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When we get a down day we get a definitive story, THE story, the one that worries everyone. Two weeks ago we had one about the suddenly dangerous Treasury bill market. As someone who sold Treasury bills when they were at 14%, I still can't get nervous at 4%. And the U.S. had a AAA rating when we were hawking them.
Yet, that was the fear. OK, I'm shaking.
I make no mistake that I am worried about the Obama agenda because he does not have a check in Congress. He actually gets it done. He is certainly not the friend of business, and his best job creation so far is the prolongation of the car agony to keep people at work. Until new weekly unemployment claims go below 600,000, those who proclaim the recession over are simply foolish. It's funny -- the guys who say it are the same guys who thought that Bernanke should have been raising rates, not lowering them. They never admit they are wrong.
I do a whole segment each week just talking about where I am wrong. Maybe that's one of the reasons that I am so easy to criticize. They can say, "Look how wrong he was." And I give them ammo. But that's simply because I am from a hedge fund culture where wrong meant lost money and lost money meant failure and failure meant take your clients or job away and no way to meet payroll.
Pretty simple.
To me, what we should have been focusing on is the countdown to raise more money at the bank level and how we are at the lowly Fifth Third (NASDAQ: FITB) (Cramer's Take) level, and how most banks are still above where the deals occurred (with the big outlier being Capital One (NYSE: COF) (Cramer's Take) because of the president's endless protestations against them). We ignore Toll's (NYSE: TOL) (Cramer's Take) call that the bottom is at hand, which occurred this period. We pass over some huge upside retail surprises as if they didn't happen. Ross Stores (NASDAQ: ROST) (Cramer's Take) does matter. So does Macy's (NYSE: M) (Cramer's Take). We look the other way at the dollar's decline when it will reverse many firms' earnings problems.
Again, there are plenty of things wrong, most importantly a president who is not creating enough jobs to offset an agenda that can cost a lot of jobs and a recession that is not ending anytime soon. That makes an assault to higher levels problematic.
But if you told me three weeks ago that every major bank would need capital and then be able to raise capital, I would have said you were crazy.
I would have been too bearish, and it is very easy to be bearish.
It's important to keep that in perspective when you panic on the AAA rating of our nation.
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)
5-22-2009 @ 1:13PM
Gary said...
Recession is over.
5-22-2009 @ 2:03PM
gilbert morrow said...
Raise capitol , write down loans , and then assume the write downs are profits , presto , instant capitol , not really capitol but smoke and mirrors that appears to be capitol .
5-22-2009 @ 2:06PM
gilbert morrow said...
Write down paper , call the write down a profit and presto , PROFIT !
Smoke and mirrors , fuzzy math !
5-22-2009 @ 2:09PM
dan said...
Question: How do you create jobs and keep a business going if you can't raise capital, barrow? The toxic assets are sitting on the books of these banks but the Fed decided to do capital injections and let them handle CDO's and CDS's themselves. Why, because if they didn't the whole system was going to fail. Now it's up to these same to large to fail banks to fix themselves, the very banks that were suppose to regulate themselves. I'm dubious.........to say the least. It will be Obama and Geithner that will have to lead us out of this mess because the banks can't seem to run their own businesses without bankrupting the country.
5-22-2009 @ 2:11PM
beachpaul said...
The real story? They are zombies, dead men walking. There is nothing wrong with optimism until it meets the face of reality. Then its just another mask, worn foolishly at best, fraudulently at it's worse. Analysts lower the bar six inches from the ground, a company pole vaults it, and the media acts as if that company hit a home run in the bottom of the ninth. Yeah, it is show business, but show biz' is about suspending your audiences disbelief. It is mostly, a learned craft that aspires to and, on a occasion, touches art. It isn't cheerleading. It is a business. But it's not just about talking a dog off a meat wagon. If only life was as simple as a hedge fund, eh Jim?
5-22-2009 @ 2:42PM
dan said...
These to large to fail banks are trying inflate the bubble again but the real economy, main street, is where it's at. If we are to ignite our economy then we must invest in America, not Wall Street. The consumers have been deviously brainwashed to think that the economy revolves around Wall Street, the advent of 401ks. The US economy will go nowhere trying to inflate the real estate bubble again because the consumer is tapped out. Real Estate has fallen to where it should be and is not a viable alternative to industrialization. It's time to get back to the nuts and bolts of what drives world class economies, and stop trying to inflate housing prices so that banks can make loans and then package them up to be sold.
5-22-2009 @ 3:43PM
bnfox1957 said...
Cramer says Obama is no friend of business??? he is the best friend the banks ever had!
5-25-2009 @ 5:30PM
plankton81 said...
Jim, let us be honest, there is no upside to this whole mess in the near term. The president is owned by the unions who will bankrupt state governments, and expect the 55% of working people to pay for it. There are just not enough people working to support our welfare culture let alone growth.