Cramer Pleads for a Fed Rescue

In a truly astonishing clip, Erin Burnett interviewed Jim Cramer on Friday.

It is destined to become a classic Wall Street legend. I expect it will become required viewing for market historians and technicians alike.

There’s no other way to say this: Jim goes postal. When Cramer essentially begs the Fed Chair to rescue the big Investment banks, you know things have gone awry.

Highlights include:

"Open the darn Fed window.

"He has no idea what its like out there – None!"

"They [the Fed] know nothing. The Fed is asleep."

"My people have been in this game for 25 years . . . They are losing their jobs — these firms are going out business"

"[President of the Federal Reserve Bank of St. Louis] Bill Poole is shameful"

"Cut the rate. Relieve the pressure"

"In the fixed income markets we have Armageddon."

But don’t take my word for it, watch the video:

CNBC.com (not a great video feed — see the YouTube below)
Cramer_and_erin

I am not sure what he means about people talking to him every night "off the record" (was Jim inferring the Fed calls him? )

>

Ever since TV has been banned from our trading room (CNBC and Bloomberg alike), I only get to see these things when they show up online.

A truly astonishing performance. Kudos to Erin for maintaining her cool, as well as not adding to the madness.

I have two words for Jim: Moral Hazard.
Contrary to everything we learned under Easy Alan Greenspan, it is not the Fed’s
role to backstop speculators and guarantee a one way market.

>

UPDATE August 4, 2007 9:30am

I have 2 requests:

1) Won’t someone with more technical expertise than I pull the entire video off of CNBC and upload it to YouTube? (Man, does CNBC.com video suck wind, or what?

2) Could someone — a very clever young dj, perhaps — please remix/mashup that rant into a new hiphop song? (It would be hysterical)

~~~
Thanks! Someone uploaded this:

>
UPDATE 2 August 4, 2007 8:20pm

Now for the punchline: "Completely meaningless, it has no relevance whatsoever"

Two weeks ago (July 16, 2007), Cramer mockingly said the Sub-Prime blow-up was utterly meaningless, and would have utterly no impact at all . . .

>

UPDATE 3 August 5, 2007 6:21am

Ask and you shall receive indeed:  DJ FiniFinito mashes up Jim’s rant:

Crystal Method Right Here, Right Now Bill Poole No Idea_mix.mp3

>

 

Source:
Cramer: Bernanke, Wake Up
Mad Money host Jim Cramer makes a passionate plea to Federal Reserve
Chairman Ben Bernanke to consider cutting interest rates and, in turn,
help the market and the people who are losing their jobs on Wall Street.
CNBC.com, Friday, August 3, 2007
http://www.cnbc.com/id/15840232?video=452808336&

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What's been said:

Discussions found on the web:
  1. NUREG commented on Aug 4

    Agreed. It is the action that Cramer is begging for (and the mentality that it reflects) that got us to the mess we’re in. The Fed shouldn’t do anything to bail anyone out.

  2. rob commented on Aug 4

    the turmoil in the bond market is not caused by high interest rates anyway, rates are still quite reasonable.

  3. Anthony commented on Aug 4

    That performance was amazing. Is this a taste of the strife that is to come?

  4. david foster commented on Aug 4

    If the fed were to do what Cramer wants, then the additional money supply would drive up inflation, and hence long interest rates. It might become easier for people & corporations to get short-term and variable-rate loans, but 10-15-39 year loans at fixed rates would quickly become *very* expensive.

  5. William Poole commented on Aug 4

    Wait — isn’t this the same guy who was telling everyone within earshot that the Bears were all wrong, ignore them, they are bitter with all their complaints about the credit market?

    Someone should pull all of Cramer’s quotes on that subject and shoot them to Barringo for a post.

  6. Bynocerus commented on Aug 4

    Barry,

    I was in Paris Monday, and we got CNBC in the hotel. I turned the tv on when we came back around 4 to start getting gussied up for dinner, and I see Cramer’s on pretty much non-stop.

    I’m not a regular CNBC watcher, so I don’t know if that’s normal, but my knee-jerk reaction was “oh shit, this is gonna be a ‘fun’ week.” The man appeared to be sweating through every layer of clothing he had on 30 minutes after the bell.

    I know you write for The Street and probably have some relationship with the guy, and he seems like a good person, but this is the same man who capitulated in ’98 and wanted to be longer and stronger in March of ’00. You’re as photogenic as him? No disrespect to him, but given that your as photogenic as he is, do you just need to start being spectacularly wrong to get off Kudlow duty and on to hanging out with Pisani and the gang?

  7. Ben B commented on Aug 4

    Cramer used to cheerlead massive layoffs in other industries as good for business — they were great for profits.

    But when Wall Street may have layoffs caused by reckless speculative excess, then the Fed HAS TO come in to rescue them? What crap.

    What a f%$#ing hypocrite! I’ve watched Mad Money for the last time.

  8. W.Edwards commented on Aug 4

    You have to think that if Cramer is right, that all of the top investment bankers (the top insiders) are crapping their pants right now, we may only be scratching the surface of how serious this might become. Having said that, Cramer does have a flair for being overly dramatic!

  9. Criticalthought commented on Aug 4

    I don’t mean to scare anyone. . but, I’m hearing anectdotal reports that some people who have put deposits down on new bentleys are walking away. . . they can’t afford them anymore.

    Worse- I’m hearing that younger bankers may only see bonuses in the 7 figure range this year. . and worse than that it may be “mid” 7 figures, not “high”.

    Something needs to be done.

  10. dblwyo commented on Aug 4

    A couple/three pts to add – Cramer starts by castigating the Bear CFO for going wimp and then outdoes him by several orders of magnitude ? On nat’l TV ?! No cojones. Also – as mentioned – interest rates are low and IN FACT the discount window is open (always). Banks can borrow anything they want UNDER the Fed Rate right now, today. As the lack of diligence in the sub-primes is showing this wasn’t/isn’t about rates it’s about good business practice.
    Before we get too carried away with Schadenfreude though how BAD must it be for Cramer to completely loose it like that and violate every principle he’s supposedly supported (markets are good, downsizing good, need discipline, etc.).
    If he’s doing that then there’s a lot more problems under the covers the Institutions aren’t telling us or themselves about.

  11. dblwyo commented on Aug 4

    A couple/three pts to add – Cramer starts by castigating the Bear CFO for going wimp and then outdoes him by several orders of magnitude ? On nat’l TV ?! No cojones. Also – as mentioned – interest rates are low and IN FACT the discount window is open (always). Banks can borrow anything they want UNDER the Fed Rate right now, today. As the lack of diligence in the sub-primes is showing this wasn’t/isn’t about rates it’s about good business practice.
    Before we get too carried away with Schadenfreude though how BAD must it be for Cramer to completely loose it like that and violate every principle he’s supposedly supported (markets are good, downsizing good, need discipline, etc.).
    If he’s doing that then there’s a lot more problems under the covers the Institutions aren’t telling us or themselves about.

  12. wally commented on Aug 4

    Since the credit crunch is not due to high rates, this particular entertainer picked the wrong target – either deliberately or through ignorance.
    I wonder which it was?

  13. tyoung commented on Aug 4

    Cramer is now more TV personality than money manager. Overblown bad acting, but great TV.

  14. Special Ed commented on Aug 4

    As a former hedge fund manager, Jim probably still has many friends and contacts that are losing it all right now. The fed isn’t asleep. They just aren’t interested in bailing out the speculators. I agree. Let them sleep in the bed they’ve made.

  15. SPECTRE of Deflation commented on Aug 4

    “My people have been in this game for 25 years . . . They are losing their jobs — these firms are going out business”

    Now I get it. He thinks he’s Moses or he has a Jesus Complex if you like, but as Bugs would say, the man is a maroooon!

  16. Bucky Katt commented on Aug 4

    A bald faced idiot he is!

  17. SPECTRE of Deflation commented on Aug 4

    What I can’t believe is that he actually believes this will help housing or the consumer. A year ago he said subprime was no big deal, and I guess it’s not until your buddies take it in the shorts.

    Bear’s CFO said it’s worse than 1987 and the Internet Bubble. I imagine it’s worse because they are getting ass kicked for making wrong way bets that they must now eat. Welcome to the cess pool fellas, and the water is fine! The gall of Jimmy Boy and all his ilk is sickening.

  18. jake commented on Aug 4

    wow i missed it on friday..thanks mr ritholtz……now i know why the market fell almost 300 points friday…cramer is the joe granville,robert prechter,abby joseph cohen of our time. actually there’s no way out of this..we’ll either have a depression or hyper inflation.buy campbell soup or home depot or lowes,they sell wheelbarrows.

  19. ECONOMISTA NON GRATA commented on Aug 4

    THAT’S ENTERTAINMENT…..

    Ladies and Biatches:

    We are watching the markets behave as they should. After all markets will fluctuate. “My friends aree loosing their jobs….?” BOO HOO! Gee, perhaps I can pick up a nice vacation home in Aspen, on the cheap….

    DUH….. I think that we are going to see anotherr “repricing of risk” nestt week. Get ssome parashutes for your dollat denominated assets, and some life preservers while you’re at it.

    It ain’t gona be pretty….

    Good luck to all…. ;-)

    Econolicious

  20. SPECTRE of Deflation commented on Aug 4

    Barry,
    would you please explain to KRAMER when you see him that a FED cut will do jack shit for homeowners who are now stuck with resets that they can’t get out of?

    We have much tighter lending standards, no liar loans, no 125% LTV,no piggybacking and on and on in combination with falling house prices on a national level. A year ago it might have mattered, but at this point the tide has gone out. The poor homedebtors can’t qualify for the loans, and even if they could, the home is worth less today than a year ago. The FED and Street made a fine stew, and now they must eat it.

    Oh ya, also tell KRAMERICA that the dollar sits at $80.14, and unless a run on the dollar would somehow help this situation, he and his brothers and sisters on the Street are screwed.

  21. GerryL commented on Aug 4

    One other thing Cramer said during his rant was the Dow would go up 1000 points if the Fed cut. Is that really what this is about?

  22. Bluzer commented on Aug 4

    Jimmy boy is much too smart to lose it like that. Seems to me that he was not trying to get the fed to come to the rescue – but simply to panic the market. And successfully so, at least for Friday. Notice that the meandering market went straight down after that interview. So if Jimmy boy had been short….

  23. Ralph commented on Aug 4

    I was watching live. I have to admit that he was scary. Definite Kudos to Erin. It is very hard to keep ones cool while watching a grown man, just melt down.

    One has to love his solution to the problem. Lets solve a bursting bubble by creating a bigger bubble!

    Thanks again to Barry for providing a place for discussion of hot topics rather than sweeping them under the carpet like most media.

  24. Sandy commented on Aug 4

    His rant was amazing….but too early. It will get bad out there (remember 1998?), but it is not there yet. The Fed will have to cut rates eventually, but now would be premature given inflation and continued growth of the economy and employment whether we believe the gov statistics or not.

    The credit markets will probably freeze up further, and when the big banks start having liquidity crises (like 1998), then it might be time to consider cutting. Bernanke is between a rock and a hard place on this one because of the dollar and foreign investment.

    Cramers outburst makes him look like a fool. If he had waited a week or two or three, he might be right on the mark. Either way, good for Erin for keeping her composure. I would have walked off screen.

  25. Bluzer commented on Aug 4

    Can anyone explain why he’s going after Bill Poole? Bernanke and the FRB I understand. But why Bill Poole in particular?

  26. SPECTRE of Deflation commented on Aug 4

    Can anyone explain why he’s going after Bill Poole? Bernanke and the FRB I understand. But why Bill Poole in particular?

    Because Poole came out and said it’s not the job of the FED to bail out Wall Street when the animal spirits got the best of the them. Can you imagine anyone saying this to Paul Volker 27 years ago?

  27. SPECTRE of Deflation commented on Aug 4

    Anyone else see the news that Novastar isn’t doing loans? Scooped at Blown Mortgage. More toast for the cess pool.

    NovaStar Suspends Funding Immediately
    Published at August 3, 2007 in Wall Street and Mortgage News/Insight.
    From NovaStar just now:

    ANNOUNCEMENT

    Due to severe dislocation in the secondary market, NovaStar Mortgage Wholesale is temporarily suspending approval and funding activity on all loan transactions that have not been locked via a NovaStar Lock In Confirmation until Tuesday, August 7th, at which time the policy will be reevaluated. Locked loans and loans with docs out will continue to fund as scheduled. This is effective immediately.

    New loan applications will continue to be accepted however will be held until the temporary suspension on loan approvals and fundings has been lifted.

    We apologize for short notice and will be reviewing market conditions and updating our policy on a daily basis.

    If you have any questions, please contact NovaStar

  28. Winston Munn commented on Aug 4

    Money is simply a commodity like all others. Artificial demand creates inflationary excess; when the demand reverts to the mean, those areas targeted most by inflationary expansion will suffer the most.

    Real national wealth comes from producing goods and services, not from leveraged buyouts, mergers, and speculative risk.

    Parties can be a lot of fun for awhile, but there comes a time to put the cork back into the bottle, sober up, and go back to work.

    It is now Monday morning, and the hangers-on are fighting hangovers and having trouble concentrating.

  29. SPECTRE of Deflation commented on Aug 4

    even i feel that cramer is much smarter than that….

    is it possible for us to know what his position was on friday afternoon??
    its quite possible he was trying to make money by spooking the traders more

    Oh to be a fly on the wall! :>)!

  30. gw commented on Aug 4

    I love, LOVE the fact that CNBC has inserted the Mad Money disclaimer at the end of that clip after the fact. (It was not there last night.) JJC is referring to senior bond traders and managers talking to him “off the record.” How is that not a disclosure violation? Its not like he can Chinese Wall that info and parse it from his public recommendations. The other point – without getting to “they know that we know that they know…” is JJC could be getting played by these guys. Or is that too machiavellian…?

  31. jimo commented on Aug 4

    can you imagine being in combat with a guy like cramer? all hell breaks loose and he’s curled up crying for his mommy. i have absolutely no use for shills like him.

  32. jz commented on Aug 4

    A moron – but an entertaining one – for about 15 seconds max

  33. km4 commented on Aug 4

    I think Cramer’s histrionics were pathetic.

    Wall St extreme greed created this mess and hey should take the hit.

    Asking the Fed to help out these bastards is just downright sickening.

    Hopefully this show is the turning point for demise of his Wall St. shillmanship

  34. MAS (Seattle) commented on Aug 4

    Here is my analysis on why Cramer is behaving this way.

    He has been a super bull up until now. He now sees he was wrong and that the market is going down regardless of what the Fed does. He needs a scapegoat. So he pleads with the Fed to cut rates knowing they won’t. When the market corrects, inflation is gone and investors are in tears – the Fed will then cut. Jimmy Cramer will then claim he was right for demanding a rate cut way back in Aug 2007.

    In other words, he is setting himself up to be the Monday morning quarterback post correction. “Don’t blame Cramer, blame Ben B! Booyah!”

  35. et alli. commented on Aug 4

    Format Change

    Speaking Personally ~~~~~~~~~~~~~~~~ Note change in format for Out and About. Title/Headline with link in bolds first. Any personal commentary second and in italics. Out and About on the Net ~~~~~~~~~~~~~~~~~~~ Senate Backs Eavesdropping Plan Sought By…

  36. Florida commented on Aug 4

    Bluzer asked:

    “Can anyone explain why he’s going after Bill Poole? Bernanke and the FRB I understand. But why Bill Poole in particular?”

    Probably because Poole went on record recently, indicating that the Greenspan Put is no more:

    “‘If the market believes that the Fed is always primed to adjust policy, then market participants will spend more time trying to second-guess the Fed than trying to understand what is happening to business and household behavior,’ Poole said in a speech prepared for delivery at the University of Missouri.

    “Poole said he was speaking only for himself, but his views add to the growing sense that the Fed under new chairman, Ben Bernanke, is trying to move away from the so-called ‘Greenspan Put.'”

    http://www.marketwatch.com/news/story/fed-wont-ride-rescue-upset/story.aspx?guid=%7B265C021C-7EA7-401D-A60A-724EA859E758%7D

  37. me commented on Aug 4

    “My people have been in this game for 25 years . . . They are losing their jobs — these firms are going out business”

    Where was he when my job went to India in 2000? IT employment in this country still is less than in 2000. Welcome to the real world Cramer, now you and your friends can head on down to Wal-Mart like the rest of us.

  38. Steve C commented on Aug 4

    I wonder if Cramer has a market position with his past employer, Goldman Sachs? It’s falling fast.

  39. Barley commented on Aug 4

    This person is way too emotional. I guess his money bets turned the wrong way.

    He mentions the homless – Wall Street does not give a rat’s a** about the homeless or folks loosing their homes. Its about MONEY and the fees generated to syndicate the mortgages.

    Odd Question: If a pool of mortgatges in a CDO runs to zero – ie. no takers – is the CDOs value zero and by extension the mortgages zero? Do these folks now have a mortgage free home?

  40. stormrunner commented on Aug 4

    Even though Cramer’s long term view has been bullish. This guy turns on a dime. When the market facts as opposed to the fundamentals change, he adjusts and tells his viewers likewise. He did so last year at the last FED hike and again last week, he was telling everyone to get out of the Financials, Brokers, and not to bottom fish Home Builders,”to sell into strength” that this is just the beginning of the carnage. I hardly find this to be disingenuous. You may not like his style, but correct me if I’am wrong his active trading is limited to his Charitable Trust. IMHO the guy believes he’s providing a public service to the small players who are destined to get caught in the comming crack-up boom and is trying to help them time the market. Yeah he’s off by a few percent of the high -if it is the high. But now everyone that watches has a feel for just how bad things could get, no excuse not to get out or realign.

    To take the position that the FED is not complicate is absurd. If we believe that they had no clue what was going to happen when they tore the glass out of the discount window, then the public education system has done its job in grand fashion. The central bankers will get their percentage of every dollar they created out of thin air. The debt-money system is a travesty of justice, defending the comming wealth transfer as business as usual is short sighted and is leading to the decline of this once great country.

  41. SFAnalyst commented on Aug 4

    At this point, I don’t know why anyone would be surprised by anything that Cramer says. When Kudlow goes on the tube calling a crash, that will be news!

  42. km4 commented on Aug 4

    RIP America’s Debt-Based Monetary system
    1980’s – 2007

    Done in by the extreme greed of capitalist pigs feeding at the obscenely leveraged debt liquidity trough.

  43. Bob A commented on Aug 4

    …and when the fed intervenes, with lower rates, or by printing money, aren’t they just increasing taxes? Aren’t they just decreasing the income of all those who have their savings invested in fixed income bonds and the like? And decreasing the value of those savings through inflation on top of it?

  44. Ron commented on Aug 4

    “there’s no crying in baseball”

  45. UrbanDigs commented on Aug 4

    couldnt agree more Barry! If anything, the fed should:

    1. Adjust statement and remove tightening bias.

    It seems this credit mess will spread and growth will not come in as excessive. I thik the fed should be balanced right now in their bias. Any move to pump liquidity in the system will be the wrong move and I think will have a negative effect on tradable markets as the street interprets that as a sign things are much worse than what appears on the surface right now.

    Right on Barry!

  46. GerryL commented on Aug 4

    Do you think Jerry Lewis is available to do a telethon? He does one where people are only sick or dying. This is much worse. Investment banks and hedge funds are losing money.

  47. Ralph commented on Aug 4

    Don’t know if anyone else feels this way but it seems that Goldilocks Kudlow is pretty much ranting these days also?

  48. Trendsman commented on Aug 4

    Correct Bob, though few seem to know what inflation is, and how it manifests. They are about to get a hard lesson in the next few years.

  49. dukeb commented on Aug 4

    Cramer wants to protect the common man??? Great, because I’m one of them. Got bid out of the over-priced housing market when my wife and I wanted to buy 2 years ago (newly wed then), we’ve been living in a small apartment and saving our cash like mad ever since, and in another year we’ll be ready to buy in a hopefully sane market and without a mortgage.

    Screw Jim and his self-serving rant to get the Fed to lower rates and finance his own success. If the Fed lowers the rate, saves the market and creates another housing price pop, then maybe my wife and I will be the ones to capitulate. Why should we work our butts off 24/7 and save every penny possible instead of spending our paychecks-plus if there’s never a need for accountability in this country? (I’m still disgusted by G.W.’s relatively recent comment congratulating China on transforming itself from a nation of savers into a nation of spenders. [It’s a budding form of financial slavery. And it’s wrong.])

    Barry and the rest of you posting comments thus far are breath of fresh air. Thank you!

  50. cm commented on Aug 4

    me: Isn’t it always the same. When the shells start hitting closer to home (or the pocketbook), and only then, will most people smell the trouble. “Competition” and “flexibility” are always good for others. Our socioeconomic-darwinist “power traders” are no exception to that rule.

  51. Magister Universum commented on Aug 4

    Cramer has his viewers so levered in high beta stocks that he is probably nervous someone will show up at the studio with a gun and needs a scapegoat to shift the focus. Kinda like the Argentine Junta picking a fight with the British over the Falklands. Amazing how this bozo calls for a Fed bailout when his “$80 goes to $120” stocks fall back to $70. Imagine his performance when the consumer gives up the ghost and we go into recession and the dominoes really start to fall (China, anyone?). They will carry him out in a straight jacket…..Gold bugs are just waiting for a bailout. Gold at $1,000? What will Larry Kudlow say? This is Gentle Ben’s “Volker Moment” during the market’s “Minskey Moment”. Hope for my children that Ben is a Volker and not a Greenspan. Tough love for the long term! Cutting rates so that hedge fund managers can keep their $70 million yahcts is just plain WRONG! The poor lumpkin homeowners who paid too much will lose their house no matter what the Fed does…

  52. Dane Janeiro commented on Aug 4

    It’s hard to believe the audacity of Cramer; he wants people to feel bad for his hedge fund buddies who won’t be able to afford the G.I. Joe with the Kung-Fu grip for their children.

  53. Zephyr commented on Aug 4

    The Fed should do what they believe is good for the economy, and not worry about the pain for speculators.

    Greenspan lowered the Fed Funds rate to much when he sent it to only to 1%, and then kept it low too long. That heavy dose of excessive liquidity caused the overheating that required the tight policy of the last 12 months.

    I believe that the Fed funds rate should never have been lower than 2% and that should have been only for a few quarters to ease the financial scare after 9-11. On the increases, they also went too far. I suppose they felt they needed to offset the previous overdose of liquidity. One overdose to counteract the previous overdose.

    A more modest increase in rates would have kept the yield curve normal and not choked things as tightly. Of course, the workout would take longer that way, and inflation and long rates would be higher today. But the dislocations would be smaller as things played out more slowly.

    Fed intervention in the markets is like a drug. Overdosing is bad on both the stimulus and depressive side. Once again the Fed has followed one overdose with another.

  54. Winston Munn commented on Aug 4

    Quote Ron: “there’s no crying in baseball”

    LOL.

    Quote dukeb: “Barry and the rest of you posting comments thus far are breath of fresh air. Thank you!”

    It is refreshing to get read writings based on a quest for truth rather than watch another disinginuous T.V. fairy tale.

    Quote Magister Universum: “This is Gentle Ben’s “Volker Moment” during the market’s “Minskey Moment”. Hope for my children that Ben is a Volker and not a Greenspan.”

    Well said. I might add better for all of us if Ben turned out to be of Austrian school.

  55. rob commented on Aug 4

    Imo the reason Cramer is behaving this way is that per his contracts with the media companies, he can only go long, never short.

    So in a downward market he is totally irrelevant, the best he can do is tell you to go to cash, which does not garner high television ratings/website views.

    Imo he was better when he could go both long and short.

  56. joejoejoe commented on Aug 4

    Here’s more on why Poole is getting flack from Bloomberg:

    “The punishment has been meted out to those who have done misdeeds and made bad judgments,” Poole told reporters in St. Louis after a speech on the market for mortgages to borrowers with sketchy or weak credit histories. “We are getting good evidence that the companies and hedge funds that are being hit are the ones who deserve it.[…]

    “I find it odd that apparently sophisticated investors in non-prime mortgage-backed securities now claim surprise that many non-prime adjustable-rate mortgage borrowers are facing payment shock because of the increase in short-term interest rates,” Poole said. “Mortgage originators persuaded many relatively unsophisticated borrowers to take out these mortgages.”[…]

    “It is terribly important that we do not have bailouts,” Poole told reporters. “If you make some bad bets, you take these losses. That is what investors in these hedge funds should be aware of.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=apltzMBdJDjc&refer=home

    So that is why Cramer is off the deep end on Poole. Poole basically told Cramer and his friends they placed a losing bet on a high risk investment and it’s no tragedy if they have to take their medicine in the form of a loss.

  57. Chuck commented on Aug 4

    While not to the level of Cramer, Paul McCulley of Pimco was almost hysterical Friday morning on CNBC.

    Very out-of-character for him.

  58. Po commented on Aug 4

    Fact is, the equity markets are still up for the year, and had been going straight up for months!

    Stocks go up and down- it’s just the way it is. Money is being made and lost every single day. The subprime issue has been a long-time coming and actually “OLD” news. It’s only been factored into the markets recently.

    Regardless of whether you think this rant was appropriate/inappropriate or just plain funny- you have to give credit to the man for having balls for “expressing” himself on TV.

    Cramer is da man!

  59. Winston Munn commented on Aug 4

    Quote: “While not to the level of Cramer, Paul McCulley of Pimco was almost hysterical Friday morning on CNBC.

    Very out-of-character for him.”

    I think it is time to re-read Panzner’s book. Something in Denmark is rotten.

  60. GerryL commented on Aug 4

    Cramer’s ranting actually is counter-productive. He has put Bernanke in the position that he can try to be great and emulate Paul Volcker or can give in to the cry babies on Wall Street and emulate Alan Greenspan. btw it was Greenspan that helped create this mess in the first place. If Bernanke gives in and immediately cuts rates he has shown Wall Street that all they have to do is start screaming and he will lower rates. Bernanke’s credibility will be gone.

  61. Doctor Biobrain commented on Aug 4

    Hey, I just lost a fortune trying to help a Nigerian prince get his rightful inheritance (apparently, his uncle got a hold of my banking information and hit my account repeatedly). But Cramer helped me convince the Feds to bail me out with a super-low interest loan. Now I’m doing better than ever and I might just be able to finally help that prince get his inheritance. Miracles really do happen!

    Thanks Jim Cramer, for making sure that my poor judgment didn’t adversely affect me. Risk is just for the other guy.

  62. Josh commented on Aug 4

    On Kudlow Friday, I’m not sure who said it, but they said, “we have a profit and loss society and it should stay that way.” Just because the loss is now here, doesn’t mean this socialism should prevail.

    Kudlow the socialist was also asking the Fed to make a statement that they are the lender of last resort. Like that will do anything besides make him feel better about the market.

  63. grepthis commented on Aug 4

    Hey Cramer!

    It’s ‘the genius of capitalism’ at work.

    You and your buddies screwed up, now take the consequences, you posturing putz.

    This ain’t no socialist welfare state. No one is going to bail you out and kiss the boo-boo so it’ll stop hurting.

  64. CaptainVideo commented on Aug 4

    The Fed has 2 resposibilities: Maintain price stability (which actually means a low rate of inflation) and keep unemployment low. It is not the resposisibility of the Fed to bail out financial firms and investors who used very bad judgement and made very foolish decisions. Quite on the contrary, it is essential that these people lose their shirts to remind the financial markets of the meaning of the term “risk.”

  65. Aaron Byrnes commented on Aug 4

    Let me get this straight-

    When Cramer’s CEO buddies take a factory, a going concern, and ship it to China for a fatter bonus, we are supposed to salute it. Its the creative destruction of the free markets. Yippeee!

    But when Cramer’s friends make unwise deals in mortgage securities and lose their jobs, they call on the Fed to fix it. These guys probably rail against welfare recipients but want their own welfare program for multi-millionaries to guarantee their lifestlyes.

    There was little concern for defending the standard living of the middle class during all that outsourcing. (Cramer used to do these rants on how great it was when people lost their jobs.)

    Now we are supposed to approve of massive gov’t intervention to support millionaires…. why? …. because its the free market?

  66. Tabatha commented on Aug 4

    >>RIP America’s Debt-Based Monetary system
    1980’s – 2007

    Heh. More like it’s only just begun.

    Print money. Create volatility to recapture it. Print money. Create volatility to recapture it. Print money. Create volatility to recapture it…..

    I bet the Idiot Wave morons are drooling all over themselves on this. Finally the markets are fitting their blueprint. Even Kass is right a few months in each decade.

  67. CaptainVideo commented on Aug 4

    As the late Milton Friedman pointed out, a market economy is not a profit system, it is a profit and LOSS system. The guys on the street like the profit part, but they don’t seem to like the loss part.

  68. Aaron Byrnes commented on Aug 4

    When I make a bad trade, my loss is booked. When Cramers’ buds take a hit, they run to the exchange to bust the trade or want the Fed to bail them out.

  69. SPECTRE of Deflation commented on Aug 4

    Regardless of whether you think this rant was appropriate/inappropriate or just plain funny- you have to give credit to the man for having balls for “expressing” himself on TV.

    Cramer is da man!

    You are joking right? The man said last year that adjustables were no big deal, and they weren’t for him and his chums at the time. Getting ass kicked by the market has a way of changing one’s tune. He’s a paid shill who deserves condemnation for no conviction and no character.

  70. vollmer commented on Aug 4

    The Fed has been wrong telling us that “the subprime mortgage problem is contained”. We all know now that the subprime mess is not contained and it is spreading. It is not too much to ask our Fed to admit their own mistakes and face the reality. Kuods to Cramer for being a straight arrow.

  71. Zephyr commented on Aug 4

    The Fed overdosed us with easy money, and lately they have been overdosing us with tight money. The yield curve is the best barometer of this. It’s past time to just go neutral with the monetary policy.

  72. Hedley Lamarr commented on Aug 4

    As the late Milton Friedman pointed out, a market economy is not a profit system, it is a profit and LOSS system.

    Milton Friedman hated our freedom!

  73. Winston Munn commented on Aug 4

    Quote Vollmer: “It is not too much to ask our Fed to admit their own mistakes and face the reality. Kuods to Cramer for being a straight arrow.”

    Are you saying it is Bernanke’s responsibility to point out the idiocy of Greenspan’s captaincy? Sorry, but in the upper echelons of management, things such as that are simply not done.

    I assume you mean “kudos” to Cramer – but for what – for begging for fed intervention to reinstitue the bubble/Ponzi finance scheme?

    Bernanke needs to concentrate on the value of the dollar – recession/depresson can be overcome; hyperinflation kills.

  74. Mike commented on Aug 4

    CaptainVideo: “The Fed has 2 resposibilities: Maintain price stability (which actually means a low rate of inflation) and keep unemployment low.”

    WRONG!!!!

    The Fed has 4 responsibilities and one of their responsibilities is “maintaining the stability of the financial system and containing systemic risk that may arise in financial markets”

    What are the Federal Reserve’s responsibilities?

    Today, the Federal Reserve’s responsibilities fall into four general areas:

    * conducting the nation’s monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices
    * supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
    * maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
    * providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation’s payments systems

    http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm#3

    Just in case if you do not know the definition of financial markets.

    “Financial market is a mechanism that allows people to easily buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect efficient markets.”

    Types of financial markets:

    The financial markets can be divided into different subtypes:

    1. Capital markets which consist of:
    – Stock markets
    – Bond markets

    2. Commodity markets

    3. Money markets, that provide short term debt financing and investment.

    4. Derivatives markets
    – Futures markets
    – Options markets
    – Swaps, other derivatives

    5. Insurance markets

    6. Foreign exchange markets

    P.S. God Bless Jim Cramer (and other patriotic Americans) for having the balls to remind the sleeping at the wheel Fed about Bernanke’s responsibilities!

  75. vollmer commented on Aug 4

    No matter how you put it, the Fed has been wrong in stating that the subprime mess is contained. IT IS NOT. The Fed has to admit their wrong judgement and face accountability.

  76. r€nato commented on Aug 4

    friggin’ hilarious to hear one of these advocates of Pure, Unrestrained Free Market Capitalism™ go begging for government handouts and assistance.

    Whatever happened to letting Adam Smith’s invisible hand sort things out? I guess that’s OK when you’re talking about proles losing their jobs; a different set of rules applies to the wealthy, hmmm? Whoever would have guessed it…

  77. Dickmann Boone commented on Aug 4

    I have speakers a little better than PC OEM speakers, but can’t understand a single word anyone’s saying in this video.

  78. Mike commented on Aug 4

    Bluzer: “Can anyone explain why he’s going after Bill Poole? Bernanke and the FRB I understand. But why Bill Poole in particular?”

    “Federal Reserve Bank of St. Louis President William Poole, in a response to a question, said on July 25 that he doesn’t expect losses from defaults on subprime mortgages to spread beyond the real-estate industry.”

    http://www.bloomberg.com

  79. Chuck commented on Aug 4

    Mike wrote:

    The Fed has 4 responsibilities and one of their responsibilities is “maintaining the stability of the financial system and containing systemic risk that may arise in financial markets”

    Indeed that’s true. And “stable markets” means that buyers and sellers need to be freely able to chose at what price a transaction takes place.

    If that transaction price is 95% less than their agreed-upon transaction price of 6 months ago, so be it.

    “Maintaining the stability of markets” does not imply that it’s required to have buyers for Yahoo stock at $240/share, toothpaste-laced-with-herbicide, or loan pools made up of 6X-income, no-money-down, no-documentation ‘liar loans’.

  80. SPECTRE of Deflation commented on Aug 4

    The Fed overdosed us with easy money, and lately they have been overdosing us with tight money. The yield curve is the best barometer of this. It’s past time to just go neutral with the monetary policy.

    We run a current account deficit and a budget deficit. Any move in rates lower will only exacerbate a huge problem with our trading partners. As the dollar has fallen, they, namely Japan and China, have taken a beating already on the exchange rate and may refuse to continue to buy old maid cards large as they have in the past if we get into a rate cut environment.

    Secondly, we are competing with the world for money. The rest of the world is in a raising environment while we would be lowering? It would be disasterous. It instantly starts the Ten Carry unwind because the Yen will blast off. Then all bets are off.

    Thirdly, we are running M3 at close to 14% which from an Austrian point of view is your rate of inflation. You are doubling the supply of money and credit in 5.14 years. Lowering rates at this point would be like throwing gas on the burning heap of the dollar.

    IMHO the best and most the FED can do is go neutral and jawbone like Hell for an extended period. Try and put out fires as best they can, and hope that they don’t cause a pileup.

    Most importantly, it’s in the interest of America for the FED Chairman to be taken seriously by other Central Bankers and the BIS. At this point we need partners who can trust that the FED and Congress can deliver the goods on locking up the wild spirits who were loosed upon the world.

  81. Mike commented on Aug 4

    Chuck,

    The secondary mortgage market is frozen. There are no bids for anything labeled as ABX, CDO, and CLO. High-yield corporate credit yields have spiked dramatically, widening spreads and increasing the cost of borrowing for companies. As a result, companies may spend less and this could slow our economic growth much more than expected.

    But the Fed is sleeping at the wheel…

    The Fed needs to do something, make a statement to come the panicky markets down.
    They should say something like we monitor the markets closely (it is their responsibility) and ready to add liquidity if needed.

  82. speedlet commented on Aug 4

    Maybe it’s just me, but Cramer’s “meltdown” seemed overly theatrical, even for him. It did not seem particularly genuine. Presumably he’s just servicing his relationships with all his friends by throwing a tantrum — I guess this is what it means to be a “stand-up guy” on Wall Street.

    Ironically, no one paid much attention to the TWO meltdowns he had on in the days prior, in which he advised people to walk away from their homes, and predicted that the Inland Empire of California would be plowed under…

    http://housingdoom.com/page/2/

  83. Winston Munn commented on Aug 4

    But, Mike, there is no systemic risk, no danger to the systemic banks. Greenspan said so:

    “Perhaps the clearest evidence of the perceived benefits that derivatives have provided is their continued spectacular growth. The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions, which was so evident during the credit cycle of 2001-02 and which seems to have persisted. Derivatives have permitted the unbundling of financial risks. Because risks can be unbundled, individual financial instruments now can be analyzed in terms of their common underlying risk factors, and risks can be managed on a portfolio basis. Partly because of the proposed Basel II capital requirements, the sophisticated risk-management approaches that derivatives have facilitated are being employed more widely and systematically in the banking and financial services industries.

    As is generally acknowledged, the development of credit derivatives has contributed to the stability of the banking system by allowing banks, especially the largest, systemically important banks, to measure and manage their credit risks more effectively. In particular, the largest banks have found single-name credit default swaps a highly attractive mechanism for reducing exposure concentrations in their loan books while allowing them to meet the needs of their largest corporate customers.”

    See, the Fed has already fixed the problem – by not regulating or interfering in the derivatives markets.

  84. Winston Munn commented on Aug 4

    Mike wrote:
    “As a result, companies may spend less and this could slow our economic growth much more than expected.

    But the Fed is sleeping at the wheel…

    The Fed needs to do something, make a statement to come the panicky markets down.”

    Sorry for the two quick posts, but I simply cannot pass this statement. Cycles are normal in business. Recessions are not the end of the world. It’s no big deal if we go into a recession – it is depression or hyperinflation we must try to avoid at all costs.

    Why scream for the Fed to intervene in a normal business cycle?

    Think optimistically – a good old fashioned recession and bear market would create tremendous buying oppotunities down the road – what’s so horrible about that?

  85. Don commented on Aug 4

    Regardless of whether you think this rant was appropriate/inappropriate or just plain funny- you have to give credit to the man for having balls for “expressing” himself on TV.

    Balls, eh? Reminded me of a skit I saw back in the 80s on some comedy show. Reagan says to Thatcher “I love a woman with Balls! Can I have mine back now?”

  86. cm commented on Aug 4

    Dickmann Boone: I presume you are running some sort of Windows. Try tweaking the volume settings in the dialog that you get when double-clicking on the taskbar speaker symbol, and the volume in whatever you use to play back the video. (And/or the volume controls on your computer casing/speakers/etc.) They may be set such that somewhere along the pipe the waveform is overdriven and clipped. Just guessing.

  87. Mike commented on Aug 4

    Winston Munn,

    Are you saying the Fed should wait for high blown depression before cutting the interest rates?

    Similar to the Fed, Japan’s MOF was sleeping at the wheel in 1980’s and you know how they ended – late rate cuts and 20 years of deflation.

    P.S. Are you a communist (Chavez/Castro sympathizer) or a terrorist (Al Qaeda sympathizer) or a democrat (Bush hater) or an opportunistic short? Just curious…

  88. Dave C. commented on Aug 4

    Kramer meltdown:

    You Tube (new window)

    SHOUTING:

    “HE HAS NO IDEA HOW BAD IT IS OUT THERE. HE HAS NO IDEA. HE HAS NO IDEA. I’VE TALKED TO THE HEADS OF ALMOST EVERY SINGLE ONE OF THESE FIRMS IN THE LAST 72 HOURS AND HE HAS NO IDEA!!!”

    “AND BILL POOLE HAS NO IDEA WHAT IT’S LIKE OUT THERE!!”

    “THESE FIRMS ARE GOING TO GO OUT OF BUSINESS!!!!!”

    “THIS IS A DIFFERENT KIND OF MARKET AND THE FED IS ASLEEP AND BILL POOLE IS A SHAME HE’S SHAMEFUL!!!!”

    “WE HAVE ARMAGEDDON”

    July 31: Jim Kramer telling people to walk away from your house:

    Google Video (new window)

    Same interview: Jim: “Tremendous Panic — first man out lives”

    You Tube (new window)

  89. Winston Munn commented on Aug 4

    Are you saying the Fed should wait for high blown depression before cutting the interest rates?

    Similar to the Fed, Japan’s MOF was sleeping at the wheel in 1980’s and you know how they ended – late rate cuts and 20 years of deflation.

    P.S. Are you a communist (Chavez/Castro sympathizer) or a terrorist (Al Qaeda sympathizer) or a democrat (Bush hater) or an opportunistic short? Just curious…

    Mike:

    The Federal Reserve is trapped inside a box of its own creation, thanks to the policies of Alan Greenspan.

    Could this get out of hand? Yes, easily, and a full-blown financial crisis is a potential. But it has yet to occur.

    There are two risks present – the value of the dollar and the economy. Interest rate cuts would do little other than reestablish the climate that created the problem in the first place; however, a falling dollar poses unparalleled risks, such as abandonment of the dollar by the global communities.

    Until systemic collapse occurs, what is there to fix?

    As to what I am? Read the U.S. constitution and you’ll have a solid idea of what I believe. (By the way, you can search all you want but you won’t find there any Leo Strauss philosophy or mention of the unitary executive, but you will find a lot on separation of powers and self rule.)

    Anything else?

  90. Dave C. commented on Aug 4

    Odd – those didn’t pop right — here they are as Urls:

    Meltdown:
    Link
    Walk Away:Link
    Panic!:Link

  91. Florida commented on Aug 4

    Mike, how old are you?

  92. tabasco jenkins commented on Aug 4

    How normal is it for a fixed income retail mutual fund to lose 5-20% in a matter of weeks? Check out the charts for floating rate funds like HFLAX, XOSAX, and PFL. And the Fed comes out and says the mortgage problem is contained to mortgages. No wonder guys like Cramer are going even battier than usual.

  93. MikeW commented on Aug 4

    Cramer and the Market tend to overestimate
    the freedom of the Fed to cut interest
    rates.

    I (different Mike) agree with Winston Munn
    that “The Federal Reserve is trapped inside a box of its own creation, thanks to the policies of Alan Greenspan.”

    One day Greenspan and his policies will
    be held in low regard. That
    day may arrive sooner than I thought.

  94. arkieology commented on Aug 4

    Jerry Voorhis, a congressman from California, proposed a monetization of the national debt, and a simultaneous purchase of the fed, and eliminating the discount window permanantly, imposing a 100% reserve requirement on all demand deposits. 1939 proposal that he drafted with Texas Populist Wright Pattman, a long term critic and restrainer of Wall Street, and Economist Irving Fisher. Wouldn’t be a bad solution. Hedge funds are essentially ponzie scheme, but on such a large and audacious manner, that no one seems to notice. But when the cards fall, well Greenspan bailed out LTCM and we never found out. Maybe it’s one more lesson we all wish we didn’t have to learn. But there are other ways out. Just sayin.

  95. Tabatha commented on Aug 4

    Is it just me or are Cramer and Erin an item?

    Actually the more I think about a nice spike down the more I relish the fact that a lot of haughty, masters of the universe, Wall Street pricks are gonna get a dose of reality that most of us little people already understand well. Gravity and Zero.

    I love the smell of roasted master of the universe in the morning….it smells like….

  96. Northern Observer commented on Aug 4

    Oh my god I am listening to this hysterical man hell at the top of his lungs. What a crybaby. What makes me think he was 100% invested in heavily leveraged long positions.
    Cramer is a crybaby. And selfish. His needs come before every other interest and actor in the market. He’s the George Bush of of market commentators.

    Oh man I am listening to the disclaimer at the end and I think I might just pee my pants ….

  97. Si commented on Aug 4

    I haven’t seen the clip and I’m not going to watch it, Cramer however has lost all credibility in my eyes. I used to think he was quite cool. It was only a week or so a go however that he was saying that there is absolutely nothing to worry about. The issue with this guy is that his ego has just got too big, he runs a long only fund of some sort and he doesn’t want to be seen to lose mony. Comps for his website go down in bear market, as interest in stocks goes down. Hes basically turned into just another chear leader for easy mony politics, and unfortunately none of these guys live in the real world.
    I’m sure hell get his wish however eventually, dollar be damned.

  98. stormrunner commented on Aug 4

    Winston

    It’s hard to be a constitutionalist and believe there should even be a FED, recommending non intervention now as a benign circumstance of the business cycle coupled with previous policy blunder is probably a little short of the mark. The FED engineers these cycles at the behest of the administration they operate under to provide the money necessary to advance the agenda. They know that if they had to ask for the money via the tax system for this wasteful empire building rampage the answer would be no. Now that sentimate is so negitive against this occupation, they’re going to reign in on liquidity and teach us all, even the more prudent amoung us of meager means how to live responsably?? This mess will effect everyone not just the idiots.
    Constitutionalists should be screaming at the top of their lungs that no one should have this power and that this is -not- part of a normal business cycle but is in fact theft.

    If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. -Thomas Jefferson

  99. Kaos commented on Aug 4

    I dislike Cramer and very much enjoy the guys who tweak him on thestreet.com like Rev and Barry. However, he’s right.

    I also would love to see the Street firms take some big hits for their role in peddling crap asset structures. But the damage to the *system* is likely to be enormous if Bernake and Co don’t step up soon. That is an opinion, and reality may not quite turn out so dire, but playing chicken with the financing system for American homeownership to go after speculators and enforce the lessons of risk and return is not in the Fed’s mandate. In fact, it’s plain stupid.

    How many AAA mortgage bonds traded this week? How many *Agency* backed bonds? How many *deposit institutions* tigntened their mortgage offerings, pulled major products and raised *rates* to consumers by 1.00% or more?

    I like comeuppance as much as anyone. But if the Fed decides to bet that this will continue to be limited to the players who “deserve” to take the hits, they are playing a dangerous game and taking a risk with the national economy they are not qualified to assess. And that is just as irresponsible as the players who helped feed the frenzy that led us to this spot.

  100. Mike commented on Aug 4

    Winston Munn,

    I am glad that you are not affiliated with any of those groups of individuals and you believe in U.S. constitution and the “separation of powers and self rule”.

    I just got the impression that you were biased and you had no problems with the Fed raising rates 17 times from 1.00% to 5.25% non-stop and causing a recession, but you were against the Fed easing and giving some relieve to hard working Americans.

    The Fed made a mistake by cutting the rates too low in the first place and then by going too far and too fast. The Fed should correct the mistake ASAP. The rates should be like in the EU around 4.00-4.24%.

  101. Winston Munn commented on Aug 4

    Stormrunner: your assessment would be quite correct, but I was simply trying to answer Mike’s question. He seemed to think I was either Al-Qaeda, a communist, or – worst-of-all-worlds – a democrat.

    It does get tiresome to hear the flag-waving and calls for patriotism from those who haven’t a clue what the constitution says. I was trying to clear up my political bent for Mike – which might be best described as a Ron Paul/Jack Kennedy Republicrat.

    I have no bias – I hate both parties equally.

  102. Derek commented on Aug 4

    There’s no contradiction here. What Jim is telling everyone is that, after his first appearance when he belittled the impact of the subprime mess, his friends all got on the horn and told him to shape up, they were in danger of losing their jobs because of the bets they had made. He then went on the TV and made a desperate plea for Fed intervention to save their jobs – very straightforwardly, I might add.

    There is nothing subtle or surprising about this. Jim is serving the interests of himself and his friends. Everyone who is “shocked, shocked…” at this, please raise your hands.

  103. David in DC commented on Aug 5

    The meltdown looked legit to me — and I reached for the Sell button. Not everything mind you, but with Jimmy foaming at the mouth I figured more cash couldn’t hurt. Theatrics are one thing…this was rubber room stuff. Odd that Maria B. left after the close and Kudlowette Francis took over. Guess Maria beat feet to some exec to call for Cramer’s head. CNBC is now officially Reality TV and it tells me that this market is completely off the rails. Monday could be a bullet train to the Land of Suck. Help me Jebus.

  104. stormrunner commented on Aug 5

    Winston

    No injury intended, we’ve been around this block before, you’re recommended action based on the “system” as is, may be prudent for the dollar, but a disaster for a large segment of the population (no sympathy for HB&B). The comming carnage needs to be exposed for what it is. People in general need to be made aware that the Debt-Based Monetary system is “Taxation without Representation” and not a function of the business cycle. I’m with you, I don’t think inflating our way out is a good idea either, but we should certainly use this debacle as just another example of why monetary reform is necessary.

    Ron Paul/Jack Kennedy Republicrat.
    New Party? where do I sign up.?

  105. Winston Munn commented on Aug 5

    Mike wrote: “I just got the impression that you were biased and you had no problems with the Fed raising rates 17 times from 1.00% to 5.25% non-stop and causing a recession, but you were against the Fed easing and giving some relieve to hard working Americans.”

    It’s hard to know where to start if these are indeed your beliefs. All you are encouraging is the proliferation of debt; debt build-up is not wealth creation. And it is not the up to the private bank named the Federal Reserve to raise or lower rates – they don’t have that power.

    It may surprise you to know that the Federal Reserve does not set rates. They set a target rate, and prices are continually in fluctuation, trading above and below that rate. To truly affect that target rate, the Fed has to act, either buy buying or selling treasuries, or raising or lowering the reserve requirements.

    As for the concern about the working American, well, ex-Fed governor Bob McTeer says it better than I ever could:

    “The main fallacy in monetary theory and policy is the confusion of money and wealth. … Money — and financial assets easily converted to money — may not be wealth for society as a whole if the production of goods and services has not kept pace with claims on it. Early spenders may have some success, but inflation will dilute the buying power of others. The bottom line is that real wealth has to be produced; it can’t be printed.”

    You see, Mike, without real national wealth the U.S. worker is doomed to Brazilianization anyway – pumping money into a broken system won’t fix the system.

    It’s like being dependent on the water flowing through an old and leaky pipe – you can increase the flow of the water and give the illusion that the pipe is sound, but it is still leaking, nonetheless, and the inexorable flow will continue to eat away at the weakest points, creating more leaks, requiring more and more water until….either the pipe breaks open completely (deflation) or a tsunami is required just to provide a trickle to use (hyperinflation).

    Somewhere along the line, the wise and prudent thing to do would have been to fix the pipe.

  106. PointGuard commented on Aug 5

    I love this site. You guys are awesome. Most every opinion in the spectrum. I like between the hedges too and a couple others, but this site has the best comments.

    I’ve watched Cramer’s meltdown three times now and every time I laugh just as much as the time before, maybe a bit more. It’s really funny, at least to me. He really puts on an awesome show. If I was looking for a bottom to this correction, I think his performance would be a great candidate as a marker. (Note: Not looking for a bottom).

    As to the situation confronting us, I wonder what happens if the bottom falls out of the dollar. Seems to me just the opposite of what the FED is focused on, i.e., inflation.

    As the tech bubble burst in 2000, I wrote my senators and congressman and suggested that the Government finance a massive building out of the internet, which I thought at the time might sop up some of the excess capacity in techland and rescue the markets. Needless to say, the Government had other plans, whether wise or no, for the money it planned to borrow. And oh by the way, I never heard back from anyone on my suggestion.

    Now, it’s like Act II Scene 3. I wonder what they will do. I don’t know, and suspect few others know, how big this current “problem” is but all the surprise rate cuts we had on the way to the market bottom in the summer of 2002 didn’t deter us from our appointed destination. That may be the same predicament we currently face.

    I do think the panic level is kind of high right now so I went long the e-mini s&p futures near the close on Friday (small position). It’s a trade, same as everyday, though given the volatility level, I do have a rather wide stop. We’ll see.

    I do think there are signs of weakness in the economy which could possibly be exacerbated by the dark clouds hanging over the masters and minions of Wall Street. I was amazed at the recent report from the conference board. It’s like someone thinks I’ll believe anything.

    If we’ve built a house of cards which is crumbling in slow motion right before our eyes, is there any reason to suspect we will not be able to recover this time as opposed to all the other times we shouldn’t have recovered?

    My comments, indeed my thoughts, are unlikely to influence policy on this occasion any more than they did on the previous market meltdown but I think I did learn a lesson on that aforementioned adjustment in pricing. Trade what you see.

    Regards,
    PointGuard

  107. Winston Munn commented on Aug 5

    stormrunner:

    I had a good friend in Las Vegas who relayed to me a message his mother used to tell him. “Pete,” she’d say, “There is what’s right and there’s what’s real. You have to deal with what’s real.”

    Reality is we have a central bank and a fiat money system. Regardless of what I believe to be right, my comments have to be in the realm of how to deal with current reality – that is why there are at times apparent contradictions in what I say, as I don’t always clarify if speaking philosophically about what I believe to be right verses the pragmatic what to do under the current situation in this current reality.

    And then a lot depends on whether I’ve taken the blue or red pill, of course.

  108. Juan commented on Aug 5

    Since I’ve not read all the comments, these may be redundent, but…

    Cramer is neither dumb nor a poor actor…he must know that, even relatively recently, the initial rate cut can be taken as (further) evidence of either real economy problems or financial sector difficulties or both, resulting in market decline not rise.

    He must be aware that a cut in the funds rate can have unintended consequences within the derivatives stew while doing nothing for the real economy.

    Many seem to still believe problems are isolated to subprime mortgage instruments even as credit default swaps (yah, as synthetic CDOs, some of these might fall within ‘subprime’ but more related to corporates), undoable deals, etc, indicate otherwise, but then what can be expected of a mark-to-model system as reality creeps in.

  109. stormrunner commented on Aug 5

    …..Somewhere along the line, the wise and prudent thing to do would have been to fix the pipe.

    Holding the discount rate steady is not fixing the pipe it is continuing the charade.

    The FED created an artifical demand for money by making policy insanely accomadative, now I get it, that you can’t force banks to lend or people to borrow, but eventually the lure of easy money– well you know the rest, this is just social engineering 101. And the nefarious part of the whole thing is that these first users of the new money were really not imprudent and benefitted accordingly. The population was being conditioned to believe that prices only go up causing a panic to buy now because saving was indeed futility. Only the central bankers know when they will close the spigot beginnning the deflationary phase of the inflated asset class, this time housing. This was intentionally targeted at the public at large not just the elite investor class. this is criminal.

  110. SPECTRE of Deflation commented on Aug 5

    Update 2 is the topper. This nut job was actually allowed to manage other people’s money? DAMN! This trainwreck has been building so long that Ray Charles could see it coming, and yet this nut’s emotions show he’s being whipsawed by God knows what.

    He admitted to calluding with other firms to rig the market by targeting a heavily shorted stock for large block trading in tandem so that it would create a rally.

    It that what they mean by effecient market?

  111. Winston Munn commented on Aug 5

    Stormrunner:

    To really grasp what happened under Greenspan’s watch requires an understanding of not only the Fed but the bond markets.

    If you will look back, what you fill find is that all those emergency rate cuts were actually timed after drops in 6-month T-bill yields, so if you look at a chart, the Fed appeared to be chasing the yield of the 6-month T-bill. T-bill prices were spiking, causing yields to plummet. The oddity is that the long bond (10-year) was not following suit. It stayed high with little demand.

    If you consider that the money flowing out of stocks and into bonds was a “flight to quality”, then it would make sense that this “flight” aticipated a rather short duration of economic downturn, which would explain why the 6-month bill got all the love.

    Now fast forward to Greenspan – he has been chasing the T-bill rate down, and now has a target rate of 1% – so how does the Fed protect a low target rate? By lowering reserve requirements and buying treasuries. Buying treasuries means creating new money. The birth of liquidity.

    So, as an investor, if you can borrow at 1% from the Federal Reserve and get 6-8% from the still high 10-year bond, what are you going to do? That’s right. You will gleefully rob from Peter and get paid by Paul. The dollar carry trade was born – and as reasoned by the Fed, the extra liquidity forced the price up on the 10-year bond, forcing yeilds down, and voila’, a housing boom was born.

    See, that is the problem the Federal Reserve has now – to reduce liquidity and protect a higher rate, treasuries must be sold – which means attracting buyers with…higher rates…and draining liquidity from the markets.

    To protect a lower rate, the Fed has to buy treasuries, creating more money supply, diminishing the value of the dollar when it is now near historic lows.

    I don’t think there is any choice but to allow the asset inflation to deflate without interference.

    It appears quite simply to be a Gordian’s Knot – not even the bond market can be much help, for whichever way yields are priced in the market, the Fed has little leeway to move off its target without compounding the problem, one way or another.

  112. dave commented on Aug 5

    cramer should give us a monthly update on his economic analysis. Maybe call it the beige rage book

  113. stormrunner commented on Aug 5

    Winston

    I believe you are detailing the mechanics of the Greenspan conundrum, the reverse of which happened, on the way back up leading to the yield inversion. This goes directly to the “you can’t force banks to lend or people to borrow —but eventually the lure of easy money.. Dropping short rates as already mentioned by Juan would probably do no more in the short term then confirm an economic calamity, self fulfilling prophecy so to speak, and not effect the long bond radically in the short term, the flight to safety seems to be doing that all by itself anyway, already low @ 4.7,, mortgage rates from Well’s however hit 8%, rates are completely disconnecting from the 10 year. We have crossed the line from the mathematical to the psychological. I know my posts are short on dynamics; they are more centered on ethics. Ultimately the dynamics are well understood by the pros and are used to transfer wealth from the middleclass to the power elite. I also get that constructive criticism lends itself to making recommendations using the current tools available. What I endeavor to convey is that these cycles although possibly riding true natural cycles were being engineered in the short term to provide an excess of liquidity to mask the drain of resources the entangling alliances (the war on terror)required to be sustained. I’m not really sure driving 100k’s of families out of their newly acquired homes is the best way to pay for oil. This is not about our safety. Monetary reform is advisable to create economic stability for the middleclass which the Debt-Money system is severely compromising. The shortfall’s need to be pointed out for what they are. Tinkering with what we have is a dead end route.

  114. stormrunner commented on Aug 5

    Eclectic

    The beatle thing thats pretty funny..

    At this point I don’t care Green Back’s, Gold standard, fricken digital Tally Sticks anything but financing nonsense by evicting young families from their homes.

  115. Samuel commented on Aug 5

    The failure of these Firms to create more debt for the financial system is a death blow to the System.

    This whole Debt Bubble economy relies on ever increasing amounts of debt to even function.

    Now, that debt is no longer being manufactured the ponzi scheme is collapsing. It’s going to be scary but the end result of this was determined when the powers that be decided to start messing with the massive amounts of leverage.

    A 40 trillion dollar imploding debt bubble is a frightening prospect. There is unfortunately no solution to it. The piper will have to be paid eventually anyway.

  116. Mike, u r a pr*ck commented on Aug 5

    I’m tired of asshats suggesting proponents of responsible capitalism are somehow unpatriotic. But, Mike goes a few steps further and somehow puts Winston in league with a terrorist organization? Unbelievable. That’s unbelievably offensive.

    Winston, I can’t believe your restraint. Kudos to you.

  117. dukeb commented on Aug 5

    What’s the commercial that used to run on TV with the guy mowing his pretty lawn in front of his pretty house with his pretty neighbors and family walking around behind him….while his voiceover is recounting how much debt he has and ends with a comical “Somebody help me?”

    When some blowhard pulls up next to my wife and I at a traffic light in a flashy car, I invariably turn to her and say, “Don’t assume that prick actually owns that car or even has a penny to his name.” And the same thing when we drive through neighborhoods (north east New Jersey) looking at houses. If they actually “own” their homes, who’s kicking them out? (Maybe the true owners of the home? Maybe the banks?)

    Can we get a brokerage account like this??? You open it up without any funding, you “buy” stocks, and then you pay the brokerage back as the stocks appreciate. If they fail to appreciate, somebody comes and takes your stocks back in the worst case. But that might not even happen because maybe the government will step in to save you….we don’t want to kick you out of your stocks! After all, stock ownership is part of the American dream. You pay capital gains and that helps the government just like property tax! GBA!

  118. SPECTRE of Deflation commented on Aug 5

    Eclectic

    The beatle thing thats pretty funny..

    At this point I don’t care Green Back’s, Gold standard, fricken digital Tally Sticks anything but financing nonsense by evicting young families from their homes.

    Personal responsibility comrade? A young family making 15K should not be buying a 750K house even if they have the ability to do so. “If it feels right/good” ain’t gonna cut now anymore than it did during the run up to the Great Depression. Excesses must be wrung from the system.

  119. Mike commented on Aug 5

    “responsible capitalism are somehow unpatriotic”

    What is your definition of “responsible capitalist”?

    Is it similar to that of Winston – the Fed can sharply increase rates and keep the rates high until we get a recession or depression (pleasing the terrorists, communists, bush-hates, shorts, etc.), only after millions of people lose their jobs and homes (and Winston’s short positions appreciate) the Fed can cut rates.

    P.S. Self serving greedy short, next time put your real name instead of hiding your identity. I know who you are and I am sure that other folks can see your real identity.

  120. jz commented on Aug 5

    ” While not to the level of Cramer, Paul McCulley of Pimco was almost hysterical Friday morning on CNBC.

    Very out-of-character for him.”

    Cramer is more refreshing than McCulley – at least Cramer doesn’t take himself entirely seriously and sort of knows he’s an emotional idiot. McCulley on the other hand is a insufferable windbag of poorly recycled ideas, unnecessarily contorted paradigms, and bad writing. Not surprising at all he’s in the same panic camp as Cramer in this reaction.

  121. Mike commented on Aug 5

    Winston Munn,

    How do you see the Fed keeping the rates high and causing a recession (that you are advocating) can help to create “national wealth in the U.S.”?

    “All you are encouraging is the proliferation of debt”

    I am sorry Winston, but you are encouraging the proliferation of debt via a recession.

    How do you think our country will be able to service our national debt and pay for all the social programs, infrastructure, etc. if the US economy goes into a recession (that you are advocating)? The government would have to borrow more (putting our nation deeper into debt) to compensate for low tax revenue (negative GDP = extremely low tax revenue)

    Moreover, nobody is saying the Fed should cut rates down to 1.00%. The Fed should cut rates down to more reasonable and neutral 4.00-4.25%. It was a mistake to raise the rates too fast and too high, and now the Fed needs to correct this mistake and to cut the rates down to more reasonable levels.

  122. SPECTRE of Deflation commented on Aug 5

    Winston Munn,

    How do you see the Fed keeping the rates high and causing a recession (that you are advocating) can help to create “national wealth in the U.S.”?

    “All you are encouraging is the proliferation of debt”

    I am sorry Winston, but you are encouraging the proliferation of debt via a recession.

    How do you think our country will be able to service our national debt and pay for all the social programs, infrastructure, etc. if the US economy goes into a recession (that you are advocating)? The government would have to borrow more (putting our nation deeper into debt) to compensate for low tax revenue (negative GDP = extremely low tax revenue)

    Moreover, nobody is saying the Fed should cut rates down to 1.00%. The Fed should cut rates down to more reasonable and neutral 4.00-4.25%. It was a mistake to raise the rates too fast and too high, and now the Fed needs to correct this mistake and to cut the rates down to more reasonable levels.

    So we cut while the rest of the world is raising? Tanking of the dollar will be dead ahead, and it’s why our trading partners are already dropping their peg of the dollar. We sit @ 80.14, so be ready for the ramifications of your cut thesis when we go to fund our deficit. Good luck!

  123. Mike commented on Aug 5

    SPECTRE of Deflation,

    First, the dollar will not “tank”; it might drift slightly lower.

    Second, lower USD will help to fund our deficits (because our deficits are in USD)

    Third, lower USD will help our exports and economy.

    Fourth, lower USD and rates will help millions of families to keep their homes

    Fifth, lower USD and rates will help millions of families to keep their jibs

    Sixth, etc…

    Oh, I forgot one more, lower rates and USD will help the financials and the housing sector and force you to cover your short positions.

  124. Idaho_Spud commented on Aug 5

    Mike, Once again — how old are you?

    Old enough to know that 5.25% is low historically speaking, and really quite accomodative?

    Old enough to remember 70’s stagflation where every week prices were up another 5% at the grocery store?

    Old enough to remember when you could get 12% on a CD if you were inclined to actually *save* money?

    Lastly, what ripple effects would you anticipate from an emergency rate cut to 4% on the overnight rate short/med/long term?

    Please share your vision of what will happen vis-a-vis the dollar exchange rate, international investment in US debt, and overall inflation. These effects will likely be negative and large yes? And these negatives would be offset by what? A couple more quarters of positive earnings by…?

    Sorry to be so unpatriotic by asking these questions…

  125. stormrunner commented on Aug 5

    Eclectic

    I’m not a socialist to want honest money, you’re really over simplifying this. Even a prudent buyer in an 80/20 conventional is going to loose all equity (in CA a 150-200k loss) leaving no cushion for who knows how long. This debacle could very possably cause across the board job loss forcing others out. Are you suggesting that only cash buyers should attempt such a purchase, attempting to save 50 or 75% or so of a purchase price in this economically engineered inflationary environment. You are rationalizing this manipulation. I know you believe the banks have served us well, we will see just how well soon. Attributing this mess completely to greed of the uneducated- and everyone knows there’s no public education regarding FED antics and their effect on market conditions and rates in the secondary school systems, and a general belief that one should buy as much home as they can possably afford, and Greenspan with his alternate financing recommendations, there was a complete propaganda blitz that accompanied this mess. If housing prices in the major population areas i.e. the coastal regions hadn’t appreciated by a 2 to 3 factor I’d be inclined to agree with your stance. But how long are people supposed to wait with no end in sight while this corrupt monetary system plays its rate game from like 98 to 08 a half of a generation.

  126. Mike commented on Aug 5

    Idaho_Spud, aka Florida, aka Mike u r a pr*ck,

    “5.25% is low historically speaking, and really quite accomodative”

    Accommodative??? Give me a break! How do you define “accomodative”?

    How old are you to know that the current environment and rates have nothing to do with extreme environment of 70’s stagflation? Simply because we had high rates during 1970’s does not mean we should have high rates in 2007.

    “what ripple effects would you anticipate from an emergency rate cut to 4% on the overnight rate short/med/long term”

    Nobody says it should be one rate cut. Where did you see me saying it should be “an emergency rate cut to 4%”?

    As far as the impact on USD, please read my post above yours.

  127. dukeb commented on Aug 5

    prudent |ˈproōdnt|
    adjective
    acting with or showing care and thought for the future

    vs.

    speculative |ˈspekyəˌlātiv; -lətiv|
    adjective
    (of an investment) involving a high risk of loss

    An 80/20 alone is not evidence of a prudent buyer. Especially in California.

  128. Mike commented on Aug 5

    Idaho_Spud, aka Florida, aka Mike u r a pr*ck, – -,

    Do you have the balls to use your real name?

    As far as the inflation, it is a function of rapidly growing global demand for oil and commodities, and a function of Washington stupidity and their ethanol policies. It has little to do with “accomodative” interest rates (“accomodative” according to you).

  129. Joe Klein’s conscience commented on Aug 5

    SPECTRE of Deflation.
    Raise rates so fast? They raise them 25 basis points each time. That is slow.

  130. stormrunner commented on Aug 5

    dukeb

    your reducing this to semantics? 80/20 conventional loans have been industry standard in the banking system for 4 or more generations. If your going to advocate this Debt-Money system some reasonable expectation for inflation especially for as core of a purchase as is housing must be maintained. The FED absolutely failed here, not only in maintaining a reasonable price level but actually creating the environment that propagated the escalation. I’m not talking about an isolated elevation in prices like maybe Malibu or Pacific Palasades this was state wide in the worlds 10th largest economy. To ignore that the FED created this to finance a questionable war is irresponsable.

    John Maynard Keynes, The Economic Consequences of the Peace, 1920:

    “Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society (destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.”

    Let’s keep our heads in the sand we get the representation we deserve.

  131. VideoUploadGuy commented on Aug 5

    Someone should pull both the CNBC and the Street.com video and do a mix showing Cramer totally down talking subprime mixed in with him hollering “They’re nuts, they’re nuts”. Jim is going to really look bad with this current round as soon as the media picks up on it. The stark difference in tone is astonishing … and all this happened in just the last couple of weeks? I posted a question for him addressing this over in Stockpickr – no response yet.

  132. Joe Klein’s conscience commented on Aug 5

    Kaos,
    Even if the Fed bails out “The Street”, do you really think it will help mom & pop get back on their feet? It seems you are for th dumbing down of America. Were people reading their mortgage apps and related materials before they got them?

  133. Estragon commented on Aug 5

    Mike,

    It seems to me that the effects on the external value of the USD of a rate cut at this point are difficult to determine. I can’t think of any modern direct precidents. One big complicating factor is that there’s a defacto USD block, either fixed to, or with crawling pegs to the USD. Presumably, the dollar block currencies (including Gulf oil states and China) would follow the USD down.

    It’s reasonable to assume that at least some non-block Asian countries would see China’s devaluation as a competitive threat, and devalue as well. Canada, UK, and Euro area probably wouldn’t.

    So, looking to your list of outcomes in this context:

    “First, the dollar will not “tank”; it might drift slightly lower.”

    As noted above, different crosses may behave quite differently. It’s reasonable to assume CAD, GBP, and EUR would show a lot of tankage.

    “Second, lower USD will help to fund our deficits (because our deficits are in USD)”

    How? Outside the USD block, we should assume lenders will see significant capital losses in local currency terms. Why would they fund further? Inside the block, reserves would tend to accumulate faster in non-block currencies, implying China etc would be funding a rising c/a deficit in Europe etc.

    “Third, lower USD will help our exports and economy.”

    Maybe, at least initially. The USD advantage would be only in trade with non-block countries though, and if there were non-block competitive devaluations, the net result may be smaller than you’d think. Also, there isn’t a lot of excess capacity in the US, so some of this will be movement from non-tradables to tradables (with dislocations and frictional unemployment very likely).

    “Fourth, lower USD and rates will help millions of families to keep their homes”

    That depends entirely on real income growth and long rates. If cuts end up letting inflation loose, real income growth could easily go negative, and long rates would spike.

    “Fifth, lower USD and rates will help millions of families to keep their jibs”

    They may want to furl their jibs and hoist storm sails for a while anyway.

    “Oh, I forgot one more, lower rates and USD will help the financials and the housing sector and force you to cover your short positions.”

    There’s a small (but not zero) risk cuts would lead to capital flight and some black swan derivatives blowups. A few shorts in financials and housing wouldn’t be so bad if that came to pass.

  134. a guy called john commented on Aug 5

    keep an eye on the amazon sales rank of greider’s book about the fed. jumped 6,000 places yesterday to today. it’s rank is probably trade-able.

  135. jtaylor118 commented on Aug 5

    The problem is more attributable to the lenders than the borrowers, and the rating agencies like S&P and Moody’s that said it was all ok. As Buffett noted, we are now measuring whether Enough is Enough.

  136. anaconda commented on Aug 5

    This is my first post on this blog and I have to say that you I found your comments on Mr Cramer’s CNBC rant quite interesting. However the fact that it drew the most number of comments on Barry’s blog in the past few days should tell you that the man has achieved his objective. It was essentially a ploy to kill two birds with one stone: Scream, curse and act as outrageously as possible with a view to increasing the ratings and sow panic among Fed officials so that they cut rates and keep the markets lubricated. Needless to say CNBC benefits as well which is why Erin had to tag along by feigning to keep her cool. If only all deals could be made this way.

  137. Idaho_Spud commented on Aug 5

    Mike, if that’s *your* real name…

    LOL you may call me “Idaho” or “Spud”.

    I am also not the same blogger as “mike is a pr*ck”. (Although I am beginning to agree with his/her assessment).

    A five percent market correction and reining in “Lenders Gone Wild” is not the end of days. We are entering a recession that has been deferred by easy money. More easy money will defer it further, plus tank the dollar worse than it already is.

    Which of course will make our treasuries unpalatable to foreigners, so who will then finance our national/personal debt?

    Weak dollar will push imported petroleum up, killing consumers.

    All to allow some wild-ass gamblers time to exit their hedge funds?

    Mike aka Cramer, we see through you.

  138. Jim Bergsten commented on Aug 5

    I showed the Cramer video to my wife last evening. She is not in the market, knows (and cares) pretty much nothing about the market. I guess I showed it to her because it’s always more entertaining to watch somebody yell and scream from a safe distance, and maybe to remind her what a calm, reasonable person I am (by comparison).

    “What is he so upset about?” she asks.

    This question stops me in my tracks. I got to give this one some thought, say eight hours worth.

    I start down the “what SHOULD he be upset about” path — “innocent” people priced out of their homes by rising variable rates.

    This sounds convincing, and has a nice emotional appeal, but doesn’t seem quite right.

    Should I start down the path of global economies, derivatives, futures? Seems a bit excessive for such a simple question.

    And this explains why he has cause to be upset, now why he in particular is upset.

    How about, “Jim’s just behaves like all the rest of the arrogant, pampered, above-the-laws-of-decent-behavior management on Wall Street — he just happens to do it on TV”?

    No. This explains why he acts the way he does, not why he’s upset.

    So, I go back and watch the thing again. And again. And once more (I’m a slow learner).

    And, I finally get it.

    He’s upset because PEOPLE ARE CALLING HIM AND COMPLAINING ABOUT THE MARKET! The poor guy just wants to be left alone! (go watch it again and tell me this isn’t true).

    Ahhh, the price of celebrity. Maybe he should change his phone number.

  139. Winston Munn commented on Aug 5

    Mike wrote: “What is your definition of “responsible capitalist”?

    Is it similar to that of Winston – the Fed can sharply increase rates and keep the rates high until we get a recession or depression (pleasing the terrorists, communists, bush-hates, shorts, etc.), only after millions of people lose their jobs and homes (and Winston’s short positions appreciate) the Fed can cut rates.

    P.S. Self serving greedy short, next time put your real name instead of hiding your identity. I know who you are and I am sure that other folks can see your real identity.”

    Mike, while I will defend your right to free speech and to hold dissenting opinions, I would appreciate it if you did not make assumptions about what positions I hold or misappropriate my comments.

    I never defined “responsible capitalist”, yet you write a misunderstood definition and attribute it to me. I have not suggested the Fed raise its target rate. I have only stated that it is not appropriate to lower that rate. Big difference.

    Then once again you imply a connection between terrorists, communists, bush-haters with someone who disagrees with your views, and you place me into that category by assuming I have short positions.

    It is no business of yours whether I am long or short, but for the sake of civility I will tell you that at the present I am all cash. If opportunity presents itself, I will go either long or short without hesitation, because trading the market is not about patriotic flag-waving but about making or losing money. It is totally impersonal.

    There are no political implications of being long or short. As Don Corleone so aptly put it, “It’s not personal. It’s only business.”

    You may also want to research Keynesian economics, in which government interventions are only to be used in extreme cases; it is a bastardization of those theories that advises constant intervention and micro-managing the economy.

    Better, though, is to investigate the Austrian school, where you will find that increasing the money supply (monetary inflation) will eventually lead to price inflation (with a time lag), and that inflation is a hidden tax that steals wealth and prosperity.

    The real concern of harm to the average American is wealth-stealing effect of inflation.

  140. Eclectic commented on Aug 5

    Storm, per you:

    “Even a prudent buyer in an 80/20 conventional is going to loose all equity (in CA a 150-200k loss) leaving no cushion for who knows how long.” end quote.

    Shouldn’t have played “Flip This House.”

    The prudent buyer is still living in the house and making his payments. He’ll do that to the delight of his lender, or his lender’s successor into the future.

    If he can’t make his payments now with some step-up to a rate higher than the teaser, then he wasn’t prudent to begin with. Had he been prudent, he wouldn’t have exceeded his capacity to service the fully anticipated nature of the loan.

    And let me say this as well. Had he and all other mortgagees been truly, as you say: “Prudent,” they would in that prudence have prevented the imprudence of the lenders, and we wouldn’t have this situation playing out now.

    What we needed was some responsible party to understand that Greenspan was only advocating a technique for reasonable and prudent mortgagees to make an orderly and appropriate use of “bridged working capital” when he advocated using ARMs.

    For example: I might have purchased a house by using an ARM recently, but I would’ve been truly prudent only to factor the true total costs of permanent financing.

    Speculating that my house value might go up enough to erase any mistakes I might make in either valuing the property or calculating the cash flow needed to hold possession of the property was simply folly.

    When banks, in the face of competitors who were pursuing the folly, had no choice but to meet the competition by offering similar reckless financing, then they were forced by the folly of others to pursue the folly themselves.

    That is the definition of the herd instinct in mankind. The herd instinct is what you should blame, not the Federal Reserve OMC.

    That is the folly you should blame, not the assumed folly of a central bank and currency, which the proposed legislation you shared with us would also not prevent.

  141. Winston Munn commented on Aug 5

    Eclectic wrote:

    “When banks, in the face of competitors who were pursuing the folly, had no choice but to meet the competition by offering similar reckless financing, then they were forced by the folly of others to pursue the folly themselves.

    That is the definition of the herd instinct in mankind. The herd instinct is what you should blame, not the Federal Reserve OMC.”

    A response:

    Simply because lemmings fling themselves over the cliff does not mean that wise old bulls should do the same. There is always a choice. This is what separates the successful long-term business from the also-rans: the ability to chose to properly manage their businesses in both bad time and good times. They prepare to successfully weather inevitable economic downturns while not overindulging during economic upturns. As Mr. Miyagi said in The Karate Kid, “Balance is the key.”

    When absolving the central bank’s role, you are not factoring in the asset inflation created by the infusion of cheap money, creating artificial demand, and that demand’s effect on housing prices. The utilization of creative financing was due to the rapid rise of prices that eliminated many would-be buyers. ARMS, 80/20 loans, and the various other exotic financial schemes were a direct consequence of asset inflation, caused by monetary inflation – a direct product of the central bank’s actions to protect a much-too-low rate for much too long.

    So although there is truth in the herd mentality argument, the is also very real culpability for the origins of that beast within the walls of the FOMC conference room.

  142. Kaos commented on Aug 5

    JK Conscience –

    First off, I am advocating the Fed act to restore the functioning of a secondary market for investment grade bonds backed by residential mortgages. The fact that this will help the Street is simply an outcome of improved liquidity. And they will hardly be left without pain.

    As for dumbing down America, where do you pull that from my comments? My point is really focused on the Fed doing their job.

  143. Zephyr commented on Aug 5

    Bubbles happen with or without easy credit. Speculative fevers create their own momentum, and ultimately collapse from their own weight. Monetary policy can be neutral or significantly affect this. Obviously, easy credit is a strong accelerant, and in 2002 the Fed added fuel to the fire. We would have had an asset run up even if the Fed had followed a neutral policy. Of course, it would have been much less severe.

  144. Eclectic commented on Aug 5

    Winston,

    We agree in principle… just not in magnitude.

  145. Zephyr commented on Aug 5

    The Fed intervenes in financial markets by manipulating interest rates. Lowering the Fed funds target rate to 1% was excessive manipulation. The economic dislocations from this were significant (and predictable).

    Then the Fed reversed its manipulation, first by reducing and then removing the artificial stimulus, and then by manipulating the market to artificially drive the target rate above the free market and neutral level.

    They did this rapidly, pushing the target rate up at every meeting. They did not stop until they hit 5.25%. This is well above what a free market rate would be. If the Fed stopped manipulating the market, the free market would likely settle around 4.25% for overnight funds.

    The extra 100 bps is the artificial result of the ongoing manipulation by the Fed. It is slowly choking the credit markets and the economy. The trouble we are seeing now is the inevitable lagged effect from the restrictive monetary policy. Restrictive policy is destructive to the economy, just as the excessive stimulus was destructive.

    First the Fed overshot to the low side, and then they overshot to the high side. In my opinion they generally do more harm than good.

    I think the Fed should strive to stay close to a neutral rate (the natural market driven rate) at all times except in times of a temporary emergency.

  146. acme commented on Aug 5

    Dear Mr. Mike,
    Have you lost your shirt recently, in a minor pullback of few percents off ALL TIME HIGHS in s&p?

    Do you really think shorts timed it perfectly to capture this minor pullback (so far) – are they are SO smart ?

    Based on yourr rantings only I thing I can figure is that you were leveraged possibly 10 to 1 and now have to sell your house for margine calls and save your sorry as** . Welcome to the show. You are not the first. Or the last.

    Next time, please be respectful. I have also lost money on my ill timed longs, but at least I am not crying. Its all part of game – win or lose.
    Based on general uproar, I can only assume that it will get much much worse before it gets any better.
    Position : Earning cool 5 % no risk in cash.

  147. stormrunner commented on Aug 5

    Eclectic

    An 80/20 conventional is 80% financed 20% down over 30 years at a fixed rate no reset, how is this house flipping. By allowing unmitigated fractional reserve banking, irresponsable loans were placed to individuals in these same neighborhoods @100 LTV these generally being financed 80/20 with the trailing 20% being a piggy back. When these loans fail and they will fail, the comp of the auctioned property will instantly wipe out the conventional buyers equity. Now if he needs to relocate for any reason, well you get the picture. As a banker / broker it is unethical to lend to people with no ability to repay just because you can (generate money out of thin air) inorder to aquire fees and commissions. They not only destroyed the idiots but also the people with a real ability to pay. I quess this is your idea of economic “survival of the fittest” this is my idea of theft. Its just a numbers game, yeah some of these people will be able to stay in the effected areas others will not, the Central Banks fully understand this.

  148. Socalcool commented on Aug 5

    While I thought that Cramer took things too far, just wait and watch this next three weeks. Poole is an idiot; this mortgage mess is a Market Ending Event–if this ship sinks, the entire house of cards is going down. Unlike most people, I think it is important to assert upfront that th market isn’t rational or even fair…the FED by design ‘changes the goal posts’. However, Cramer was wrong, like many of you have said. Dropping rates would be retarded. The FED should privately buy CDO’s at a 25% discout to prop up the market behind the scenes. They couldn’t drop rates anyway, because they have $75 billion to fund/month. Also, they can’t afford for rates to go beyond 7%–then they would be insolvent with 9 trillion in debt. Rates might spike, but they will stay between 5-7% for the next 7-10 years. Get used to inflations, btw, because the money supply accross the globe has been out of control for five years…which means 10 years of extended inflation… Ouch!

  149. Mike commented on Aug 5

    Winston Munn,

    “Mike, while I will defend your right to free speech and to hold dissenting opinions, I would appreciate it if you did not make assumptions about what positions I hold”

    Assumptions??? There is no need to make assumptions, please read your prior posts; it is in black and white.

    Winston Munn said: “It’s no big deal if we go into a recession… Why scream for the Fed to intervene in a normal business cycle?” “Think optimistically – a good old fashioned recession and bear market would create tremendous buying oppotunities”

    And now you are insulting our intelligence and making statements that I made assumption about you being (you know who you are Winston)…

    Acme, a.k.a. Idaho_Spud, a.k.a. Florida, a.k.a. Mike u r a pr*ck, a.k.a. – -,

    Could you kindly try a little bit harder and post something more intelligent? Thanks

    In addition, why are you afraid to use your real name instead of hiding behind these pseudonyms?

  150. Winston Munn commented on Aug 5

    Mike,

    I have done my best to be cordial and civil in this discussion, ignoring your insults that I am somehow a supporter of terrorism or a communist because I believe in free market actions with minimal government invtervention.

    However, in response to my civility, you have held steadfastly to your misguided positions, made assumptions about me and others that are totally without merit or basis, and now you continue to support your ideological attacks with innuendo – you are now simply babbling.

    From your assertions about “finding who we are”, “communists”, and “terrorist supporters”, I feel confident that you must wear a uniform and be deeply involved in the security business.

    At what mall?

    Never mind. Forget that. Inquiring minds really don’t care to know.

  151. Winston Munn commented on Aug 5

    Eclectic:

    Know doubt both views contributed to the debauchery.

  152. Idaho_Spud commented on Aug 5

    Mike,

    If you had been reading this blog long enough to do anything besides foam at the mouth and rant, you would know that our gracious host *BANS* people who post using multiple aliases. LOGIC tells us therefore I am not those multiple bloggers that you claim I am. Your bad manners merely managed to irk several people in one thread.

    You are a newcomer here and your silly McCarthy-ish accusations of older (and far wiser) posters will likely get *you* banned.

    Mike, If you somehow manage not to get banned:

    I suggest in the future that you be civil, thoughtful and mature. Alas, it doesn’t seem to be part of your nature.

    FYI this is not a Yahoo message board. While we have spirited discussions and disagreements, we don’t accuse one another of being commies, terrorist supporters, anti-Bush, slave owners, or Romulans.

    Learn some civility, leave, or stay and be ridiculed. It’s all the same to me.

  153. Eclectic commented on Aug 5

    Storm,

    I likened you earlier to a dung beetle as a compliment to you, because of the dung beetle’s relative consistency, purpose and magnitude of effort.

    I realize now I was giving the dung beetle far too much credit.

    I stand on all prior comments.

  154. Eclectic commented on Aug 5

    Jim Bergsten,

    You’ll have to watch it some more. It isn’t true.

    Cramer is one of those rare intellects that you don’t see very often. I expect he relishes the contacts… the more the better… the bigger the better.

    He’s ‘on’ 24/7/365. You could wake him up in the middle of a liver transplant and he’d be on top of all news, all happenings, all concepts, and he’d know what’s happening in the majority of stocks without blinking.

    The only person I know that’s ‘ON’ even remotely as much as Cramer is… is Barringo, and he’s a distant second… a mere slacker in comparison.

  155. Jim Bergsten commented on Aug 5

    Eclectic — yeah, I know and agree. My post was (mostly) in jest. And thanks for reading!

  156. Eclectic commented on Aug 5

    Come on boys!

    C’mon VJ, Jim, Spectre, Winston, Chuck, Po and Mike, all you Mikes, mofo Mikes and non-mofo Mikes, and all you other fellow Big Picturintos… not to forget you Storm…

    Saddle UP boys!

    We’re takin’ this motor trucker to Big Pic Valhalla:

    http://www.youtube.com/watch?v=qhJqIkdLo88

  157. Mike commented on Aug 5

    Idaho_Spud, a.k.a. Florida, a.k.a. Mike u r a pr*ck, a.k.a. Acme, a.k.a. – -,

    Of cause you agree with “Mike u r a pr*ck” and all other vulgar profanities that you have posted here (under different pseudonyms) as the substitute for arguments, because YOU ARE THE SAME INDIVIDUAL. (I am sure that other folks can see it too)

    “We don’t accuse one another” BUT you have just accused me of “silly McCarthy-ish”; in addition to all other vulgar profanities that you have posted above.

  158. Mike commented on Aug 5

    Estragon,

    I do not see USD going much lower after 4×25 basis points interest cuts secondary to the EU (many EU countries have been already complaining about strong Euro vs. USD) and Japan not allowing it.

    Therefore, I do not see it as an issue. We had 1% interest rates and strong USD five years ago.

  159. dukeb commented on Aug 5

    The best thing to do—regardless of your postion—during times like these, during any notable market advances or declines, or between impassioned postings/readings on financial blogs, is to pick up that copy of THE INTELLIGENT INVESTOR everybody should keep at the ready. (Mine stays on the coffee table, atop all else without exception.) It’s like flying to the moon and looking back at planet earth–about as clear a view you could ever hope to have but without all the fuss.

  160. stormrunner commented on Aug 5

    I believe Winston being a constitutionalist sees the angst of my position. My skin is thick, too thick to be concerned by anything, I suppose, with the exception of spouting nonsense. The FED that is protected so vehemently blew it. Anyone would also be hard pressed to explain how,
    An 80/20 conventional which is 80% financed 20% down to (avoid PMI)over 30 years at a fixed rate, no reset, how this is house flipping. And exactly why these people deserve to take it in the shorts.
    There is absolutely no way to predict when the liquidity spigot will be closed. If the American people are going to allow private banks to control the currency they can at least control it. I honestly believe they have failed miserably, I feel there is a growing contingent that thinks likewise. The rest will likely be business as usual, the constant continuing erosion of the middle class, till the intellectuals amoung us stand up, regardless of how well they personally have been able to operate in the system.

  161. Idaho_Spud commented on Aug 5

    Mike, you are delusional. Barry *does not allow* using multiple aliases here.

    Try it.

    In fact, PLEASE try it… you have the power to make everyone’s day much better ;)

    PS I think I’ve used up most of my civility on you as well. I must save a little of it for work. Good day to you sir.

  162. stormrunner commented on Aug 5

    too thick to be concerned by anything, I suppose, with the exception of be “accused of” spouting nonsense.

    I stand corrected.

  163. Mr. Hoffman Blogs Here commented on Aug 6

    Jim Cramer’s Self-Contradictory Meltdown

    This whole needs to be put in context. Handily, Cramer himself did this with this Active Trader Update early on Friday morning.

  164. billygoat commented on Aug 6

    Cramer’s a whiny asshole… period.

    Is anyone surprised?

    Never did watch his lousy show, never will.

  165. The Capitalist Resistance commented on Aug 6

    Whats On Tap For Markets This Week

    The Fed meeting on Tuesday is probably the most important and watched in years. Jim Cramer(Link: Here and Here) et. al are calling for Bernanke to cut rates and bail the market out. I don’t think Bernanke will bail out

  166. Eclectic commented on Aug 6

    Storm,

    I obviously blew by your 80/20 discussion, but it’s of no real consequence to my own discussions of the core problem that faces the mortgage industry today.

    Nite Nite all. I think I’ve put this one to sleep.

  167. stormrunner commented on Aug 6

    I quess we’ll just chalk these likely 100,000’s of home owners up to

    ……collateral damage.

  168. Eclectic commented on Aug 6

    No Storm…

    …..involuntary mortgage-slaughter.

  169. muckdog commented on Aug 7

    LOL, good job, BR. No big deal vs. Armageddon.

    Which is it?

    Does it matter, either way JC can link back to whatever vid proves him right!

  170. justsayin commented on Aug 7

    “Won’t someone with more technical expertise than I pull the entire video off of CNBC and upload it to YouTube”? – Is that a polite way of saying won’t someone with less on the line than I commit copyright infringement of a potentially criminal nature? I’m sure you were assuming we’d all recognize it as a veiled criticism of how draconian modern (c) law is, and not a solicitation of a criminal act, but still…

  171. JEn commented on Aug 9

    Cramer is such a clown. How people can watch that guy is beyond me. Its like watching wrestling – just loud snotty nonsense.

    His record speaks for itslef. He has failed MANY times and gotten lucky a few.

  172. leylynn commented on Aug 9

    nice commentary on the Fed of *today*! how ’bout those retail sales?

  173. Guy Without Money commented on Aug 11

    Although I am educated and gainfully employed, I have no saving and have never owned a single share of stock in my life. I rent, and probably always will, because I am unlikely to ever afford to own my own home within any reasonable distance of a source of income. I watch CNBC once in a while and its like another planet. I don’t know anything about the fed or stock or bonds or any of that stuff. All I know is this: if there is a big meltdown of any kind, there will be a taxpayer-funded bailout. That’s just the way it works. I’m not cynical, I’ve just seen it over and over and over again. Finance guys who justify the millions and millions of dollars they make during boom years because they are “risk takers” or “find hidden opportunities” or whatever, are suddenly victims during the downturn. In the end, all their ‘risk’ seems to involve nothing but upside. At least from this lay person’ perspective.

  174. BlackScorpion commented on Sep 15

    I bought a home in AZ for 222K…I had a loan for 178K and one for 44K. I refiid the 44K and got 32K in cash to pay credit cards and bought 20K in Land. Now I owe 256K and the home is worth 170K. I’m having a hard time to keep paying 1500 a month interest only loan and I’m thinking of walking away. Other than the Foreclosure in credit and destroying my credit for some years..can the bank go after me for the difference of the current 256K loan and what is sells for? I heard AZ don’t have Deficiency Judgments for properties less than 2.5 acres and used for single family primary residence. Please let me know what will be the consequences if I walk away.. I can’t continue to pay for it…

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