Kicking People Out - Cramer's Stop Trading! (9/24/08)

Recap of Jim Cramer's comments on Stop Trading! Wednesday September 24.

Playing Politics

As Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke go before Congress this afternoon, Washington is beginning to play politics with Paulson’s plan. "The administration has to present this as: 'If you vote against this, you want to kick people out of their homes,'" said Jim Cramer, referring to the government's proposed bailout plan.

My Financial Opinion Times Four – American International Group (AIG), Freddie Mac (FRE), Fannie Mae (FNM), Washington Mutual (WM)

Cramer offered his opinion on four financial stocks. And, no, they’re not necessarily all sells. He laid out strategies for trading Washington Mutual, American International Group, Fannie Mae and Freddie Mac.

• People see potential for Washington Mutual, too, he said. "There are a lot of people who feel like the moment the plan gets in, there's going to be a premium bid for Washington Mutual. I think that's just ridiculous."
• American International Group is "a total loser. I think AIG would be down substantially if not for the reason you can't short."
• Freddie Mac and Fannie Mae are "interesting." Since you can't short them and since both companies -- and particularly Fannie Mae -- have portfolios that would benefit "greatly" from the government's plan, I can understand why some might see a rational for owning them and flipping them. But "I don't want to buy any dollar stock."

Drilling Winners - Schlumberger's (SLB), Transocean (RIG)

Lastly, Cramer offered his opinion on Transocean and Slumberger two stocks in a sector that’s trading erratically. Cramer said that if the rules against offshore drilling are done away with and "we actually open up our shores, Schlumberger's a big win, not just Transocean." Transocean is the leader, he said, and "Schlumberger will follow."

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Comments

[Kath H.:]

People will still get kicked out of their houses. Let housing prices tank and they can get back in sooner. I was renting as I moved a couple of years ago and foresaw this fiasco.
But my landlord quit paying the mortgage, but kept the rent money.

Cramer is just pimping for the bankers. Notice that no one is talking about adding a repeal of that bankruptcy law passed a couple of years ago.

There is far more wrong with our economy, which is based on growth with cheap labor, than just the mortgages. It is riddled with Ponzi schemes such as Social Security.

If free markets are not allowed to correct, then let's just nationalize banks and houses!!

2008 Sep 24 06:48 PM

[sickofthehype:]

The free market would correct all right, and we'd be in years of demise. There's a LOT of things wrong with this country, however, without banks lending money there is no growth and therefore no climbing out of the hole we're in. We're a capitalist society and we need CAPITAL to get back in the swing of things. Sure, Cramer is an idiot. Do the reverse and you make more money than if you follow his screaming advise - which changes with the wind. But read the Buffett interview on his thoughts about the bailout.

Greedy PEOPLE got us in this mess. Each Wall Street firm is comprised of PEOPLE, despite their lack of consideration toward anyone but themselves. But unfortunately those same people have put this nation in such a situation that the plan is the only option to avoid catastrophe. Like it or not.

2008 Sep 24 07:39 PM

[turkeyeyes:]

Thanks, Einhorn for creating a panic and a bank run.

2008 Sep 24 07:53 PM

[downtoearth:]

WaMu isn't going anywhere (but it could be sold).

With all the recent bad news about it, WaMu's retail deposit base must have been diminished enough so that by now, If the FDIC had a mind to take it over (since it is watching it "closely"), it would have done that by now. Why hasn't it? Again, why hasn't it?

This delay tells volumes.....

Add to this the following:

If the TARP program is passed (which it will be now, because if it isn't, and after what the president and Buffet and Paulsen and Bernanke said today, there will be a bank run for sure), the FDIC will NOT shut-down WaMu. If they did grab WaMu after TARP is passed, it would be the biggest political disaster and embarassment for Congress (let alone the President) (i.e "we just committed your money to a "fix", but, sorry, the biggest Thrift failed anyway??? Ouch, and then another bank run for sure.

Now the contenders: Goldman Saks? Think about it. GS is now a new "retail" bank which needs retail outlets and would no doubt like expansion potential; and has new capital; Does Warren really have his sights on another west coast banking franchise?

Or how about that Spanish bank (the name escapes me presently). WaMu's numerous branches are in California, Florida, and Texas. See a pattern? One which a "spanish" bank might find attractive?

And I could go on.

But the bottom line is that WaMu will not be grabbed by the FDIC (nor will its share price therefore be reduced to zero) at this point in time. Such would not only be a financial and economic disaster, but even more significantly now, a political nightmare as well.

But what's going to be the ending value? What will be the sales price?

Hmmmmmm

Mike

2008 Sep 24 11:40 PM

[williambanzai7:]

Bush Bailout Rising
(to the melody of Bad Moon Rising
Creedance Clearwater Revival)
Adapted by WilliamBanzai7)

I see a a Bush Bailout arising.
I see trouble on the way.
I see fiscal earthquakes and lightnin.
I see bad economic times today.

Chorus:
Dont listen to Hank n Ben tonight,
Well, its bound to take your net worth's life,
There's a bailout on the rise.

I hear deficit hurricanes a blowing.
I know the end is coming soon.
I fear rivers of debt over flowing.
I hear the taxpayer voice of rage and ruin.

Chorus
Dont listen to Hank n Ben tonight,
Well, its bound to take your net worths life,
There's a bailout on the rise.

Hope you got your assets n things together.
Hope you are quite prepared to die.
Looks like were in for nasty market weather.
One eye is taken for an eye.

2008 Sep 25 12:48 AM

[downtoearth:]

Hmmmmm (continued)

And why did Paulsen last Friday state that only US banks would be entitled to the TARP program's benefits, and then on the following Monday state that foreign banks who employed United States citizens would also be eligible?

Could it be that either that spanish bank Banco Santander, or Toronto Dominion are the ones who are now the highest bidders for WaMu?

the pieces of the puzzle are beginning to fall together......

2008 Sep 25 01:13 AM

[Ishortyou:]

small regional banks are going to feel the pinch a bit more after the plan, so thats why WaMu wants to sell quick before filing for bankruptcy. The buyers though would prefer to buy it after bankruptcy to pick up the good body parts and left the rest of the roten meat.

2008 Sep 25 07:42 AM

[downtoearth:]

fell the pinch AFTER the plan; that doesn't make sense to me; it seems they would feel a more immediate "pinch" if WaMu fails (FDIC takeover, Chapter 9, whaever); i.e. if the largest thrift fails; people will be lining up at their comparatively "smaller" banks by the droves....

2008 Sep 25 09:01 AM

[Noz:]

I'm voting against this and people need to be kicked out. Tough if you ask me. Way too many people got greedy and stupid. Is that my fault? Is that the fault of anyone here on this forum who was responsible and lived within his or her means?

If we can do, why the hell can't others?

And I'm supposed to bail out these morons? Screw em...they need to fry.

2008 Sep 25 12:19 PM

[bassmaster17:]

The greed has been encouraged...this will help the global economy, but the CEOs of those companies and some management better go to jail and get heavy fines, because, if not, it will happen again...and soon...wihtout this we would enter great dep part 2...just think about how strong the economy and world would be without these rougues that screwed it all up. I agree with Noz, they should fry, an example must be made or the taxpayers will feel fleeced. Short the dollar and buy comms, the deficit is on the rise, I hope the gov. does not go bankrupt.

2008 Sep 28 01:15 AM