Friday, October 31, 2008
(Cont'd from above)...

I'm sure he will convince Treasury and the rest of the feds that Cerberus, which is really basically just a glorified hedge fund, is filled with little people's monies... firefighters and teachers, as he said on our air, through pension investments... so it's Chrysler's investment that will be saved... not for the super-rich financiers at Cerberus, you understand... but for the poor teachers and firefighters, who might lose if we don't bail out this private equity outfit. This is what you're going to hear, believe it or not... it makes me sick. That Snow may get this done is the biggest moral hazard of all... because we are bailing out, really, the only super-rich on this one.

But this one has to be done now - in the next few weeks - because otherwise, an Obama presidency might be more reluctant to give billions to the ultra-rich billionaires... Just a theory... the oligarchs will be bailed out from Chrysler.

Alright... all of our own trillion-dollar bailouts, courtesy of last year's reluctance to cut interest rates big, plus the moronic moves of cancelling the Fannie and Freddie preferreds... and letting "too big to fail" Lehman Brothers fail... have been priced into the market. That's what happened this week. Another depression is now off the table... That's what this week's amazing rally was saying... Now we're just in for a severe recession, not a hum-dinger of a 1929 cliff jump.

Our government has now done just about all it can... even if, to be a statesman about the situation, they haven't always done it well...

So the big issue next week will be the Europeans and the Brits... They could be our salvation, they could be our Game Plan... because they are being dragged, kicking and screaming, into cutting rates, but they're doing that little salami slicing that the Fed did last year, and we all know how that worked... when my simple plan was to cut rates by a couple of points fast, allowing people to refinance their mortgages before the banks foreclosed on their homes... That was the rant, remember?...

Now... right now... it is time for me to do a European rant...

I would love to record a button that says, "They know Reand [foreign language]"... or, "They know Neixd [foreign language]"... but this is all I've got... "They know nothing!" (sound effect button played)...

Everything bad I have ever said about Bernanke I am saying about the folks at the European Central Bank and the Bank of England right now... and worse!

These guys actually believe - even as their financial institutions collapse, and the prices of their residential real estate is plummeting - they believe the real war is against inflation, not deflation...

Does the story sound familiar to you?...

The European Central Bank is playing the role of Herbert Hoover this time around... They are playing with fire, and they'd better get their act together. Otherwise, we are going to pay a price for their negligence and stupidity... They are worried that people will be tooling around Europe with specially-made wheelbarrows for the Euros, if they cut too aggressively.

Here's what I have to say... "They know nothing!"

Cut rates in half! Cut them now!...

Now, we don't just need it in Europe. We also need the Chinese to step up... They need to cut rates drastically next week. They have cut rates already, but they're rates are still at... yeah, 6.66%... which is ridiculously high, and a really auspicious number... Haven't you seen "The Omen?" Where's Damien when we need him!

The next leg of this market is simply not up to us; it's about our trading partners...

Why do we need these cuts in Europe and China so bad?...

Because, next Friday, we are going to get an unemployment number so bad, you're not going to believe... I mean, it is going to be horrifying... a hideous number to say the least...

Double-digit unemployment is beckoning... We need Europe to help us. We need a reverse Marshall Plan... We need Asia to help us. If they don't help us... we will go back to the October 10th low. That's what will happen, and that's what scares me.

But, if they do cut rates, we will likely get through this period, and we can stick by our Game Plan. What is the Game Plan?...

You want stocks with safe, high yields... those stocks out-performed everything this week... I'm talking about the 5%-ers, the 6%-ers... Did you see Nucor (NUE), up $10 this week?... the Sir-Mix-A-Lot dividend candidates...

Second, you want stocks that are trading near their cash per share...

And third, you can buy domestic, recession-resistant stocks like Clorox Co. (CLX) we saw the other day... We don't want international, because the dollar's too strong; if we can, we want to cut back on international exposure.

Here's the bottom line...

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The bottom line!:     We in this country have now done all we can to save ourselves... Now it's up to the U.K., Europe and China... If they cut rates, our three-prong game of high-yield stocks, high-cash stocks and recession-proof stocks will keep working. If they don't, I say hang on for the "brooklindom!"... which is every bit as bad as it sounds.

[verbatim recap]

Read Jim's next Segment here