Cramer on BloggingStocks: Belly-up builder would tip the scales

The last thing the Fed should consider is
another reduction. The last two reductions have
done absolutely nothing to help the situation.
And a further one would only make it worse.
Mark My Words.

The federal gov has spent all of us into bankrupts and are childerns childerns etc,etc We are all going to feel the bite .

Each time we cut the interest rates, it cheapens the dollar, which causes oil prices to rise. So who is Mr. Cramer rooting for, the well off, or the people who will be deciding if they should pay for heat, food or prescriptions this month? I appreciate his knowledge of the markets, I am one of his fans, but if middle America doesn't get a chance to recover, it'll take more that interest rate cuts to bail out this country!

The feds do need to reduce the interest rates to
stabilize the housing market so that the inventory
of existing comes can start moving and the builders
can start building again, Think about what this has
done to the blue collar workers that are not working and providing for thier familys because the building industry has gone to hell in a basket. This
is a leason learned for all of the investors and lenders that saw dollar signs and the fast buck with
no regard as to the future or the industry.

But who are the builder's hiring? Immigrants with or without their greencards? If we had the $400B back to rebuild our infrastructure across the country, that would be real jobs for a lot of people. We have poor leadership on both sides of the aisle, with more coming next fall. They are all afraid to say what is the truth, lest they get cut-off from the Corporate feeding trough.

Let the builders and the banks go through the pain they deserve. We don't need to build more houses ... it is way overbuilt and prices should come down to make it affordable. If we are to build then lets work on infrastructures like new highways and bridges and maintaining existing ones to make them safer. Low interest rates is what caused this mess and we don't want to make it worst with the dollar falling even further.

The Fed is there to protect the dollar and fight inflation and not to prop up Cramer and Wall Street and bankers and mortgage lenders.
We need Energy Independence in 10 years to get away from $200 per barrel of oil in the future and save the dollar.

If Fed cuts rates again that would that would solve only one problem.

That problem being home heating ... since the dollar will be worth next to nothing and most countries are starting to shy-away from accepting US dollars ... we could cash in our life saving (IRAs, CDs, Bond, etc.) convert them to dollar bills and burn them to heat our homes this winter.

The system is broken. The fed made money so cheap that anyone could buy any house with 100% financing through liar loans. The builders then took further advantage and sold high rate mortgages and more homes that consumers couldnt afford. Throwing good money after bad, or continually tweaking the interest rate prolongs the inevitable. If it doesnt crash hard now, its going to hit like an apocalyptic asteroid later.

Nothing new here. Another RE crash just like the 1980's S&L debacle. As long as the government ignores its responsibility to maintain an orderly marketplace in favor of get rich quick schemes, that inevitable end up being subsidized by government, we will continue with these idiotic boom bust cycles.

Prediction for June 1, 2008 - 1 Euro = $2.00 USD

Jim: You keep saying the same thing - cut rates. The stock market needs a boost, the housing sector needs a boost, etc. - same answer cut rates. It is not a panacea and in fact, would make things worse. We are at the limits of dollar disparity against other currencies. Oil is traded in dollars, is already at prices that will not help the domestic economy and another rate cut will just make this worse.
As I read the comment board I find that the majority is in my camp.
As to the builders, I agree, but some are going under no matter what the Fed does. Here is the simple problem. There are too many homes on the market and that is just the re-sale sector. The builders have too many completed and on-going projects, all with high prices, that add to the glut. Some of the homeowners - the ones of longer term - have leeway in price and these homes will have drastic price reductions, but sell. The builders do not have this luxury and until there is some market balance - they are stuck. If they have reserve captial they will survive, if not, T.S. There is no way out unless we go back to voodoo style loans which is how we got here in the first place.
By the way, I'm on record as predicting this scenario two years ago. Now, fifty percent of the economists are with me. This is the result of greed, stupidity and Congressional oversight that failed and no amount of hype is going to change the outcome.

Jim - as you know making high returns is all about risk. If you can't deal with it buy t-bills or CD's. If the fed is going to bail eveyone out where is the risk?

Cramer is right on. The Fed needs to stop basing its actions on backwards-looking data and inject a modicum of common sense. The real issue is risky loans issued by incompetent CEOs and inneffective Board oversight. This is a financial "Enron" that will hurt people who want to retire in the near term. Let's hold these greedy people accountable!

Mr.Cramer have this notion that the Fed can solve ALL our market problems by tinkering with interest rates. Japan's zero interest rate did not help their economy ... but the speculators that use their currency in carry trades. So Mr. Cramer what should the Fed do when they run out of "interest rate" bullets? Pay us to borrow money with negative interest rates?

Every organization that wrote mortages to get people into homes that otherwise would not have gotten a mortage without good debt to income ratios and had to come up with creative financing should be let to slowly and painfully go into bankrupcy. Those that lent money knowing or was obvious that they should have know that these new mortage products would come back and take away the dream so many of these people worked so hard for.

That is why the big track builders have their own mortage companies and turn around within 60 days and sell off your mortage. The banks that brought those mortages should pay also. The way to make them feel the pain is for evey shareholder to sell their holdings.

Isn't it amazing that the big companies like Bear Sterns, Leman Brothers and all the institutions that spout out their ratings on companies to buy, sell or hold are the same ones who diddn't see this all coming. With that in mind do you want to follow their ratings when they were not able to protect their own assets????? It is so bad they can not even figure out how much exposure they have - that my friend is scary.
Think about it.

cramer, the clown of wall steet. gives out advice on buying and selling stocks with the seriousness of a drunken sailor. how can you take a guy like him seriously when he spent his early years smoking dope in the grave yard next to the old trinity chucrh on wall st.

Jim - if your so concerned about the builders why don't you invest all your money into their stocks? Why should the government invest our money.

Oh yes Jim, lets cut rates and bail the lenders out for their several years of total stupidity!!! To hell with saver.

I never approved of the subprime market. People not creditworthy should not get credit. There should be stiff regulations on lending practices. I would be for the lenders to renogiate some of the loans. The problem is falling out on small investors who had nothing to do with the supbrime market as the stock and bond markets tumble. People who invested conservatively are being hit by this. These lending practices should be illegal and the bankers prosecuted. What they did was the same as taking the money of the common stockholders' and the bondholders' to the casino. I do think the bankers who made these arrangements should be jailed for what they have done. It was nothing but greed, but the small investor, saving for the future and retirement is getting shafted. The Wall Street bankers will get bonuses, and they will be hatching their next scheme. The government needs to regulate. I am sure Cramer would not agree with regulation or jailing the bankers, but that is what I want, and I am sure he was all for easy credit when there was no pain. I would never get into one of these arrangements, and anyone who did was a fool, and I have no sympathy for them. One cannot live on credit or over one's means.

I agree with Jeremy. I do not like the idea of helping those who lived beyond their means, but it seems to be the best alternative. This way the government would not be bailing them out. Besides sending the bankers to prison for about 25 years for what I consider fraudulent practices, they must be stripped of their compensation packages, including retroactively. For the bankers to lose all their compensation and 25 years in a maximum security facility (no country club prison) would make them feel a lot of pain. There would be severe downside risk for their decisions. Millions of middle Americans invest in these companies because they are considered sound, and middle Americans cannot get all that much information on the quality of what is on the companies' books. I did a lot of hunting, and some conservative people are concerned about how much more the honchos have buried in their books for now but nobody knows, waiting to be written-down. It is even affecting municipal bonds, something the "experts" did not expect, so they were wrong again, and municipal bonds are very conservative. The people losing their homes deserve to be penalized, and I have no mercy for the bankers, but middle Americans who do invest prudently should not take the hit. The bankers have stolen the money. These types of business practices are inherently unsound, and it is theft. Washington failed because those crooks work for Wall Street crooks. Regulation, severe jail sentences and renogiation of those loans that can be saved and the absolute end of the subprime market needs to take place. Wall Street needs serious regulation. Lending practices must have strict regulations. The retail investor is too often left holding the bag. I do not like Cramer. He is a Wall Street crony.