General comments about AIG and
how its failure would affect the
market overall... and how it is
truly too big to be allowed to
fail.
American International Group
(AIG)
See Opening Segment 2,
below...
After this segment, you
can see Jim's Lightning
Round picks
here...
Jim: We knew
that Ben (Bernanke, Fed
Chairman) would let us down,
when he foolishly left rates
unchanged today. Uncle Ben
Bernanke... who, I think,
remains so clueless to the new
fluid dynamic to allow banks -
and they're all hurting... the
majors - to allow some banks to
rebuild capital. We knew he
would cite inflation risks, even
as we are in the most
deflationary conflagration I've
ever seen in my life.
Meanwhile, the banks have
already caught fire... some have
already burned to the ground.
And the deflationary
conflagration appears far from
over...
Some people... and I heard them
all day on our show... some
people are calling this move to
stand pat a bold stance... I see
it as more of a pro-breadline
move... a move that could really
screw up the economy.
It's almost as if this guy is
trying to out-do Hoover...
Let me be very clear about
this... I believe that, if
American International Group
(AIG)
goes under, we could be facing a
catastrophic deflation of
assets. Did Bernanke mention
that? No, no... he talked about
inflation. Let me be clear...
the major banks in this country
need to make more money on their
deposits, in a more risk-free
fashion... We heard that from
Bob Steel last night... CEO of
Wachovia Corp. (WB)...
That's what happens when you cut
the Federal Funds rate...
In 2003, with an economy that
wasn't facing any of these
horrific Katrina-like situations
that we've got now... financial
Katrina... the one we are facing
now is so much worse... we took
rates to 1%... 50% lower than
here. We need a truly bold
action here... the kind of
action that I believe Alan
Greenspan (former Fed chair)
might have given us. Not the
false, so-called "boldness" of
doing nothing... and worrying
about inflation... Yeah, we got
the Bernanke signature move...
pay no attention to the facts.
Do not let the facts get in the
way of the thesis...
Now we appear to be right back
on the precipice... with the Fed
using all these little tools
that haven't worked out...
Yeah, the Fed is trying to keep
us out of the abyss... even
though their move to do nothing,
I think, is only going to move
us closer...
Hey, how bad is this AIG that I
thought the Fed ought to focus
on a little... how bad's the
real problem?... This serious
threat to our economy... not the
specter of inflation that
Bernanke's fighting?...
Alright, I'm going to put a
number on it... I think the
market could fall another 1000
points if we don't fix AIG
correctly... and the best way to
do it would be to have the
government loan them $50 billion
to ensure no defaults... no
defaults in all the insurance
policies... the AIG myriad of
financial policies... but take
the common stock over, and work
on an orderly liquidation of its
many valuable parts...
Now, lots of stocks rallied
today, and I believe that whole
rally will be repealed. They
might plummet right back down
and then through where they were
if we don't rescue AIG before
tomorrow's opening...
In fact, the only reason I think
we were up today were because of
rumors of an AIG deal...
Make no mistake... despite its
protestations, in my opinion,
AIG needs rescuing. It is not
like WB, which can solve its
problems by making more money
off its deposit base...
AIG has assets but no deposits.
I don't think it can make it
without help, and AIG won't get
any help from the private
sector. It has too much exposure
to financial derivatives... all
over the map... so only
governments can help.
The sheer number of individuals
and businesses that depend on
this company is so monumental
that I think it's safe to say
the whole financial world might
seize up, if AIG looks like it's
going to go under...
If AIG's allowed to fail, many,
many of the European financial
institutions are going to get
immediate credit downgrades and
have to sell more assets and, I
think, at least on of them will
see a real run on its stock, a
la what was done to Lehman. I'm
assuming they know all this on
the other side of the
Atlantic... I'm assuming that...
It's not just Europe. China has
enormous exposure to AIG... and
who the heck knows who's on the
hook over there... Chinese, are
you worried?...
If there was ever an institution
that was too big to fail, it's
AIG...
I mean it shouldn't be, but I'm
not into that moral stuff... no,
I'm into the jobs stuff... like
in "no depression"...
Now, if we had a president who
was engaged, what would happen
right now would be that he would
be calling every sovereign
wealth fund and finance minister
around the world, and passing
the hat, and getting money to
bridge AIG through this
period... And he can do orderly
liquidation... I don't want the
common stock to get anything.
Those guys, they got blown
out... the short sellers took
them out.
I don't think our president is
sophisticated enough to know
this... I don't even know if the
Fed is... and, judging from Hank
Paulson's comments (Treasury
Secretary), he may not even
know.
See, it's not too late for them
to make some calls... or go
through the December 6th
transcript... Why can't they do
this homework?... I'm just like
one guy...
. . . .
.
The Bottom Line!:
If you want to see the Dow fall
another 1000 points, and I think Ben
Bernanke's in that camp with his silly
stand on rates... If you want to see the
global financial system seize up... then
please, let AIG fail. If you're not in
the breadline camp, then you know we
need a bailout. Other countries are on
the hook too but, if the U.S. needs to
rescue AIG alone, then it should, and we
sure need rates lower to help make this
all work. The company, AIG, is truly too
big to fail.
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Second
Segment
Final Segment
2
Title:
'Outrage of
the Day'
. . . .
.
Featured
Stock(s):
General comments about how the
SEC, led by Commissioner
Christopher Cox, is largely
responsible, through its Laissez
Faire approach to enforcement,
for the largest destruction of
wealth in stock market history.
After this segment, you
can see Jim's
Sudden:Death picks
here...
. . . .
.
Jim:
Time for my outrage of the
day... although this could
actually just as easily be an
outrage of the week... or maybe
the outrage of the year...
I believe Christopher Cox, the
SEC Commissioner, and his naive
click of academics and
theoreticians did more to
sabotage the confidence of this
market, with their adherence to
the Laissez Faire free-market
destruction of stocks
ideology... than any CEO has...
Now, if you think that's an
exaggeration... maybe you think
I'm being too hard on the guy...
well, you're wrong.
Cox is the guy who got rid of
the rules protecting you... the
rules against naked shorting,
and shorting stocks without
upticks... they protected you.
And, believe it or not, these
rules mattered to protect your
capital...
. . . .
.
The Bottom Line!:
When we look back at the destruction
of the financials during this great
year, never forget the instrumental role
the SEC played in both creating the
chaos and doing nothing to stop it...
And, just like every other government
player in this mess, received no
criticism or skepticism, except for
right here because I'm trying to protect
you... getting ready for the smear
campaign... they've done it before... If
they had asked anyone... if the SEC had
asked anyone in the industry, other than
the shorts who are lobbying for their
own gain, and some clueless professors
who have never made a nickel trading
stocks... they would have known what to
do... but they stayed in their ivory
tower... The SEC isn't supposed to be a
university. What's amazing is that, if
anyone had studied the history of why we
put in these rules, as I have, it's to
precisely to have stopped what happened
to
American International Group
(AIG)...
what happened to Lehman, what happened
to
Citigroup (C),
what happened to
Washington Mutual (WM)...
Oh, but these people don't even
understand that. When the historians
examine this era, here's what they will
conclude... and the Chris Cox SEC was
largely responsible... through Laissez
Faire enforcement and an emasculation of
the rules put in after the great crash
of 1929... for the largest destruction
of wealth and value in stock market
history.
. . . .
.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
na
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Jim mentioned it is a stock
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at the very least, not sell
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think it is indicated by his
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Please read his comments to
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Thumbs down -
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based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
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