You want to shoot yourself when you read these headlines. "Local Banks Face Big Losses," is the lead story in The Wall Street Journal, a fomented survey story telling us that commercial lending is going to sink local and community banks under a pile of $100 billion in bad loans.
This is news?
So what!
That's right, so what. What, dear journalists, do you think the point is of ring-fencing some strong national and regional institutions? It's to buy these troubled small institutions. Why, nightly, have I been recommending FirstMerit (NASDAQ: FMER) (Cramer's Take), and Glacier (NASDAQ: GBCI) (Cramer's Take) and People's United (NASDAQ: PBCT) (Cramer's Take), and First Niagara (NASDAQ: FNFG) (Cramer's Take)? Because those are the banks that will take over failed institutions.
Oh, and within a week, the government will have $45 billion in Troubled Asset Relief Program money back if it wants to save all of these institutions.
Or how about the lead story in The New York Times: "Efforts to Repay Bailouts May Undercut Benefit for Taxpayers." How in heck does this stuff get past an editing desk? Has it dawned on people yet that the government could end up making a fortune on TARP between the high rates and the warrants? Isn't that the real story? With the exception of AIG (NYSE: AIG) (Cramer's Take) and possibly Citigroup (NYSE: C) (Cramer's Take), I think the government will come out ahead on TARP and AIG's problems were more "ethical" so to speak, than banking. If you have committed a fraud and it is of the size of AIG, you can't expect the back stopper of the fraud to make out OK, and that's the U.S. government.
I am beginning to think, though, that Citigroup might come out of this OK and so will the government. That's a huge amount of money no one thought could ever come back.
I read these two stories and I feel like I have slipped down the rabbit hole!
There are good things happening. Really good things: TARP paybacks, great numbers from Lowe's (NYSE: LOW) (Cramer's Take) and Home Depot (NYSE: HD) (Cramer's Take), the weaker dollar -- yes, that's a good thing -- and a bottoming in housing.
Let's read about those, for once. At least that way, even though the press will have done its level best to keep you out of this market, at least you will know why the darned thing's rallying!
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 was long Home Depot.
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Reader Comments (Page 1 of 1)
5-19-2009 @ 8:33AM
nickerson said...
Here we go, load mouth Cramer taking his talking points from his CEO at GE. This guy should be in jail with Madoff.
5-19-2009 @ 11:16AM
Iridium said...
Double digit million dollar declines in revenue are great numbers.
Thanks for proving Wall Street is insane.
Housing prices are predicted to continue to fall by at least 15% through the end of the year. Foreclosures are setting records. Unemployment is far from peaking.
The picture looks great though Jim. See you only make money if people are buying and trading stock, regardless of the real fundamentals of the economy. A fake rally still means money to you. That is why you want this total BS rally to continue. It is driving everything up. In so doing it is driving every art of the real economy down.
The stock market should never have become an institution where fortunes could be made. The pay scale of Wall Street is so far out of line with the rest of the country that it needs to be taken out. Here's a question to ask. If the only way to make money in the economy is to trade stock, how are those stocks supported?