Jim's got what you need to know, ahead of the Monday morning opening bell...

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JJC:   I hate to be a buzz kill... but the lesson of this week's Game Plan - and we've got to do it right up top - is that you cannot get super bullish... You can buy some stocks, and we've got those stocks... we've talked about them all week...

You can't get super bullish until the whole mortgage/private equity mess gets stabilized...

So, how do know when that happens?...

I've given you the indices... Somehow, they're not capturing the message...

So, you know what we need?...

We need a Cramer's Mad Money Index... to tell us when the madness - which was entirely responsible for the dramatic drop today - ends.

We need to know when the madness ends, and when we can start feeling better...

One that measures all of the stress points in the system... one that will signal 'all clear' when it finally stabilizes, and it will stabilize...

I live to serve, so I've created that index and weighted it...

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We're doing this for you, but I'm also doing it for (Federal Reserve) Chairman, Ben Bernanke... who should have gotten a wake up call from the weak employment number this morning, or perhaps my impassioned statement - not meant to panic investors, but to wake up the Fed - on Stop Trading today, on Erin's show... that, you know, we've got a real problem on our hands...

Yeah, not listening...

Chairman Bernanke, listen to me...

Just like Reagan to Gorbachav (when he said 'Mr. Gorbachav, Tear Down This Wall')... Mr. Bernanke, cut the rates now... take the special meeting...

It's okay, we did it in October 8th of 1998.  It worked.  It'll work again...

Cut the rates.  Take the pressure off.  Many, many people could be about to lose their homes, because you're not listening...

We're spending more time and money helping the people in Iraq... hey, like the cause, but we're spending more time and money helping the people in Iraq than we are spending to help homeowners in America, all of whom work very hard, and don't want to lose their homes. 

It's ridiculous...

Now, your predecessor (i.e., previous Federal Reserve Chairman, Alan Greenspan) urged people to take teaser rates, and then raised rates 17 times...

That destroys the purpose of that...

I don't even know if I could get a mortgage anymore...   

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Mr. Bernanke, you're going to lose the whole ball of wax here...

It wasn't your fault, but you're perpetrating the worst crisis since 1990...

Bear Stearns saying in its conference call that it's the worst in 22 years... I don't go that far...

In 1990, it was about Latin American loans and construction loans.  This is about people losing their homes...

Mr. Bernanke, I know you come from an academic background.  I would like you to call some businessmen... Maybe an Angelo Muzillo from Countrywide (CFC)... maybe Warren Spector from Bear Stearns (BSC)... Lloyd Blankfein from Goldman Sachs (GS*)... He's really good... Michael Perry from IndyMac (IMB)... who's expressed a lot of good things...

How about putting a call in to one of your neighbors?...  Mike Farrell from Annaly Mortgage (NLY)... I would love to set up the conference call if I have to...

And then, Mr. Bernanke, you will know how far behind the curve you are...

With the hope that this will jar the most esteemed Chairman Bernanke from his 'Lord of the Rings' stupor, let me give you the Mad Money 'Mortgage Madness Index'... We're going to keep track of it on a daily basis, so you'll know what to do...   
 

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This index is made up of 12 stocks...

MGIC Investment (MTG)
Countrywide Financial (CFC)
Bear Stearns (BSC)
KB Home (KBH)
Centex Corp. (CTX)
Citigroup (C*)
Goldman Sachs (GS*)
Blackstone Group (BX)
MBIA (MBI)
Thornburg Mortgage (TMA)
Beazer Homes (BZH)
Washington Mutual (WM)

Do you know that a lot of these are good companies?...

Why these 12?...

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MGIC Investment (MTG)
MTG insures mortgages, by which I mean they insured the poor unfortunates who took those piggyback home equity loans, and now are walking away from their homes in droves, doing the smart thing, and leaving the suckers at MTG holding the bag, whether that's right or not.

MBIA (MBI)
Another mortgage insurer.  It's already said that the reports of its death are premature.  But traders are checking it in the obit page every day.

Countrywide Financial (CFC)
Best mortgage company in the country!... Unfortunately, that's damning with faint praise.  Traders are telling me that CFC is another Love Canal... I don't believe it.  I bet that they have to tell us they're fine another dozen times, before people finally say maybe they're okay, or maybe they say that the company doth protest too much... Their CEO, Angelo Muzillo was terrific.  He's honest, he's great... he knows much more about this industry than I do, and he gave a conference call where he told you basically how to stop worrying, and love the total collapse of the housing and mortgage industry as we know it, if the Fed doesn't cut.

Bear Stearns (BSC)
Hedge fund nightmare?  I don't know.  Mortgage backs... coined money for a long time...  Prime brokers, where they helped hedge funds.  It was one of their great businesses... Now that shrinking hedge fund world - although many of the good guys are up a lot - hurting them... Bear told us today that things were going great guns... at least they started to... and then, at the end, I felt like it was more like the H.M.S. Sheffield...

Goldman Sachs (GS*)
Goldman?  I'm savage about my own views... Goldman has been as quiet as Bear... They have a lot of private equity business... hedge fund world.  They feel like the Titanic close to an iceberg... GS* deserves to be in the index.  Lloyd Blankfein (CEO) and GS* will come through, just like most of these firms...

KB Home (KBH)
Centex Corp. (CTX)
KBH and CTX?  If Goldman is the Titanic, these guys are the Hindenburg...

CTX has taken the hit.  It's written down its land holdings.  It seems to be ahead of the game.

KBH, a lot more work to do...  Some really awful markets to sell into...

I didn't put Standard Pacific Corp. (SPF) into the index.  That would be the worst market and the worst balance sheet... it's not fair.

Beazer Homes (BZH)
BZH?... Bad balance sheet, but it just got a big revolver, right?  It just got the loan... and some tough reasons.  They do have a Fed investigation...  Now, the credit line should make it so that they get through this.  They just declared their dividend today.  I know that there's a lot of hedge fund buyers... Where BZH stops going down?  I don't know...   

Blackstone Group (BX)
BX... What's an index without the biggest elephant in the room?  The largest private equity firm in the world which, as we said repeatedly, timed everything perfectly when they came public.  Schwarzman knew exactly when to sell his shares off to retail investors, and then say so long suckers... I love these private equity mambo kings... 

Thornburg Mortgage (TMA)
TMA, lender to the stars... You want a jumbo mortgage?  You go to them.  They're the bluest of the blue chips when it comes to mortgages... Which, in Monopoly terms, makes them Connecticut Ave., Baltic, or Mediterranean... They ain't no Park Place or Boardwalk... These guys aren't even Ventor, or maybe Indiana...  Lots of insider buying.  Can't decide if they're foolish, or maybe they're doubling down...

Washington Mutual (WM)
It's a good bank... It's a great place to bank, by the way... It's a big bank, big dividend... The dividend didn't get there big by accident though... It got there, because the stock keeps going down... The Street hates these guys.  Read the research reports.  They're nasty...  The largest home lender and, in my opinion, they are under-reserved... Some would say that WM is the weakest link in the chain right now...

Citigroup (C*)
Finally, the last member of the Mad Money 'Mortgage Madness Index' is C*...  This is the most aggressive player in both private equity and mortgages... C* is all about leadership.  They're the bank that let us down in 1990... They're the bank, whose leader, the clown Prince (i.e., CEO, Chuck Prince) was the last major player to say that things were just fantastic!  Like I said, all about leadership... Either way, he would do less damage than what he's doing right now to the bank... the bank that always sleeps...  

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That's the index.

These are the stocks that were put together in a basket that measures all the crisis points in the system.

I'm not telling you to go long it.  I'm not telling you to go short it.  I'm just telling you it's going to measure and let us know, before we know things will improve...

This will tell us.  We've got a metric that works.

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The bottom line!:     The Mad Money 'Mortgage Madness Index' may look like a group of punch lines in a group of stocks but, when the thing stabilizes, and the Fed cuts rates, we're going to be having boat drinks.  But, until then, let's keep monitoring the index.

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