TheStreet.com's Jim Cramer says Fannie and Freddie aren't the true culprits here.

The blowhards and bluff artists and the Gang of Four -- Ambac (NYSE: ABK) (Cramer's Take), MBIA (NYSE: MBI) (Cramer's Take), MGIC (NYSE: MTG) (Cramer's Take) and PMI (NYSE: PMI) (Cramer's Take) -- truly have blood on their hands for this moment. So do the ratings agencies, the mortgage insurers and the salespeople who packaged undocumented loans and pushed buying homes with no money down.

The whole apparatus stinks and we are now seeing the unwinding, but I think that the false assurances created by the Gang of Four and their insistence to not worry made everyone way too complacent. Their glib promises as well as the incredibly lax work of the ratings agencies, S&P and Moody's, enabled the whole edifice to be propped up.

And once it was clear to them that they needed more capital, they chose to forgo the window and attack the shorts. Had they raised the capital they needed and had the ratings agencies said they can't bless any more of this junk, we might have never been in this spot.

Last March, I wrote a post which suggested that the mortgage insurance industry would take a hit as a result of the subprime mortgage meltdown. Today's New York Times [registration required] suggests that prediction was correct -- two leading mortgage insurers are writing down the value of their subprime mortgage subsidiary.

Specifically, the Mortgage Guaranty Insurance Corporation (NYSE: MGIC) said last night that it would write down its $516 million investment in Credit-Based Asset Servicing and Securitization (C-Bass) -- possibly to zero. Radian Group Inc. (NYSE: RDN) which has a $518 million stake in C-Bass, also said it might have to write off its investment completely.

Meanwhile, NovaStar Financial Group (NYSE: NFI) whose subprime mortgages MGIC insures, has fallen 91% to $10.83 from the split-adjusted $116 at which it traded in December when I suggested shorting it.

MOST NOTEWORTHY: Chico's FAS, Inc (CHS), Live Nation (LYV) and Clear Channel Communications, Inc (CCU) were some of today's notable upgrades:

• Friedman, Billings, Ramsey upgraded shares of Chico's FAS Inc (NYSE: CHS) to Market Perform from Underperform and raised their target to $25 from $17 on valuation.

• Matrix USA upgraded Live Nation (NYSE: LYV) to Hold from Sell on valuation.

• Sanders Morris upgraded Clear Channel Communications (NYSE: CCU) to Hold from Sell, as the firm believes the disapproval by holders to sell the company will result in shares trading in the $34-$37 range.

OTHER UPGRADES:

• Lehman upgraded PPL Corp (NYSE: PPL) to Overweight from Equal-Weight.

• Friedman, Billings, Ramsey continued to recommend shares of Urban Outfitters, Inc (NASDAQ: URBN) with an Outperform rating as the firm has seen consistent progress at both the company's divisions throughout March. Friedman added Urban Outfitters to its Top Picks list.

• JP Morgan raised Sonic Corp (NASDAQ: SONC) to an Overweight rating from Neutral, and believes shares have priced in softer Q2 sales that were pre-announced late-February.

• Martha Stewart Living Omnimedia, Inc (NYSE: MSO) was upgraded at Bear Stearns to Peer Perform from Underperform.

• Morgan Stanley upgraded Mylan Laboratories (NYSE: MYL) to Neutral from Sell.

• Goldman Sachs upgraded the Mortgage Insurance sector to Neutral from Cautious.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Analysis provided by Paul Foster of Theflyonthewall.com:

U.S. stocks are mixed in lower into tomorrow's November employment report. The Dow was down 0.24%, NASDAQ 100 down 0.55%, S&P 500 down 0.33%, and the 10 year bond rates rose to 4.485%. The CBOE VIX was up 0.89 to 12.22.

The PMI Group, Inc. (NYSE: PMI), a provider of credit enhancement products that promotes home ownership, is recently up .97 to $45.40. PMI owns 50% of CMG Mortgage Insurance Company, which offers mortgage insurance for loans. FBRC says Washington "lawmakers appear close to passing the tax extenders bill that includes MI tax deductibility. If passed, MI tax deductibility will be a positive development for the mortgage insurance space as it would remove a competitive advantage enjoyed by 80-10-10 loans, which are the MI's primary competition." The vote is expected on 12/8/06. PMI call option volume of 6,141 contracts compares to put volume of 6,758 contracts according to Track Data. PMI over all option implied volatility of 21 is near its 26-week average, suggesting non-directional price risks.

Harley-Davidson, Inc. (NYSE:HOG) January implied volatility was elevated at 32, indicating movement. HOG was recently trading at $71.89. GSCO said "we think concerns over rising inventories and discounts on 2006 models could put downward pressure on the shares creating a trading opportunity over the near term. We would use any weakness in share performance to the high $60/low $70 range as a solid entry point." HOG January option implied volatility of 32 was above its 26-week average of 26 according to Track Data, suggesting larger price fluctuations.

Radian Group Inc. (NYSE:RDN), a provider of mortgage insurance products and services, is up $0.92 to $54.95. FBRC says Washington "lawmakers appear close to passing the tax extenders bill that includes MI tax deductibility." The vote is expected on 12/8/06. RDN call option volume of 5,086 contracts compares to put volume of 4,284 contracts according to Track Data. RDN December option implied volatility of 32 is above its 26-week average of 26, suggesting larger price risks.

Option volume leaders today were Ford Motor Company (NYSE:F), Boston Scientific Corp. (NYSE:BSX) , Oracle Corporation (NASDAQ:ORCL), QUALCOMM, Inc. (NASDAQ:QCOM) and Amazon.com, Inc. (NASDAQ:AMZN).