch: BSC. Competitors: GS, LEH, MER. ETFs: IAI, KCE

[Ralph F]

Astonishing! Thanks for a great article.

[David Fry]

Your comments virtually parallel my own to subscribers over the weekend. There was a second video in the afternoon with a tranquilized Cramer saying he didn't mean to imply people should sell any stocks, etc. He must have gotten tapped on the shoulder from above suggesting that such bearish comments are not permitted.

I liked your find of the previous months "everything is contained" video. It just shows how duplicitous guys like him are.

I enjoy your commentary.

Dave Fry

[sliman]

Barry
What about a clip of your prediction that S&P would be at 850 last year. T.V is full of clowns. I agree turn IT OFF!!

[tlc8386]

I guess we should all go out and feel sorry for these firms who funded these loans and now are crying those low lifes can't pay their mortgage. Ask them how much money did you make off those loans, how much did the morgage brokers bank, the real estate agents, the banks even the government gets a higher tax rate based on the selling price of your house.

Everyone had their hand in your pocket telling you houses will keep rising in prices, you will make more money when your balloon payment is due and if not your house will be worth more. You must buy now--you have to get in. Spend half or more of you check on your home you won't be sorry. You will be rich.

This is what cheap money did to the market bring in the greed the corruption.

And the worst part is why don't they just bring down their interest rate themselves. They don't need the fed to do this for them (oh thats right they want to be bailed out).

Instead of adjusting to 12% which is what some are becomming why don't they avoid their downfall and drop the rate?? That is what I would like to know. Why do the rest of us always having to pay for their GREED!!!!!

tina c.

[Paul Meisel]

If the market is happy right now with 2 year money under 5%, why wouldn't Ben drop the rate a quarter of a point?

[tlc8386]

Just to free up more liquidity---which also spurs more inflation which is what the fed wants to control--after all this cheap money has caused this mess to begin with.

The fed will say something---will they cut that is the big Question!

[wixeywaxy]

Starting with Cramer: The best thing you can believe about him is that his advice is worthless, hyper, jibberish, the worst is that he is a shill for the Wall St crowd cultivating the mind set they want the public to possess. Why has CNBC stuck their neck out so far with this guy who is pretending to be an expert on everything?
The surest indication that the sub prime problem is a problem for only a few Wall St firms and hedge funds is the fact that Burneke won't be accomodating them. The bankrupcies that come out of this will be in large part using the sub prime issue as a cover for other serious problems caused by the hedge funds reaching too far for big returns, naked selling for one. Going back, the Tech bubble was a windfall for many CEO's that would probably been in jail if the bubble burst hadn't come along and given them cover. Vic

[frankovi]

I think Jimbo lost some bucks in this, why else the meltdown? He's not worried about some friends in the business, its his own lost money that caused his behavior.

[D Pickard]

WOW, I think he forgot for a moment that he was on TV, and not in a closed room with his buddies.

As for people losing their jobs way up in the heights, I'm all for it. They've made bad decisions, decisions which put all of us at risk, and the last thing we need is for the fed to bail them out with more easy money. What's needed now is for some responsibility to be taken, some heads to roll, and some new minds to be put in place to start making some new value decisions in this market.