Petsmart Inc. (PETM)

See Jim's comments above for:
PETM

'Mad Mail'

Kinder Morgan Energy Partners (KMP)

Q:      You have liked Kinder Morgan Energy Partners (KMP) for its dividend, but I have noticed the projected earnings are about 40% of the projected dividend for ‘09. What do you think about KMP?
Thanks, Daryl

Jim:    KMP is what is know as a cash flow story… they pay out their cash flow because it is really a partnership… and you get a partnership interest…. what is difficult for people to understand is that these master limited partnerships, these different kinds of stocks that throw off income… they don’t play by the same rules… they are not tax payers so to speak… they send it to you… and that is why we shouldn’t be as concerned about typically what I like to see, which is a lot of earnings covering a dividend… this is a lot of cash flow covering the dividend… and they are going to do a good job for that.

'Mad Mail'

General Question...

Q:      Cramer,
The new assessment to refill the FDIC coffers will kill any profit that small banks make. My wife is a community banker and the FDIC wants the equivalent of two years profit in a lump sum assessment. And Ms. Bair says this is the bank’s burden to bear… really? Even while we the taxpayers, are spending trillions to keep the big bank competition on life support? Is there any sanity left in Washington?
Jim

Jim:    I regard the FDIC like Social Security… do I need the Social Security, do I need to pay into it… hopefully at that age I will have enough I won’t need it, okay, that is great… but the FDIC is for everybody, and when you went into banking you knew that… and you knew that they could always raise the fees… Sheila Bair did a terrific town hall with us… I think that she is as fair as fair could be… I wish that she was running Treasury… I think that she is doing the right thing… it is a point that everybody has to bare in the banking business… and it is always been the way it is… why should it change now… it is probably one of the most successful programs in the history of the federal government.

'Mad Mail'

General Question...

Q:      Dear Jim,
In the UK, the banks are lending on variable mortgage at 100 basis points (1%) over the Bank of England interest rate. A homeowner in the UK has seen his variable mortgage rate drop from 6% to 1.5%. Why is this not happening in the US where banks are lending at FED funds +500 basis points? The Obama administration should allow/force the US banks to lend at Fed funds +100 basis points like in the UK. This program will not cost the taxpayer any money and will help all homeowners. Do you agree?
David

Jim:    David, I think that it is not a realistic proposal… I think that the banks will lose too much money… there has to be some vig, so to speak for the banks… what I have favored over and over again in this country is that the government should be in the business of issuing mortgages for the next 18 months… giving everyone who wants one, or refinance, not just the deadbeats, 4%… that would solve the problem… it is great what the UK banks are doing… a lot of them are going to end up being owned by the government though… I don’t want that happening here.