TheStreet.com's Jim Cramer says the whole market pays for the Treasury's purposeful indecision. What are they going to do about the preferreds? Are they going to let them go down the drain? Are they going to keep current management? What are they going to do to reassure foreign governments about the obligations.
Don't worry. We will know this weekend.
Oops.
That's how we left last Friday, with an understanding that the Treasury knows that every day it waits to take over Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take) is a day when things get worse, when the nation's credibility darkens -- as this is sovereign debt's repository -- and when rates can't go down.
But the Treasury's not like what we think it is. The Treasury wants to wait for a collapse; it wants everyone to know that Fannie and Freddie are history because it is afraid. It doesn't want to be interventionist, and if it does, it wants the people who run Fannie and Freddie gone, and yet it doesn't' really know how to do it until we have total collapse. Then it has the cover of total collapse and doesn't have to say it intervened or bailed out or whatever it is so worried about.
Meanwhile, the whole market pays for the Treasury's purposeful indecision, and we can't get a bottom, which is, alas, the root of all evil and trumps the earnings for all but PepsiCo (NYSE: PEP) (Cramer's Take) and General Mills (NYSE: GIS) (Cramer's Take), or at least it seems so. Enough people thought Treasury would enact its secret plan this weekend that there is a letdown today, a letdown that could only be counteracted by oil crushing through $110, which will be hard to achieve.
So we stay in limbo and bet that Fannie and Freddie common get crushed by the shorts, which then causes worry in very solvent and good paper (i.e., the mortgages that Fannie and Freddie package) as well as the very bad paper (i.e., the preferreds). A risk-taker buys Fannie and Freddie's senior debt. I don't know anyone who thinks that will be wiped out, but everything else is so up in the air that you know it will pollute the market as surely as the post-Olympic industrial China pollutes the air over Beijing.
-----------------------
RELATED LINKS:
Fannie, Freddie Roil Financial Sector Funds
Stock Indices Can't Shake Negativity
-----------------------
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Pepsi and General Mills.
Five winners of a weak dollar: SBUX, PEP, AAPL
Twitter valuation off by half: NeXt Up Research
Comfort Zone Investing: The unmighty dollar
