Monday, December 15, 2008
(Cont'd from above)...

Jim (cont'd):    Well, I don't want to be the bum who so panicked that I would prevent us from turning retreat into advance... At this point, I don't think that we have as much to be worried about... Things change...

Was I just going for maximum rhetorical effect, screaming about a Great Depression when things were bad... and now telling people to shut the heck up by the Great Depression when things are better?... Absolutely not!... The market made me...

But I still think like a hedge fund manager... I was shouting from the rooftops that we could be in for another Great Depression... and here's the really important part... if... if the government didn't do something... mainly to save the banking system, to make whole all of the market's black holes, and also to do everything possible to juice the economy... That was the "if"...

They had to do that... I screamed and I shouted and, at first, the Fed knew nothing... but eventually... maybe because they listen to me and maybe they didn't... but the Fed, the treasury, and even Congress finally did what I've been telling... what I've been telling them to do... and back to the Great Depression part two off the table...

The Fed has poured, literally, $2 trillion of liquidity into the system... but we don't know where that money has gone... but we know that it's gone somewhere... and, as long as it didn't go to Bernie Madoff, Cramer be cool, and that's what matters...

We got the massive $700 billion in TARP money, even if I don't think dissembling Hank Paulson has done the best job of distributing it properly... It did undeniably take massive bank failures off the table. Once the bank failures had been taken off the table, you couldn't fail... If you are a major bank, even if you tried, you couldn't fail... and, believe me, Washington Mutual did its very best... It became much more irresponsible to talk about a Great Depression... Remember, in 1932, we saw wholesale collapse of the banking system... Before the TARP, like it or not, that was probably what was going to happen. It isn't anymore... and, this time around, we don't have to sit through three years of the Hoover administration... before we get a new president whose main focus is creating jobs... and who's willing to spend 1 trillion smackers to do it... And anybody who thinks that fiscal policy... that's like tax cuts in federal spending... doesn't work, you got a get back in the Way back machine... in 1937, FDR decided to try to balance the budget, instead of continuing to throw money at the problem... and then things got worse... until finally he turned to original new deal borrowing and a spending ethos...

Okay look, FDR took an endless Great Depression off the table doing the stuff that these guys are doing now... and we're doing much more... Ultimately, it took the lend lease program in World War II to make everything better then... I think they are going to try to make the banking system even better now... this time around Paulson and Bernanke... they are pulling out all the stops to make sure that another depression doesn't happen...

Look, we're going to see a bad recession... but no Great Depression, the sequel... because of these actions that I was so hoping for, when I was screaming about a Great Depression...

When all is said and done, I believe that in the amount of stimulus, guarantees and giveaways will come to $7 trillion... equal to all the stimulus we've had since World War I, if you added up...

As much as these guys come under fire for not helping Main Street... and we know that they do... remember, Bernanke's latest scheme is $800 billion in programs... for credit cards, student loans and auto loans and home mortgages... is exactly what real people need... Anybody who watches the show knows that I don't have a great deal of respect for Ben Bernanke... but it looks like he's finally putting his education... the man was a scholar of the Great Depression... to use. When the actual depression got going, interest rates were actually going higher... Now we've got a central bank that at least is on the case...

I wish that Bernanke had gotten religion earlier... but is Rip van Winkle, come to, came soon enough to avert another depression...

So, for everybody who's calling me a flip flopper or a hypocrite, because I once thought that we could be in for a depression, and now and don't... let me just quote John Maynard Keynes... the man whose economic philosophy is the reason that we won't be repeating the Great Depression...

"When the facts change, I change my mind. What do you do, sir?"...

The facts have changed... We got everything we needed to avoid another Great Depression... including Hank Paulson, our reluctance Stalin... moving to use TARP money to rescue GM and Chrysler... not the Chrysler should be saved given the fact that it belongs to a giant private equity fund... let Cerberus pay for the bailout...

So, pardon me for being rigorous and changing my mind, but the facts have changed... I am not a permabull... I am not a permabear... I am just permanently rigorous.

Believe it or not, buying all the bells and whistles and sounds... this show is about looking at the facts and telling you about what I think they really mean... Meanwhile, the critics party like it's 1999 and, periodically, take their heads out of the pub to pin attacks on yours truly...

Bottom line...

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The Bottom Line!:     Not only is it okay to change your mind... if you don't change your mind when the facts change, you'll never be a good investor. You bet we adjust to the market, and we're darn proud of it.

[verbatim recap]

Read Jim's next Segment here