Friday, February 20, 2009
(Cont'd from above)...

Jim (cont'd):   


Obama is talking about all of the wrong things and his Treasury Secretary Tim Geithner… what did I tell you… who should be calming the markets is no where to be found… it makes me pine for the days of dissembling Hank Paulson… right now we are watching a play… you seen it, I read it and saw it… it is called “Waiting for Geithner”… it happens to be a musical, it is scored by Jim Morrison, and the first song is “The End”… yeah, that’s right… this is the end my friend… of many stocks and many companies… if not everything that stands… now you know that I meant it when I came out on the Today Show, frightened, scared… some people would say nervous… and told you that you would pull any money that you might need for big purchases in the next five years out of stocks… that was back when the DOW was still over 10,000... and things were looking a lot less grim than they do now… it would a 40% gain to get back to where we were then… at this point we are in a position to see the DOW go to 6000... if the administration keeps quibbling about what should be done while the situation deteriorates.

How bad is the carnage…. we would like to think that it is contained largely to the financials… but the reality is that it spared nothing… we are hitting unbelievable lows as people either clammer for the government to do too much… by nationalizing the banks… or too little, that is the Chicago trader school… that you are probably familiar with… that is a school of thought that says we should Lehmanize… as in euthanize the banks, and euthanize all of the homeowners who are under water on their mortgages, because hey, they are a bunch of clowns… large cap companies have become mid cap companies… and mid cap companies have become small caps… do you know that a year ago the 100 largest companies in the country were worth $8 trillion all together… now they are not even worth $5 trillion… $3 trillion just gone puff… puff the magic, well whatever… the banks have pulled the biggest disappearing act… the Bank of America has gone from $197B to $24B… how about Citigroup, $125B to $13B…. and believe you me I think that as long as the administration doesn’t have a plan… and nationalization is on the table along with Lehmanization, the worst of both worlds… the losses are not over.

The worst part is that I have repeatedly suggested a plan that I believe will work… have the government offer 40 year, 4% fixed rate mortgages or refinancing to everyone… not just the deadbeats or the numskulls… everybody… based the new mortgages on the new appraised value of the homes, so that no one is under water… and in return give the banks that own the mortgages equity participation certificates… I wrote all of this in RealMoney.com if you want to flush it out, it is part of TheStreet.com, where I am chairman… equity participation certificates for the amount of the principal that gets shaved off of the
mortgage… let the banks use these pieces of paper as money for regulatory capital… with no mark to market rules… so they can work out their problems themselves… I know that this is difficult to understand… it is a Friday evening.. but I want to offer solutions… and not just carp and be negative… solutions work otherwise you are part of the problem… thank you Eldridge Cleaver… then if the homeowner sells their home for more than the value of the mortgage… the balance first goes to pay off the bank… any profit beyond that goes to the seller.

What would be the alternative nationalization… what would that mean… if we actually took over a Citigroup or a Bank of America we would wipe out the preferred stocks and the bonds… that could also mean wiping out your life insurance, and your guaranteed annuities, and your property and casualty insurance in some cases… cause the life insurance and annuity issuers, that is what they have their money in… they took your money and they invested in that stuff… they would be alienated… here is one for you… in my opinion, nationalization could destroy the bedrock of our nest egg… it would be financial nuclear winter… I wonder about Warren Buffets, Berkshire Hathaway survival if that happens… but we can not do nothing and let the chips fall where they may… the people that make that argument just don’t know the history…. do they really want to precipitate another a second great depression… because if we do nothing the consequences will be more than just financial… I won’t be talking on this show… there won’t be a show… we would be destroying the very fabric of our society… the Great Depression happened because Hoover and his gang were more worried about not rewarding the undeserving than saving the system… does that sound familiar… do we really want to repeat that mistake… am I being a bleeding heart liberal… no, I am being a student of history.

So here is a little history lesson… here is a little query for you on a Friday afternoon… what was the first major war that General Patton, General Eisenhower, and General MacArthur fought together… think about it… okay… it was the war against the Bonus Army in Anigastia Flats in 1932... the war against the veterans… these were veterans of World War I who thought they had bonuses coming from the government… instead Patton drew bayonets… unemployment was higher back then, but let’s get some perspective… these were heroes from a great war and they protested, 20,000 of them in Washington, D.C. right next to the mall… I mean I guess they should have been bayoneted for wanting special treatment… memo to the Chicago traders school… many of these soldiers were probably proflitic too like the people that you laugh at and you don’t want to help…. but we don’t want to bayonet them financially or physically… that is the kind of thing that you are inviting if you don’t do something to keep people in their homes… keep the banks alive… create jobs.

You can complain about the moral hazard of bailing out deadbeat homeowners… but you also have to count for the real hazards of letting the economy fall into ruins… so here… let’s do a little Cramer Mad Money here… let’s get right to it… what is the earnings per share of a Hungarian insurrection… what is the price of a book of the Spanish Civil War… what is the peg rate of the Bonus March destruction in Washington… how about the discounted free cash flow created by the Reisch Tag fire… I have been working on this on the ak… the synergies created by the Sutatan Land seizure… what are the odds of the center holding this time… how about we don’t even go there.

Bottom line…

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The Bottom Line!:     As long as the administration doddles and we believe that the nationalization and Lehmanization/euthanization are possibilities… that is right euthanasia… we are going to continue to be punished.

If nationalization and Lehmanization are still on the table, losses could continue...    How low can we go… unlike limbo this game is not fun… we will offer solutions on this show… but unless we are sobering… unless we tell it like it is… unless we are rational… we aren't worth jack.

[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:    What do you think about the housing bottom, I know that you called for June 30th for this year, right, is that correct?

Jim:    I am not going away from that… but remember the housing bottom does not occur because things are getting better… the housing bottom occurs because every time that we have seen a 40% decline in housing, whether it be in India, CA, or Banyon… the two hardest hit areas… or whether it be in Marion County, as we just saw last week… Sonoma, saw it hit 40%… or Bradenton in Florida, where it hit 40%… that is when buyers come in… they actually come in… and that is when things trade… remember real estate is like the NASDAQ in 2001 to 2003... it didn’t bottom until things started trading… I am sticking by my housing bottom… but it sure would be good if we had a 40 year fixed, 4% mortgage issued by the government, also allowed to have non deadbeats… that would hasten the process.

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Q:    I have a few questions about oil here. First, oil does the price really matter about the changes in the economy? and can it actually be a catalyst for us to be a little bit higher? and also, if that is the case, what companies or stocks would be good in this sector?

Jim:    Alright, let’s understand that oil is an international commodity… not a domestic commodity… but let’s also understand that the reason that you paid more at the pump this week… because of actual demand, demand is up once we got $1.80... I think that is good… supply is down… we learned that from Transocean Drilling, the largest off shore drilling… who said this week that the number of drilling projects has been reduced dramatically… last night China made a gigantic deal with Petro Brazil… why… because they want to stock up on oil… what I am saying that supply has diminished… demand is now returning… that means stabilization… I am a buyer of oil… and all of the oil integrateds… except for Exxon, Exxon is not my fave… but listen I am going to have an oil stock in the next segment… so you should be aware.

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Q:    Now we have President Obama come in and he seems like he want to go on a socialism side, have all of the rules changed?

Jim:    Well, everything has changed… but I think it has been changed by the exocentities of the situation… this is the worst time since the ‘30‘s… so I mean I am sure… I have read the books that said that Mr. Roosevelt you are a socialist… it is a Roosevelt moment… we don’t look back on Roosevelt as a socialist… we think of him as a great capitalist… but it is a Roosevelt moment… let’s hope this guy is up to it.

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[verbatim recap]

[end of segment]

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