TheStreet.com's Jim Cramer says everyone in the trenches knows we're better off now -- only the academics disagree.

Am I nuts, or am I missing something? One year after the financial system was brought to its knees, we are back in the mid-9000s and we have taken off the table massive bank risk and are well on our way to recovery.

I keep listening to people like Nobel Prize winner Joseph Stiglitz say the banking system is worse off now and I say to myself, "That's just stupid and wrong and anti-empirical and actually just silly." Anyone who knows what's really going on has to feel this way. And where was Stiglitz when some of us were running around trying to save things?

TheStreet.com's Jim Cramer says builders have stopped, and prices have fallen to affordable levels.

Housing bottoms form when homebuilders finally stop building. They come when permits dry up. They come when foreclosures are so rife that they drive down the prices to affordable levels. Housing bottoms come when the homebuilders give up and merge. They come when mortgage rates go really low. They come when unemployment claims level out.

The bottom, well, is now. We are seeing a huge wave of buying of foreclosed homes in Northern and Southern California and in Florida. The numbers are too positive to think that these, the hardest-hit areas, aren't putting in long-term bottoms. Of course, where legacy housing is coming on, most notably in Florida and Las Vegas, where lenders like Corus Bank (NASDAQ: CORS) (Cramer's Take) abetted ridiculous levels of condominium construction, or New York, where the economy was on fire courtesy the brokers and the lawyers and the foreign tourists taking advantage of a cheap dollar, you are not going to get a bottom for a year. In New York's case, the building continued right through the layoffs because of tax advantages that ran out inopportunely right at the top. It will most likely be a tough market for a while.

TheStreet.com's Jim Cramer says everything depends upon these financial programs.

Maybe Sheila Bair doesn't matter at all. Maybe nothing matters. The chatter behind the scenes everywhere is, "Just let it happen, it can't be any worse than this."

I say, are you kidding me? Do you know that our whole country would simply stop if we didn't have these programs and these government promises?

Think of it like this: If you have models that show 10% unemployment and you offer credit cards, your model says don't offer them. But if the government didn't guilt-trip these companies into offering them, you couldn't get one.

TheStreet.com's Jim Cramer says the government needs to step in and take charge, and it needs to do it now.

We all know it. All of us. We know that the subprime mortgages that Lehman (NYSE: LEH) (Cramer's Take) wrote in Europe have come back to haunt them. We know that AIG (NYSE: AIG) (Cramer's Take) insured a lot of bad paper over in Europe when it decided to "avoid" the U.S. Subprime financial insurance, if you can call its multi-billion-dollar exposure "avoidance."

We know that Washington Mutual (NYSE: WM) (Cramer's Take) can't absorb the losses itself.

We know that Downey (NYSE: DSL) (Cramer's Take) and Corus (NASDAQ: CORS) (Cramer's Take) and BankUnited (NASDAQ: BKUNA) (Cramer's Take) can't raise the money they need.

We know all of these things. I think the federal government does, too. We lived in an unregulated time where everyone acted badly and no one protected anyone, and now these institutions have to be dealt with in a way that is the least painful of all the painful ways.

Of course, though, this government has no desire to deal with things until guys like Bill Gross or the Chinese government say, "We are done buying your paper," when it came to Fannie Mae (NYSE: FNM) (Cramer's Take). I guess they want a run at the bank of Washington Mutual and they want customers to stop doing business with Lehman before that's sold for scrap, although I must say that the Bear deal worked pretty well for everybody except Bear shareholders.

MAJOR PAPERS:

• The Wall Street Journal said the $19B privatization of Clear Channel Communications Inc (NYSE: CCU) was near collapse as the private-equity firms behind the deal and the banks financing it failed to resolve their differences over terms of the credit agreement, people familiar with the matter said.
• Comcast Corporation (NASDAQ: CMCSA) and Time Warner Inc (NYSE: TWX) are in talks to fund a new nationwide wireless company that would be operated by Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR), and use WiMax technology, reported the Wall Street Journal. Intel Corporation (NASDAQ: INTC) and Google Inc (NASDAQ: GOOG) may also help with funding.
• The Wall Street Journal also reported federal regulators are handing out warnings to banks due to their exposure to development loans and commercial real-estate construction. Sources believe Corus Bankshares Incorporated (NASDAQ: CORS) is facing trouble in the near future due to increasing scrutiny by regulators and the fact that much of the fallout in the condo sector has yet to be felt by banks.
• Some banks in the government-sponsored Federal Home Loan Banking system want to guarantee municipal infrastructure projects, the Financial Times reported, thus fulfilling the role traditionally taken by monoline insurance groups such as MBIA Inc(NYSE: MBI).

TheStreet.com's Jim Cramer says the sheer number of companies that need foreign capital will keep sovereign funds busy. By Jim Cramer

We need more sheiks!

We need some for Citigroup (NYSE: C) (Cramer's Take) and for Merrill (NYSE: MER) (Cramer's Take) and for Bear (NYSE: BSC) (Cramer's Take). And how do you like the fact that Bear says it needs no money and yet everyone else does? How about that for chutzpa?

We need more sheiks for Countrywide (NYSE: CFC) (Cramer's Take) and for Washington Mutual (NYSE: WM) (Cramer's Take). We need sheiks for National City (NYSE: NCC) (Cramer's Take) and Key (NYSE: KEY) (Cramer's Take) and Huntington Bancshares (NASDAQ: HBAN) (Cramer's Take). Any sheiks around for Corus (NASDAQ: CORS) (Cramer's Take) or Downey (NYSE: DSL) (Cramer's Take) or for the Gang of Four -- or do people really believe that Warren Buffett wants to buy one of them? (My sources indicate that what he does want to do is provide some extremely profitable reinsurance to the gang of four).

Zimmer Holdings Inc. (NYSE: ZMH) is recently up $1.22 to $83.63 on renewed and unconfirmed buyout chatter. ZMH, a leader in designing, developing, manufacturing and marketing reconstructive orthopedic surgical products, is expected to report EPS on October 25. ZMH call option volume of 5,379 contracts compares to put volume of 125 contracts. ZMH November option implied volatility of 28 is above its 26-week average of 23 according to Track Data, suggesting slightly larger price risk.

Corus Bankshares Inc. (NASDAQ: CORS) is an active commercial real estate lender nationwide, specializing in condominium, hotel, office and apartment loans. CORS had outstanding commercial real estate loans and construction commitments of $8 billion as of June 30, 2007. CORS is expected to report EPS on October 16. CORS October option implied volatility of 80 is above its 26-week average of 59 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Aluminum Corp of China (NYSE: ACH) volume & volatility spikes on wide price swings. ACH is engaged in bauxite mining, alumina refining and aluminum smelting. ACH is recently up $10.73 to $64.81. ACH closed at $37.04 on 8/16/07. ACH call option volume of 6,490 contracts compares to put volume of 4,671 contracts. ACH September option implied volatility of 88 is above its 26-week average of 47 according to Track Data, suggesting larger price risk.

Open Text (NASDAQ: OTEX) volatility Elevated at 80 into 8/30 EPS & Outlook. OTEX develops, markets, sells, and supports enterprise content management solutions. OTEX is recently down $0.29 to $19.98. OTEX will report EPS on August 30th. Canaccord Adams says: :We maintain our Hold recommendation and U.S. $18 target based on our Discounted Cash Flow analysis." OTEX September option implied volatility of 80 is above its 26-week average of 50 according to Track Data, suggesting larger risk.

Corus (NASDAQ: CORS) volatility elevated on exposure to commercial real estate. CORS is an active commercial real estate lender nationwide, specializing in condominium, hotel, office and apartment loans. CORS had outstanding commercial real estate loans and construction commitments of $8 billion as of 6/30/07. CORS over all option implied volatility of 60 is above its 26-week average of 49 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.