Cramer on BloggingStocks: Once Main Street feels the sting, it may be too late

Is this the same man who said not to buy airline stocks after 9/11, and stay away from GM stocks at $18.00? Now see how these two stocks increased in value. Cramer is just human, we forgive you. We still make the last call at the end.

Here's a thought...live within your means! Don't buy things you can't afford with money you don't have to impress people who don't really matter. Had the banks and mortgage companies NOT been so "creative" with helping people who had too much debt and too little savings get homes they didn't qualify for then we wouldn't ALL be in this mess. The greedy banks and mortgage companies are responsible for this nightmare in the making because they refused to deny mortgages to people they KNEW couldn't afford to buy homes. Yes, my parents had a mortgage, but that was the only debt they had. They didn't buy anything they couldn't afford to pay for with cash. I lived beyond my means and had a lot of unsecured CC debt until about 4 yrs. ago when I got a revelation about how much debt and how little savings I had. I now live within my means, the only debt I have is my mortgage, and I have a nice little savings for the inevitable rainy days that will come. Living this way is so much better because I can sleep soundly at night.

I believe it was Cramer that emphasized the fact that, as opposed to the last disaster in the market we now have predominently fixed rate loans, where in the previous market they had predominently fixed rates. I believe the biggest fall-out in the market will be those of us who have adjustable rates. As an example my rate went from 4% to 8%. This is on 1.2 million in loans. That's equates to an extra $4,000 a month in payments. The purpose behind the adjustables was so that the money investor could continue to maintain a fair return on their money. So how is it that with a just above 6% mortgage rate I am currently paying 8% on an adjustable? I remember when the government gave each of us a $200 gift to help stimulate the economy.....I wonder what impact a minus 2 % to 4% of any reasonable loan balance will have on the economy. 2% of $10,000 would equal $200 a year. You work the figures on the average loan balance today and see what the minus dollar factor is to the economy. I have two other comments. One, on homes sales; appraisers cannot help perpetuate a higher priced market, their appraisals are based on past sales in the market. The market through whatever happened perpetuated the increased values by purchasing the properties at the higher prices. two, whether or not the Fed anticipated it or not, their lowering of the discount rate enticed any logical thinking person to refinance at the much lower rates. Then when the Feds took the discount rate from 1/2% to almost 6% it was a stab in the heart of the American people. The outcome of this action with the predominance of adjustables was quite obvious and obviously disasterous. So, who's the culpert, the lenders, the government or the people themselves? And who or what is in the position to amend this travesty?

Will stricter laws on who qualifies for a home loan prevent another mess? Anyone could qualify for a loan at a Fed Fed rate at 1.5 percent. The problem is what happens when interest rates move above that. Did anyone factor in qualifying a loan based on the rates above this? Then these folks who qualify at 1.5% would not qualify at a rate above that. Sounds like lenders hide that fact just to make a loan for commission. Now this is returning to bite lenders like Country Wide homeloan in the back.

Mr. Cramer,

Accountability has been abandoned. Computer models based upon ever-escalating asset values is not a concpet; it is an unaccountability. Investors who purchased the unaccountabilities and Main Streeters who splurged on the geyser of unaccountabilities are themselves unaccountables. There always comes a moment of the end; as occurred in the former Soviet Union because socialism, with its foundation of the antithesis (asset alues will never rise) is likewise an unaccountability. Cycles exist as uncirumventable corrections. If we delay the cold, we catch penumonia. Following the Great Depression, the nation returned to sensibility and prospered moderately and sustainably from 1940 until 1970. The credit and housing bubbles are nothing new; they began in 1980. This correction will be painful. There is no remedy of any substance to alleviate Main Street, and there is only more of the disease to support Wall Street . . . but this time, no one is sufficiently stupid to purchase any derivative marked to model . . . . praise the Lord!

MR.CRAMER,
I HAVE BEEN READING SOME OF YOUR STOCKS THAT HAVE INTERESTED ME IN THE WEEKS AND WHAT DO YOU HAVE TO SAY ABOUT VERIZON (VZ)
AND COMCAST (CC) ANDANY OTHER STOCK THAT YOU HAVE REPORT LAST WEEK OR THE WEEK BEFORE THAT AS WELL.

THANK YOU,

CHIP ZIGULIS
BOSTON, MASS

The mortgage bomb is not the only bomb to hit the market. Sally Mae is going to be the next area to explode. As the various attorney generals keep uncovering behind the scenes commissions and gifts to school officials the students are becoming saddled with loans they may never be able to pay back. Also, students are being solicited for additional personal loans added on to the student loan. In the near future, this will seriously hamper the students ability to borrow money for cars, houses, and other goods. Where is the Fed and the rest of the Federal Government looking when they themselves are a major part of the problem. Is the fox watching the hen house here or what.
As for interest rates, they are probably 2-3 months too late to save the market. Why? Because we no longer have much of a production core in our economy. We have given our jobs overseas in favor of higher immediate profits. There is very little production base so that when housing dropped there was no other industry or industries collectively that could step up and cover the loss of jobs. We need to get the housing market or another large U.S. manufacturing industry going to carry the weight. We cannot live solely on the service industries.

Do you think the disenfranchised middle class minds if housing prices fall? Here in the SF Bay Area few people can afford a home. Nurses, teachers and hospital administrators rent studios or shared housing for a huge chunk of their net income. In middle America low wages and high real estate taxes make it difficult to buy the even average home which sounds cheap to us in the Bay Area. It costs about a dollar to buy one apple where I live; you can get new clothes for the price of dry cleaning. My little 5% yield on my super money market account has just fallen to 3.5%, tightening the noose a little more. When America was king (in the 1950s & '60s), nearly anyone with a job of any kind could buy a home and put food on the table. A mother could work on homemaking and raising children. Just who does it serve to have sky high housing prices and low interest rates?

For most of America's home not up for sale, we would like to see the prices come at little. This will ease the amount of property taxes we would have to pay. This money would be like a pay raise to our pockets. So much money going to taxes acts like a Federal Funds interest rate increase. Most home owners do not use their house as a investment. It's just a place to live. If the Fed lowers interest rates on Sept 18th, 2007, this would keep the prices of home high and act like inflation. In fact rates should go up so the price of home moves down even more. Then more first time buyers could qualify for a home loan.

The biggest reason to drop rates has nothing to do with the state of the economy. It has to do with peoples unrealistic expectations. If rates drop some folks will be better off and so will Wall Street, however the value of the dollar will sink further and fuel cost will rise further. EVERYONE will be affected by higher fuel costs. Consumers will pay more not just becuase of lower dollar buying power but everything is shipped by truck at some point just to mention one industry impacted.

On the positive side it might help the balance of trade and be a "back room" way to reduce energy consumpton.

In any event the market expects a cut and if one is not provided look out below.....that more than the facts will affect the decision

100% refi's.100%purchases.neg amortization loans.stated income loans and lies .people are buying homes that they cant afford and cant repay.what happened is natural result of years of bad lending and bad loans .nothing last forever everything comes to an end. whats comming is a lot worse .i dont think we saw the end of this crisis.time to go back to traditional lending and be sure that people can afford what they are buying . NO MORE STATED INCOME LOANS AND LIES PLEASE .!!!!!!!!!!HANDY MAN MAKING 20K A MONTH YA RIGHT >>>>>

I think I hear the fat lady singing.

Who is kidding whom, this is egregious to every person who believes in the American Dream...Our homes are going to be empty, in Michigan they cant' even sell the foreclosures right now. There are no investors waiting in lines here. I was counting the houses up and down the streets, this is horrible...I may not be chicken little like Jim, but I am definitely the Fat Lady Singing...Its over... People have gone too far in too many areas of their lives. Judges have thrown thrown Lady Justice out of the window, Attorneys have thrown out the laws in favor of plea bargaining, Financiers have sold the cow 10 times over, and they even have to wonder what the Feds are going to do...If they don't want every one of us out on the streets and the foreign countries owning every asset we have they will have to shore up this boat and paddle like they never have before...If in the least to buy time to figure out what really has to be done A.S.A.P., this is not something to point fingers at, or to be taken lightly, you know that bible verse, he who is without sin cast the first stone, well, start looking at your own Glass Houses, if you own them outright , and have enough cash in gold to pay your taxes till the cow does come back home (we are solvent again), because everyone of us is in this boat together, if one falls we will all feel it in some form or manner, we need corrective actions and some form of accountability, but lets not be foolish, we would have so many in jail/prison that we would have to build new facilities and that is a whole new issue... We have got problems and they are not small, we need to Pray, be Rational, hold each other up, and press forward... We have thousands of men and women overseas that need us to be steadfast in order to "pay" for their ride home soon! And HOME better be in their names as well as ours, AMERICA.... Stop the blame game, Think of others, the selfishness and greed is what put/got us in this mess.... Haven't we learned anything yet?

Attened a diner at Cambridge University.Next to me sat a retired economists from a western country--he headed that country's top eco. poisiton for ovwer ten years. He commented, "It is obvious your (USA) leaders have given up on saving the dollar." This comment haunts me--should it?

This is the beginning of the Stagflation we experienced during the Jimmy Carter Presidency. This did not happen because of any action or inaction by the Carter government, it was the hangover from the Nixon Wage & Price controls.

As much as governments believe they can tame or direct an economy, the underlying forces will still remain and will eventually manifest in a far worse way than if they had been left alone in the first place. Today we are experiencing the effect of our loss of manufacturing base and its high paying jobs, the ridiculous trade imbalance, real wage erosion, the declining middle class, unbelieveable budget deficits, tax reduction for the wealthy, tax increase for everyone else, years and years of artifically low interest rates and rising unemployment masked by a deceptive and dishonest count.

That sound you hear is our economy crashing.

When you look at this mess we are in now you have to shake your head and realize we just had the worst seven years in history for the American people with another year to go. How could any president not step up to the plate take responsibilty and step aside so someone else can start working out our problems. If it were just just the mortgage problem then that would be one thing, but Katrina, The World Trade Center, and Irag. Where does it end and how can we as a people unite to show the world we are not about oil, greed, & self interest as we have these last 7 years.

People don't have to cry for the overextended, that's what bankruptcy lawyers are for. People and companies will get their debts restructured in a chapter 13 or if they are really bad off they'll get their debts wiped out in a chapter 7. They'll start over. It's capitalism. So everyone will do what's best for themselves or their company.