Wednesday, August 1, 2007

Jim Cramer Re: Troubled Mortgage Lenders: "You Can't Trust Any Of These Companies"

Some classic Cramer lines regarding the sub-prime fiasco and advice for stockholders in the housing market to be the "first man out" now:

"These companies are at the mercy of banks."

"They're future is out of their control."

"Why don't more people talk about this? Because it inspires tremendous panic. It's first man out lives."

Wow. This is really messed up.
I love you Cramer, but what the hell?

My response to this would be: "No freaking Shit, dude! Nice for you to show up for the funeral! Where have you been?".

It's all well and good to walk out of your house, hand over the keys to Larry at the bank, and call up your broker to dump all your housing stocks, but one should question whether it's accurate to suggest that anyone will be the first one out anymore. I mean, come on, over 90 national or well-known regional American mortgage lenders have tanked already.

More importantly, when does the music stop and who will be standing there holding the bag of flaming shit when it does? The mortgage lender? The bank? The adept stockholder?

Think again.

My friends, it will be you. And it will be me. American taxpayers will be holding the bag, ultimately. I'm afraid this time there's no sneaking out of the restaurant to force the "other guy" to pick up the tab. Some might make out OK short-term by selling off their housing stock before the rub out, but we're all going to get nailed in the end. It's inevitable. How else can I put this? 'This brutha is gonna smutha yo mutha'.

Now watch.

The Fed will not raise rates in a vain attempt to prevent additional housing market panic.

Inflation will continue to rage. Prices for goods and services in the USA are going to rise substantially.

There is a freaking war still on, with no end in sight. Gotta pay for the new US embassy, the surge, the bribery of the Iraqi army, and elected officials.

The US dollar's value will be so eroded, American buying power will continue to decline.

The US government can't keep borrowing without offering stronger backing and security.

Federal and state income taxes will have to be raised, and not by a little bit either.

Banks, mortgage lenders, stupid homedebtors and everybody else tied to the irrational exhuberance of the housing run up will expect hand outs from "that building the walks around and does shit" (Lewis Black's favorite metaphor for the American government.)

The cost of money will rise significantly as rates of interest must be adjusted higher to prevent a complete US dollar bust and prevent an inflationary tailspin.

Foreign investors will be attracted to higher rates of interest, but not to the US dollar currency.

Lending standards, qualification processes will become even more restricted. Unconventional lending instruments will be pulled from bank and mortgage lender offerings. The flow of easy credit without question and without merit will grind to a screeching halt nationwide and then worldwide.

Housing inventories will continue to rise.

Home price may even rise moderately for a time in some overvalued markets, but it will not be relevant because American take-home incomes are so far out of alignment.

Realtors can line up zombies to their Zig-Zigler, stone-cold heart's delight. It will not matter. The majority of prospective homebuyers, even if they just came out of a coma and still punch drunk from the 2002-2006 irrational exhuberance and Realtor Kool-Aid, will not be able to afford or qualify for the types of loans required to buy $700K, $600K, hell even $450K cement shitbox condos.

The whole shit will come crashing down on our heads.

Got helmet?

1 comment:

John Singer said...

Now I suppose we should all burn down our houses because they'll be worthless soon. If Cramer's as right as he has been on GOOG maybe we should be worried.