cramer meltdown

[alocispepraluger102]

[Joe G]

Saw that earlier today. Pretty wild.

[MoGrubb]

He's a bit passionate I'd say.

He does sound like he knows what he's talking about though, a method to his madness.

[alocispepraluger102]

He's a bit passionate I'd say.

He does sound like he knows what he's talking about though, a method to his madness.

the powers that be are obviously going to pressure him into backing off.

cnbc is financial pornography.

Edited August 6, 2007 by alocispepraluger102

[Joe G]

http://www.kunstler.com/mags_diary21.html

August 6, 2007

The Open Ocean

By now, is there anyone over twelve in the USA who has not seen Jim Cramer's tantrum recorded late Friday afternoon on CNBC as the stock market took a 280 point swan dive off the rocky cliff of Hedge Fund Island?

Cramer's histrionics were only a few clicks above his normal antics on the "Mad Money" show, but even so, they made a remarkable impression of someone in real, not mock, despair. He mentioned more than once during the tirade that he'd been on the phone all week with other interested parties who were begging him to do something about the rising bloodbath on Wall Street. And by "do something," they clearly meant that Cramer should go on his TV show and make an appeal to Federal Reserve chief Ben Bernanke to drop the prime interest rate at the Fed's meeting this coming Tuesday -- the purpose of which would be to make cheaper loan money available to the Wall Street players whose investment houses suddenly found themselves underwater in the churning straits off Hedge Fund Island, weighed down by bagfuls of worthless securitized non-performing mortgages.

Personally, I don't quite get how a financial industry based on bad loans would be helped by borrowing more money to bail out a hopelessly unwinding Ponzi loan racket of the type the industry had engineered for itself -- but maybe I'm lacking the gene for financial creativity that the Bear Stearns bonus babies were all born with.

In any case, apropos of Cramer's telephone marathon, one can only imagine the number of cell phone minutes racked up this weekend out in the Hamptons by players trying desperately to finagle their way out of the brutal fact that their firms and funds suddenly lay exposed to the cruel ravages of reality. A lot of catered crab tidbits and mini-quiches must have gone uneaten out along the dunes as weeping men in blazers realized that "marked to market" had come to mean the same thing as "holding a bundle of shit."

I'd be surprised if all these geniuses hadn't managed to rig some kind of a life raft over the weekend, but they'll still be bobbing in the dangerous waters offshore, with plenty of sharks circling, and they'll still be stuck with those wet, bags of mortgage tranches (soon swelling and reeking in the sun), and my guess is that by Tuesday or Wednesday the life raft will be listing in more heavy seas.

At the other end of the storyline are the many sad people who were the initial dupes in the racket: the poor shlubs who signed "creative" mortgage contracts to become notional home-owners and thus achieve their spot on the first landing of the American Dream staircase. I say "notional" home-owners because somebody who "buys" a "product" such as chipboard-and-vinyl McHouse with no money down is not really an owner of anything but rather a kind of glorified renter stuck with the additional burdens of paying property tax and maintenance costs for something really owned by another party (a notional landlord). And, of course, we all know by now that the payment terms for these loan contracts were slippery sliding indexes which uniformly tended to slide upward as interest rates re-set above the ludicrously low levels of 2003 - 2006.

Millions of these unfortunate people are now seeing their lives whirl down the interest rate re-set drain. If this was still the same American Dream nation of It's a Wonderful Life, these contracts might have been re-negotiated by friendly, helpful, upright local bankers who benefited directly from loans favorable to both parties that continued to perform. But the whole racket this time was designed to dissociate the loan contracts as far as possible from their company of origin, and then to slice and dice the liabilities of ownership so finely that all the lawyers theoretically ever producable in the life of this universe, or several like it, may never succeed in patching together a coherent skein of ultimate responsibility. In the meantime, a remorseless chain of mere procedure in the form of default and foreclosure notices issued by computers will be sent through the mail, and sheriff's deputies will fan out through the subdivisions with their rolls of yellow tape, tossing residents out on the street (if they haven't already mailed in their keys to some company that fired all its employees and shuttered its offices back in June). A lot of these unfortunates will prove to be members of racial minority groups -- as reported by Gretchen Morganstern in today's New York Times -- and that is liable to add some cayenne pepper to the political gumbo cooking on the nation's back burner.

In his CNBC tirade, Cramer barfed up some choice phrases such as, "[the Fed board] has no idea how bad it is out there!" and "this is armageddon for fixed income [markets]!" No doubt a lot of observers, especially in the cheerleader financial media, will discount these utterances as we enter the shark-infested waters of the open markets this week. I really have to wonder if the many little life-rafts out there, rigged desperately over the weekend, bearing the castaway crews of hedge fund boys, are not drifting into the damp winds of a perfect financial storm.

[alocispepraluger102]

thanks, joe.

[Joe G]

Not sure if you mean that sincerely! Dark as the whole thing is...

[randissimo]

thanks, joe.

Interesting though I don't understand any of it...

[Joe G]

I'm not very well-versed in the language of finance either.

[alocispepraluger102]

thanks, joe.

Interesting though I don't understand any of it...

...but you're awesome at 'organomics.'

Edited August 6, 2007 by alocispepraluger102

[randissimo]

I'm not very well-versed in the language of finance either.

Yeah, I'm just a drummer w/ no savings, in a rental property, hustling gigs, doing drum lessons, and managing to pay monthly bills with a few bucks left over for gas, recreation, occasional dinner & wine, and of course groceries... I'm sure the yuppies in the sprawls near my place know more about

the terminology

[alocispepraluger102]

I'm not very well-versed in the language of finance either.

Yeah, I'm just a drummer w/ no savings, in a rental property, hustling gigs, doing drum lessons, and managing to pay monthly bills with a few bucks left over for gas, recreation, occasional dinner & wine, and of course groceries... I'm sure the yuppies in the sprawls near my place know more about

the terminology

you are doing really well, compared to a couple of my free-drummer friends.

[randissimo]

I'm not very well-versed in the language of finance either.

Yeah, I'm just a drummer w/ no savings, in a rental property, hustling gigs, doing drum lessons, and managing to pay monthly bills with a few bucks left over for gas, recreation, occasional dinner & wine, and of course groceries... I'm sure the yuppies in the sprawls near my place know more about

the terminology

you are doing really well, compared to a couple of my free-drummer friends.

It's tough! I have good months and bad months.. At least one or two months I'll have to pay my rent with my plastic..

[Quincy]

I can't stand the guy. I've watched him go from a hyperactive columnist to a hyperactive tv personality. Granted I don't even have cable but I would guess as with all of these guys, very little applies to the individual investor, unless you're willing to research a recommendation on your own and wait many months as the stock may move unreasonably because it's been paraded by some guru before millions of viewers.

And lookee lookee, here we on a Monday and Wamu (which he mentioned he wouldn't buy for the yield) went up 5.55% (the S&P 500 did 2.42%), Goldman Sachs up 4.5%, etc. etc. Just another day, la de da, maybe tomorrow it'll go down so he can throw a another temper tantrum.

Hell, I'd be in favor of raising rates if it caused his frickin' head to explode LIVE on tv. If it happens somebody youtube it for me.

Edited August 6, 2007 by Quincy

[alocispepraluger102]

I can't stand the guy. I've watched him go from a hyperactive columnist to a hyperactive tv personality. Granted I don't even have cable but I would guess as with all of these guys, very little applies to the individual investor, unless you're willing to research a recommendation on your own and wait many months as the stock may move unreasonably because it's been paraded by some guru before millions of viewers.

And lookee lookee, here we on a Monday and Wamu (which he mentioned he wouldn't buy for the yield) went up 5.55% (the S&P 500 did 2.42%), Goldman Sachs up 4.5%, etc. etc. Just another day, la de da, maybe tomorrow it'll go down so he can throw a another temper tantrum.

Hell, I'd be in favor of raising rates if it caused his frickin' head to explode LIVE on tv. If it happens somebody youtube it for me.

cnbc is financial pornography.

[7/4]

I thought it was a thread about Michael Richards running amok again...

[GA Russell]

I read his book Real Money maybe six months ago.

He wants you to play the market every day - sell on every downturn, buy on every up-turn. My understanding is that amateurs never make money doing that. Maybe some of you disagree.

[Jazzmoose]

I thought it was a thread about Michael Richards running amok again...

Yep; that's what I clicked for!

[Jazzmoose]

I read his book Real Money maybe six months ago.

He wants you to play the market every day - sell on every downturn, buy on every up-turn. My understanding is that amateurs never make money doing that. Maybe some of you disagree.

Not me. Sounds like the best way to lose money in the world. Let's see...the price is dropping, so I'll sell. Now it's more expensive, so I'll buy. Yeah, sounds great!

[Jim Alfredson]

As usual, Kunstler is spot-on. You need money to make money and unfortunately for a lot of people, they don't have any to begin with. The gap between the have's and have-not's is widening and that will lead to a lot of trouble.

[Guy Berger]

Well, this guy is generally known as a lunatic but this was exceptional even by his standards. As far as I can tell, the current anxiety in credit markets (which he is blowing out of proportion) has not had much spillover into the real economy.

Guy

[MoGrubb]

http://www.kunstler.com/mags_diary21.html

August 6, 2007

The Open Ocean

....... At the other end of the storyline are the many sad people who were the initial dupes in the racket: the poor shlubs who signed "creative" mortgage contracts to become notional home-owners and thus achieve their spot on the first landing of the American Dream staircase. I say "notional" home-owners because somebody who "buys" a "product" such as chipboard-and-vinyl McHouse with no money down is not really an owner of anything but rather a kind of glorified renter stuck with the additional burdens of paying property tax and maintenance costs for something really owned by another party (a notional landlord). And, of course, we all know by now that the payment terms for these loan contracts were slippery sliding indexes which uniformly tended to slide upward as interest rates re-set above the ludicrously low levels of 2003 - 2006.

Millions of these unfortunate people are now seeing their lives whirl down the interest rate re-set drain ...............

So, the "creative" mortgage business is providing the outlet for the building industry's boom(?). That's the bottleneck/logjam that's putting the brakes on the building industry and it has reached a saturation point; and,consequently, dragged the Market down with it.

We've had a big stink in my area concerning these variable interest home loans/mortgages that cater to starter homeowners. Lots of folks can't make their payments and are going belly up. It's kinda unreal to expect to buy a house with hardly no downpayment and a low(starting) interest rate. PT Barnum would be proud.

Edited August 7, 2007 by MoGrubb

[Chuck Nessa]

The real issue is the condition of the Wall Street holders of the "mortgages". Bunches of hot shots will lose money.

[connoisseur series500]

The real issue is the condition of the Wall Street holders of the "mortgages". Bunches of hot shots will lose money.

Well, that's all Cramer's interested in. He doesn't care about the people who lose their homes. He cares about the Countrywides and the mortgage companies where he's got his money invested.

Still, he's right about Bernake and the Fed. 17 straight increases without a single cut. They're likely concerned about the dollar. I say who cares about the dollar. If it falls low enough we might actually have some foreign countries set up their companies here again. The unemployed need a lower dollar and they need jobs.

[Joe G]

Here, btw, is a longer clip: http://www.cnbc.com/id/15840232?video=452808336&play=1

Who is "Bill Pool"?