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Cramer's Mad Money - Paul Krugman Is Wrong (8/10/09)

Kramer is part of the US Gov attempt to reinflate the economy. All mainstream media is screaming recovery at every opportunity. Nothing has changed in the last 4 months other than the market is up. Unless you bought low and are now selling high that means nothing other than the confidence it inspires. The residental housing market is still mired in deep trouble. There is a shadow inventory the banks are not putting on the market to keep prices up. As unemployment worsens the number of foreclosures is bound to rise. Supply increases, demand falls so more loans go bad, the banks can not or will not lend and even more banks fail. The economy is caught in a cycle of deflation and rightly so after the last decade of cheap money inflation. As the US consumer sits on the sidelines scared or simply out of money/credit the economy stays depressed. Some stocks will make money, I happen to like Wendys as I believe fast food will be a winner as more Americans trade down to save money. But do not make the mistake that we are past the problems.