Duude

Time to Hoard Cash - Cramer's Mad Money (10/6/08)

Wow! What a sack of crap! Thank God Cramer doesn't work for the government.

" With the bailout package now in place and the FDIC insurance limits raised to $250,000 per account, he said the market has the tools it needs to work out the rest of its problems without government intervention."

Which government intervention might that be? What here isn't government intervention? ITS ALL GOVERNMENT INTERVENTION!

"Furthermore, he said, a bold statement from the FDIC that the seizures are over will go far to stabilize the market."

No, that would be seen as empty talk. It would be the last seizure until the next one comes along. Nobody but Cramer would buy that.

"He suggested first buying individual home loans, a move which will allow the government to immediately end the foreclosures and begin the renegotiation process to lower the terms of the troubled mortgage loans while taking the toxic assets off the balance sheets of the banks."

What are you kidding me? First, do you know how many individual loans there are? What would be the criteria in deciding who's loan to rescue? Those that are 3 or 4 payments behind? Well, count me in. I haven't missed a payment yet, but I would love to get mine renegotiated too. Talking about moral hazard. We don't need to make matters worse.

"Lastly, Cramer said the government should buy the credit default obligations (CDO's), but only after it has exhausted the individual loan options. For these CDO's, Cramer suggested they be grouped by geography and vintage, so the government can hold them until their values increase, then sell them in an orderly manner."

Impossible! The market on these things is far too huge. I like better the clearing house the Fed is setting up. Anything that adds transparency to the situation will reduce the fear associated with these assets. Additionally, it will provide an actual marketplace to trade them as the market re-liquifies.

"Cramer said the only prudent thing to do is horde some cash. He said he doesn't take the term "depression" lightly, but he feels the market could retest the lows of October 2003, when the Dow traded at just 7,700"

This is just the kind of talk I like to hear. Capitulation only comes with virtually every talking head and wall street pundits telling us the sky is falling. A bottom must be at hand.