Financials Look Bad, but We'll Get Through

The most disturbing part of this whole era is "no mergers, no closings." No mergers and closings in banks and homebuilders beyond Indymac. That's just crazy and a sure sign that we are not done. But 1990 proves you can't wait until we are done. After the first 50% move, we had a move like yesterday's, but, of course, much more protracted. Everything was more protracted then, and we had no short-selling without upticks, no ETFs that could be used to bang down stocks, and some liquidity from brokers. Pretty nauseating now, but we are working our way through.

In 1990 after the 50% move and some retracement, we then caught a 200% move. However, we greatly thinned the ranks and allowed really good banks to get bigger by buying good banks gone bad and shucking the bad loans to the Resolution Trust Corp. We haven't been able to do that yet. But if Indymac doesn't get a bidder soon, something will have to happen to sweeten it. Remember, nobody wants the branches of these banks; they just want the deposits.

With this housing bill, I just refuse to feel as badly about things as many others I read here. It is too monumental, and it shows how horrible the president has been on the issue and how he is switching. Think about all that has happened in two weeks, since the Indymac weekend: Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take) are safe, we had the president switch allegiances to save the legislation, and we got the SEC to start enforcing the short rules for the financials.

Not bad for two weeks' work!

Random musings: I think that the Sirius (SIRI - commentary - Cramer's Take)-XM (XMSR - commentary - Cramer's Take) merger will now depend on radical cost cuts and programming changes that no longer pit these two against each other. The big sports contracts, when they come up, will no longer have competitive bidding, and that's the real gain.

At the time of publication, Cramer had no positions in stocks mentioned.

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