How much of the decline is Madoff? How much of it is no bailout? And will the bulls who love these situations come in and stabilize the market at the opening? Or are they coming to their senses for once and just letting the market go down to some level where it belongs, given that the fundamentals are deteriorating so quickly?
If it weren't money, we'd be laughing at the last few days when the gold stocks roared and the commodities took over the market because of the "inflation trade." If there is such inflation, why in heck does the collateral go down every day? If there is such inflation, then why doesn't someone sell a T-bill, for heaven's sake?
We are in a climate of fear, with the spread of corporate over Treasurys at the highest in history, including the Great Depression. Why anyone is worried about inflation when we can't create credit is beyond me. Maybe I took the wrong course.
And why was anyone shocked that this quarter's not been a good one for Jamie Dimon at JPMorgan (NYSE: JPM) (Cramer's Take)? Did lots of corporate bonds get issued? Lots of new profitable mortgages? Lots of bad mortgages sold to TARP? Lots of M&A? Lots of new issues? Lots of securitization? Can someone get a grip? You think Citigroup's (NYSE: C) (Cramer's Take) having a bang-up quarter either?
So today we are back in bearland -- like we ever left -- except this time the two maulers are trust -- Madoff killed $50 billion in trust yesterday -- and, amazingly, the two last black holes, GM (NYSE: GM) (Cramer's Take) and Ford (NYSE: F) (Cramer's Take), which have not been filled. I think that had GM and Ford cordoned themselves off from Cerberus, and if the unions had half a brain something could have happened, but so be it.
I have said from the beginning that to remove the systemic risk of another depression from occurring, we needed to fix AIG (NYSE: AIG) (Cramer's Take), Citigroup, Fannie (NYSE: FNM) (Cramer's Take) and Freddie (NYSE: FRE) (Cramer's Take), Washington Mutual, Lehman, GM and Ford.
They were all done except GM and Ford. Those two were needed to keep unemployment below 10%.
It's the latter, which long term we all know is good, but short term causes tremendous grief, that will be tougher to fight, although the Madoff thing is going to scare hedge funds into readying themselves for more redemptions.
Here's my prediction. Every time we have opened down big, it has bounced back quickly.
So don't buy it this time.
Wait.
Because if it doesn't bounce back, the new ProShares Ultra Bear funds will take wherever it is at 3 p.m. and double it, so you can buy all you want at 3:45 p.m.
Jim Cramer is co-founder and chairman 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 had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
12-12-2008 @ 12:18PM
Bob said...
Attn CRAMER!
I have a patented invention that that will sell for less than $10 that will make ALL toilet bowl cleaning techniques obsolete.
Collateral product is 900% profit at a retail price of $0.50. 900% profit on a product that retails for $0.50 that makes every other toilet bowl ceaning technique obsolete
Supermarkets of the future will not have stupid goose necked bottles of anything.
Call me. This is a stupidly simple device that you'll recognize as soon as you see it. Selling 30% ownership to the first taker.
12-12-2008 @ 12:34PM
beachpaul said...
Cut the crap. The 8-8500 floor has to hold, otherwise the market will go down another 40%, period. If it drops to low 7's, BUY. Just like last time. Bulls and Bears both know this. That 40% would be suicidal for everyone, bulls and bears, employed and unemployed, public and private. As much as some of us would love it too, it's not going to happen. America flew the same flight path as Japan did. We will land in the same place they did. To expect a different result is insane.